NASDAQ:SOPH SOPHiA GENETICS Q3 2023 Earnings Report $2.83 +0.02 (+0.71%) Closing price 04/17/2025 04:00 PM EasternExtended Trading$2.86 +0.02 (+0.88%) As of 04/17/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast SOPHiA GENETICS EPS ResultsActual EPS-$0.21Consensus EPS -$0.32Beat/MissBeat by +$0.11One Year Ago EPSN/ASOPHiA GENETICS Revenue ResultsActual Revenue$16.30 millionExpected Revenue$15.42 millionBeat/MissBeat by +$880.00 thousandYoY Revenue GrowthN/ASOPHiA GENETICS Announcement DetailsQuarterQ3 2023Date11/7/2023TimeN/AConference Call DateTuesday, November 7, 2023Conference Call Time8:00AM ETUpcoming EarningsSOPHiA GENETICS' Q1 2025 earnings is scheduled for Tuesday, May 6, 2025, with a conference call scheduled at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by SOPHiA GENETICS Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 7, 2023 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Ladies and gentlemen, and thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Saphia Genetics Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Operator00:00:33I would now like to turn the conference over to Katherine Bylon, Head of Investor Relations. Please go ahead. Speaker 100:00:46Good morning, and thank you for joining us on Sofia Genetics' 3rd quarter fiscal 2023 earnings call. My name is Catherine Baylon, and I'm the Head of Investor Relations at Sofia Genetics. Joining me today are Doctor. Yergi Kamlal, Our Co Founder and Chief Executive Officer and Ross Muken, our Chief Financial Officer and Chief Operating Officer. Before we get started, I'd like to remind you that the management team will make statements during this call that are forward looking within the meaning of United States Federal Securities Laws. Speaker 100:01:17These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Cautionary Statement regarding forward looking statements in the Form 6 okay for the Q3 earnings release on file with the SEC. Except as required by law, Sofia Genetics disclaims any intention or obligation to update or revise any financial Product pipeline projections or other forward looking statements whether because of new information, future events or otherwise. This conference call contains time sensitive information and is Accurate only as of its broadcast November 7, 2023. This presentation includes non IFRS financial measures. Speaker 100:02:00These measures are calculated by management and do not have any standardized meaning under IFRS. These non IFRS measures supplement IFRS measures, but should not be viewed as substitutes for IFRS measures. We have included a reconciliation of IFRS measures Speaker 200:02:33Thank you, Catherine, and good morning, everyone. We appreciate you joining us on our call today. I am pleased to share that our 3rd quarter results came in strong with revenue for the quarter growing 37% year over year On a constant currency ex COVID basis. Moreover, we achieved this growth while delivering meaningful expense reductions from the prior year period. Our operating loss on an adjusted basis was $11,800,000 an improvement of $7,500,000 or 39% from the Q3 of 2022, an improvement of $2,800,000 or 19% from the prior quarter. Speaker 200:03:17On today's call, I will start by reviewing our progress in the Q3 as it relates to our business execution And the continued growth of our Sofia DDM platform. I will then turn it to Ross Muken, our Chief Financial Officer and Chief Operating Officer, To share our financial results for the period in more detail, followed by our outlook for 2023. We will then end by taking your questions. Let me start with a review of the Q3 highlights and the execution of our business strategy overall. At Sofia Genetics, we are focused on driving the adoption of our Sofia DDM platform. Speaker 200:03:57Sofia DDM is a cloud based Software as a Service platform that helps health care institutions analyze and generate insights from patient data. SofiaDDM applies artificial intelligence to complex patient data, including genomics and radiomic data To help customers identify valuable patient insights, our platform provides insights on a wide range of diseases With applications spanning across oncology and rare inherited disorders. A key attribute of Sofia BDM platform We leverage our network of connected customers to create flywheel effect. As more customers use our platform to generate patient insights, The more powerful our insights become for the next patient. Customers who use SofiaDDM are constantly uploading patient data to the platform And providing inputs as they apply their expertise. Speaker 200:04:53As customers upload more data and provide more inputs, the AA algorithms, which power Ultimately, this allows healthcare institutions to benefit from the expertise and knowledge of 1 another and contribute to the collective intelligence of Sofia Didier. In the Q3, We made great strides towards driving further adoption of Sofia DTN. First, we added 18 new logo to our network. These customers join our more than 750 customers worldwide who use Sofia DBM, out Revenue through our Sofia DDM platform in the last 12 months through our dry lab bundle and integrated access modes By uploading their patient genomic data to generate insights. We aim to increase the usage of SofiaDDM by landing new customers And then expanding their usage of the platform. Speaker 200:06:00In that regard, our strong Q3 revenue performance is driven by robust utilization of Sofia BDM For the Q3 of 2023, analysis volume across our core genomic customers, which can be considered A close proxy for the number of patients analyzed was 79,784. This represents an all time high and is up 28% year over year. When excluding COVID-nineteen related analysis, Platform analysis volume was $78,709 for the Q3 of 2023, For oncology, we offer SofiaDDM applications for hereditary cancer testing, solid tumor profiling And hematological malignant system in addition to the newer applications we added in the market for homologous recombination deficiency, HRD and liquid biopsy. On that note, the later applications, HRD and liquid biopsy, were the fastest growing in the quarter, While more established applications like hereditary cancer grew in line with our company's overall growth. For rare and hereditary disorders, we offer applications to cover a wide range of diseases. Speaker 200:07:40Exome analysis represent The fastest growing applications in this area, and we are expecting to see a shift to larger gene panels over time. Overall, we saw both the oncology and rare and inherited disorders categories grow in line with our company's overall growth And reflects strong year over year performance, while COVID analysis were down year on year as expected. I will now share some highlights during the quarter across our geographies. In EMEA, I'm excited to highlight 3 customers from the Q3 who are using SofiaDDM to generate insights for their oncology patients. First, we recently announced 2 new customers who were attracted to SofiaDDM by the impressive analytical performance of our platform And especially by our new homologous recombination deficiency application. Speaker 200:08:40In August, Ciache Bordeaux, one of the largest hospital in France, went live on Sofia DTM and will be using our platform's HRD application capabilities. In addition, Instituto Romagnolo Perlo Estudio dei Tu Mori, I R S T, an oncology center in Italy, Went live on SofiaDDM in September and is also using our platform's HRD detection algorithms to help In October, We also announced a new logo with Onco Mediore Diagnostics, a German based hematology oncology clinical lab, We will use Sofia BDM's hematology application capabilities for chronic lymphocytic leukemia, CLL, a common type of blood cancer. We welcome these new customers to the SofiaDDM network and are excited to both serve them for their oncology needs as well as them Contribute their data and knowledge to the Sofia Didier community. In the LatAm region, we announced that we expanded our relationship with Laboratory of Curie, a laboratory in the capital city of Paraguay. Laboratory Opry became a SofiaDDM customer in 2022 using the hereditary cancer application of our platform. Speaker 200:10:07This quarter, they expanded their use of Sofia DDM by adding our HRR application for solid tumor testing. Laboratory Ocuri cited that the Sofia DDMs to their expected turnaround time for this application In the Asia Pacific region, Analysis volume in the Q3 grew above company average, benefiting from September of 2022 signings When we added 2 labs in India, Unipa Specialty Lab and MedGenome. These labs, in addition to the Tata Institute of Genetics and Society Center at Instern have all now completed their Onboarding and are using Sofia BDM to run about 12,000 analysts per year. These large volumes in India are notably Beyond what we see in other parts of the world and are underpinned by India's large population size, albeit At the price point established to suit the Indian market. In the Asia Pacific region, we now intend to build on these Early successes in India and in Australia with Peter Marks, which we discussed in detail last quarter and are looking to push into new territories such as Korea and Japan. Speaker 200:11:30We intend to leverage direct and indirect sales. In doing so, expect to add small number of sales headcounts in the region. Next, turning to NORAM. We are pleased with the solid progress we are making in the region. NORAM revenue growth accelerated sequentially And grew at an impressive 78% year over year, well above the company average. Speaker 200:11:55NorAm benefited from above company average analysis volume growth as well as contribution from biopharma. We continue to be excited with our growth in ORAM, Which we consider to be a relatively underpenetrated and high potential market for us. I would like to take this time to highlight 3 new customers we signed in Loram this quarter. In Canada, we signed Create Fertility Centre in Toronto. We'll be using Sofia BDM for fertility testing. Speaker 200:12:26And in the U. S, we signed website in Seattle And BioReference outside of New York City that serves over 19,000,000 patients annually. Both of those reference labs are adopting Sofia BDM for liquid biopsy applications, which I'm excited to talk about in more detail now. As you know, liquid biopsy technology has the potential to revolutionize the diagnosis and management of cancer. Today, liquid biopsies are being investigated across 3 main use cases: 1st, for diagnosis and therapy Selection for cases in which obtaining a biopsy of the primary tumor is not feasible, for example, in subset of advanced lung and prostate cancer cases. Speaker 200:13:132nd, for the longitudinal monitoring of response after onset of systemic anticancer treatment And third, for early detection of cancer. However, these promising use cases do not come without challenges. Liquid biopsies require highly sophisticated analytical capabilities to overcome a number of signal detection challenges, Such as low input material, we believe this is an area in which our algorithmic capabilities may be distinctive. Our analysis of over 1,400,000 genomic profiles to date means that we can confidently pick the signal from the noise. In addition, we have developed our own proprietary molecular barcoding technology required for liquid biopsy analysis, named Qumine, Which grants us freedom to operate in this important area. Speaker 200:14:08Both rare sight And by your reference, I've recognized the analytical performance of our liquid biopsy applications, and we're excited to welcome them to our network. In addition to these U. S. Customers, we also recently helped Saint Leon Berard, a leading cancer center in France, adopt Sophia Didier for liquid biopsy Overall, in Q3, our liquid biopsy analysis volumes grew 80% granted of a small base, And we look forward to seeing this trend continue as we bring on new customers. Speaking of expanding our liquid biopsy customers, I would like to take this opportunity to talk about our partnership with Memorial and Saint Catherine. Speaker 200:14:53As previously announced, we recently entered into a partnership with MSK to help them commercialize and deploy their liquid biopsy assay, MSK ACCESS. MSK Access is a liquid diopsy test that MSK developed in 2019 and successfully implemented clinically Over the last 4 years at the New York facility, performing over 10,000 analyses to date. This has been a resounding achievement for MSK, and they are facing a lot of demand for their test. However, they do not have the capacity to materially ramp up their testing volumes. Earlier this year, they turned to us with The shared vision of working together to decentralize the MSK access test and bring it to the world. Speaker 200:15:43The cloud based nature of the Sofia BDM platform uniquely positions us to help them escape break the data failures created We are currently in the process of working with MSK to decentralize and commercialize our liquid biopsy test. MSK access powered by Sofia DDM and make it available to customers across the globe. Customers around the world will be able to use Sofia Participants to our early access program will be able to use Sofia DDM before the end of 2023 With full commercial launch on track for the first half of twenty twenty four. In fact, by reference, the New York City lab we announced earlier today He is one of the first adopters of MSK access through this early access program. In addition to this initial traction, we also announced Ahead of ESMO in October that AstraZeneca will join the collaboration between us and MSK to help bring MSK access to a global scale. Speaker 200:17:01AstraZeneca will leverage its global footprint to help accelerate the deployment of MSK Access worldwide. In doing so, institutions around the world, including those in under resourced and under served areas, will Access to highly accurate and reliable data and insights. Beyond improving global health equity and enabling proper cancer testing, The network we're building with MSK will also be very important to accelerate standard recruitment of patients for clinical trials And in partnership with biopharma companies, accelerates the development cycle of new compounds in oncology. Having now covered the opportunity in liquid biopsy, let me move to a second fast growing application area, HRD. Identifying patients with homologous recombination deficiency, HRD, means identifying a biomarker that has Been shown to be associated with response to PARP inhibitors in advance of brain cancer. Speaker 200:18:06Since the launch of HRD detection capabilities on Last year, we have seen sustained strong growth in analysis volumes. We have now approximately 35 customers in routine usage globally. And in the Q3, we added Peter Mac in Australia to the list of countries Using SofiaDDM for HRD detection, which includes India, Brazil, Italy, France and Spain. We recently expanded our HRD offering covering CIBD and RU applications by offering a patented analytical algorithm named Ginger is a deep learning algorithm that powers our HRD detection capability. This algorithm uses low pass world genome analysis in conjunction with our proprietary deep learning algorithm to detect patterns of genomic scarring across the genome and as a result of mutations associated with or homologous recombination reaper. Speaker 200:19:11Ginger is technology agnostic and can be readily deployed In addition to our positive momentum in the clinical space, Biopharma continues to show interest in Sofia DDM for HRD and HR testing applications, Notably, in the context of liquid biopsy testing. Today, I spent a lot of time highlighting the process we have made Selling the genomics capabilities offered by Sophia Bien. While the genomics offering you've heard about today, Such as our HRD and liquid biopsy applications continue to be a key focus, we have always intended I am pleased to update you on our progress towards this multimodal vision. During the Q3, we released the multimodal module of the Sofia DVM platform, Sofia ClearPath. Sofia ClearPath provides customers with the ability to perform multimodal and longitudinal analysis of patient data. Speaker 200:20:26In order to ensure Sofia Perpas gets off a strong start in the market, in December of 2021, we initiated a multimodal As a reminder, this flagship initiative is a real world Using the study as a springboard, we have now activated Sofia ClearPath At all 30 of the sites, we are participating in the DIPLAN-four study and have recorded data on the 2,000 patients enrolled to date. Researchers from those 30 institutions are now using Sofia ClearPath to develop new clinical research hypothesis by The study data in a statistical aggregated manner. On that note, we are currently working on a first plan interim analysis of Around 600 patient cases, which will be reviewed by the study IDMC, an independent external data review committee This will notably be the opportunity to have a first readout Regarding the performance of the predictive models being developed, and we are looking forward to updating you The progress that we've made to develop our multimodal capabilities could not have achieved without the partnership of several key players in the healthcare ecosystem. In order to continue cultivating a community of joint collaboration, We proudly hosted the AI Driven Precision Oncology Summit in New York City in September. Speaker 200:22:18Attendees enjoyed 2 keynotes, One from Michael Berger of Memorial and SunCaterine discussing a precision oncology with decentralized solutions And the second from David Groux, Chief Medical Officer of Microsoft, who presented opportunities and challenges with AI in Healthcare. Then our Chief Biopharma Officer, Peter Casasanto, hosted a panel discussion with distinguished guests from AstraZeneca, Janssen, Henry Ford, Memorial and Sant'Catherine and Microsoft with a focus on AI's potential for enhancing treatment decision making and supporting development of novel therapies. Beyond this event, we attended ESMO, The European Society For Medical Oncology, where our meetings with prospects and customers focus on the excitement Surrounding the recent press coverage of our joint announcement with AstraZeneca and Memorial Sloan Kettering to broaden the adoption globally of NGS testing The impact of this memorandum of understanding and potential for them to participate in the movement, Enabling greater access to testing and eligibility for clinical trials and life saving therapies. And just this past week, NVIDIA, our partner for rapid and scalable genome sequencing data analysis, Joining us is in Washington, D. C. Speaker 200:23:56At ASHG to showcase our joint efforts. We look forward to continue working with all of our partners to advance our shared mission of improving our equity through data driven medicine. Now turning to financial priorities. I want to address our recognition of the constraint environment for capital and rate to rate that Sofia Genetics has the ability to reach profitability without additional capital, if necessary. We fully expect and will proceed with our forward budgeting under the scenario that will not be available. Speaker 200:24:39Our concerted efforts of cost containment are now in the 6th quarter of consecutive improvement, Excellent recurring items. In the Q3 of 2023, our reported operating loss was reduced by 30% year over year And by 17% sequential. On an adjusted basis, our 3rd quarter operating loss was $11,800,000 an improvement of 39% year over year and 19% sequentially. I would like to emphasize this, we do not take this challenging environment lightly. As such, We continually inspect our spending for opportunities and improvement. Speaker 200:25:25To that point, I would like to share that we have identified incremental select actions that can further expedite our path to sustainability. We're just underway with these actions and expect benefits to 2024 and onwards. So to conclude my section, Sofia Technology has been adopted by more than half of the 20 Leading global cancer participants. As technology markets have shown us, winning the early adopters can be helpful in longer term efforts We are in the early days of the movement towards personalized medicine for cancer, And our sense is that our momentum is increasing. And so in closing, I feel as excited today as ever that To harness data from the global community to generate actionable insights that contribute meaningfully to patient care and patient outcomes. Speaker 200:26:34And now, I will turn the call over to Ross to discuss our financial performance in more detail. Speaker 300:26:42Thank you, Yergi, and good morning, everyone. I'm pleased to share that despite the challenging macro environment, Sofia Genetics delivered robust performance in the Q3, continuing our commitment to sustainable growth. Turning to the financials. Total revenue for the Q3 of 2023 was $16,300,000 compared to $11,600,000 And constant currency revenue growth, excluding COVID-nineteen related revenue, was 37%. Platform Analysis volume, Including volumes from our integrated access customers was 79,784 for the Q3 of 2023 Compared to 62,276 for the Q3 of 2022, the 28% year over year growth was attributable to strength of our core platform analysis volume offset by the expected continued decline of our COVID-nineteen related analysis Excluding COVID related volume, platform analysis grew a healthy 36% year over year in the period. Speaker 300:28:00Core Genomic customers were 431 as of September 30, 2023, up from 424 in the prior year period, But down sequentially by 3 customers. This is primarily the result of a continued decline in COVID only customers. Core Genomic customer count included 14 new routine customers in the quarter. Annualized revenue churn rate quarter improved sequentially on a reported basis to 127%. Constant currency net dollar retention, excluding COVID related revenue, With 126 percent, strong NDR and a healthy level of backlog continued to provide us with a high level of revenue visibility going forward. Speaker 300:28:52Gross profit for the Q3 of 2023 was $11,300,000 compared to gross profit of $7,300,000 23 compared with 63% for the Q3 of 2022. Adjusted gross profit was $11,800,000 An increase of 56% compared to adjusted gross profit of $7,600,000 in the Q3 of 2022. Adjusted gross margin was 73% for the Q3 of 2023 compared to 65% for the Q3 of 2022. Total operating expenses for the Q3 of 2023 were $27,800,000 compared to $30,900,000 for the Q3 of 2022. Turning to operating loss, for the Q3 of 2023, it was $16,500,000 compared to $23,600,000 Thank you, operator. Speaker 300:29:57Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Speaker 300:30:00Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Speaker 300:30:03Thank you, operator. Thank you, operator. Thank you, compared to $19,300,000 for the Q3 of 2022. Lastly, total cash burn for the quarter was $15,800,000 compared to $27,400,000 in the prior year quarter, down over 42%. We are quite proud of this achievement and remain committed to sustainable growth moving forward. Speaker 300:30:27Cash and cash equivalents were approximately $133,000,000 As of September 30, 2023. Turning to our 2023 outlook. Based on our strong first three quarters of fiscal year 2023, We are reiterating all elements of our annual guidance. We continue to expect reported revenue growth to be at or above 30% in 2023, Constant currency revenue growth excluding COVID-nineteen related revenue for 2023 is expected to be between 30% 35%, In line with our previously highlighted long term expectations. Additionally, following on strong cost performance exhibited in the 1st quarters of 2023, Sofia Genetics continues to expect 2023 operating losses to be below 2022 levels. Speaker 300:31:16Furthermore, With respect to the anticipated revenue cadence for the final quarter of 2023, I would note we continue to expect utilization to be up sequentially. However, currency may prove slightly less favorable than previously anticipated based on current rates. Additionally, given the timing of certain revenues recognized in We would anticipate that the step up in 4Q revenue to be below what was exhibited in the prior year. This is all consistent with what we shared on our last quarterly update. Lastly, I wanted to provide a bit more on the remarks Yergi made with respect to our path to profitability and the required cost actions to expedite that goal. Speaker 300:31:57We recently decided to take some tactical headcount actions that will further optimize our operations, We're also continuing to focus our R and D efforts on increasingly high ROI projects. These are difficult decisions, But we have prioritized sustaining medium term revenue momentum at our previously targeted communicated levels, while ensuring a reasonable timeframe The cash flow generation. Additionally, we continue to revisit our discretionary expenditures and have identified potential savings for 2024 In systems, professional services and certain public company costs. The combined nature of these items will further our path to Profitability in 2024 and beyond, we commit to remaining vigilant and responsive to the environment and have attempted to balance our desire to execute Against a very large TAM versus the practical reality of becoming self sustaining. We look forward to providing more color on these matters Once we have completed our 2024 planning process. Speaker 300:32:59With that, I would like to turn the call back over to Yergi for the closing remarks before we take your questions. Speaker 200:33:07Thank you, Ross. We are proud of our performance, which we believe reflects our continued ability to execute on our vision And the opportunity ahead. Sofia's success stands on our ability to delight customers and continue driving more and more usage of our platform. I am encouraged and as confident as ever about the long term path that we are on. We have a fantastic opportunity to drive compelling returns In closing, thank you to our Sofia colleagues, partners, customers and investors for Joining us in our journey, without you, none of this would be possible. Speaker 200:33:47Please note, later this month, We are attending the Evercore Healthcare Conference in Miami. I look forward to continuing to update you on SOPIA's future success With that, operator, you may now open the line to the questions. Operator00:34:09Thank you. The floor is now open for your questions. Your first question comes from the line of Tejas Savant with Morgan Stanley. Your line is open. Speaker 400:34:40Hello. This is Yuko on the call for Tejas. Thank you for taking our questions. Could you provide more color on the BioReference Lab collaboration? How quickly could it scale and how meaningful could it be in terms of economics, Sofia? Speaker 200:34:53Yes. Good morning, Yuko, and thank you for your question. So before we go to the specifics on bioreference, I would like to remind people that recently we signed an important Memorandum of Understanding partnership with Memorial Sloan Kettering and AstraZeneca to basically Support decentralization of liquid biopsy testing and comprehensive genomic testing, profiling testing through the usage of Sofia BDM And ultimately give equal access to proper patient diagnosis around the world, including in the U. S, right? And so in that regard, indeed, we are having a lot of traction, a lot of demand on MSK Access. Speaker 200:35:38And I will let Ross give you some more color on the announcement of today with BioReference Lab. Speaker 300:35:45Thank you. So obviously, as you all know, They are one of the largest central and reference laboratories in the U. S. And they have a great presence in the oncology field and one particularly Amongst community oncology where we historically have not played necessarily. So this is a tremendous partnership for us. Speaker 300:36:06They are a great party to be able to serve their communities with this fantastic application. And for us, it's also really nice validation sight of our ability to be able to scale up to other large central and reference laboratories similar to what we've done in other parts Of the world as we've spoken about historically. So unfortunately, I'm not going to give you specifics on the economics, but as you well They have very large patient reach, particularly in a number of key geographies like New York and Texas And Florida. And so we would anticipate this being a really nice contributor later in 2024 and into 2025. And again, one of Hopefully, several updates we'll have for you on the early access program for MSK access, which to date is garnering quite a lot And as Jurgi mentioned, with our partnership or MoU as well with MSK and AstraZeneca, I think that will further help On that adoption and really drive access and awareness across the globe with respect to this really unique application. Speaker 400:37:20Great. Thank you for the color. And then also as a separate follow-up question, With interim for deep lung study readout expected before year end here, what metrics would be provided to demonstrate models predictive ability? And what do you think is the bar that you must meet to see strong adoption? Speaker 200:37:42So to start with, Yuco, Dipland for study was for us a means to do multiple things. And first was to build multimodal capabilities in Right, so the KerPass module. So in that regard, now this has been extremely successful. And we are being able to deploy in the context of deep lung, a curb path in 30 centers around the world. So that's something that is extremely important. Speaker 200:38:092nd, as we would demonstrate that we had the ability to compute Beyond Genomics multimodal data In a real world, real time setup, it was important to show that we're not only trusted by the hospitals To manage and compute their data, but as well to demonstrate there was a value for the biopharma. And you may remember that we had announced earlier this year A deal we had signed with AstraZeneca on the data side, where we are leveraging on Sofia Didier and Curpaz and the data that we've gathered In the context of DeepLang to help IZ in their development efforts. And last, to your point, which was for us potential cherry on the top of the cake, was to demonstrate that while you do so And you combine multiple sources of data, you may be able to anticipate response to therapies, expensive therapies like immunotherapy In a better way. So we are in that context today. So we are very proud to have deployed Sofia Kerpaz in 30 centers to have Gathered data points, which are 200 clinical radiomics, genomics data points on 2,000 patients across the centers. Speaker 200:39:28And as it should be, now it's an independent data monitoring committee that is meeting up in December and is going to present The outcome of our predictive algorithms independently in January next year. And so I would say Great. It's already what we have achieved, because we have demonstrated there was value of Onboarding 30 centers around the world on multimodal capabilities. And when it comes to The predictability of the algorithms, we will speak about that at the time of the reports from the independent data monitoring committee. Speaker 400:40:11Got it. And you also noted that the this predictive multimodal model can be applied to And are you viewing that expansion as a medium term or a longer term opportunity for you? Speaker 200:40:34So indeed, Yuko, For many years, we've invested in what we could call today our Sofia factory, where we've been Building algorithmic and workforce capabilities to be able to properly compute sophisticated, In the context of the multimodality, we wanted to demonstrate there was a value by doing that In lung cancer, because lung cancer is the cancer that is killing, I think, the most of the people around the world. We focus on non small single lung cancer and some unmet needs, demonstrated the value of doing that. But our Factory and algorithmic capabilities have already proven that similar outcomes could be expected in other cancer types. And in particular, I would highlight kidney cancer, uioblastoma and breast cancer, where we had internal efforts. And indeed, one could expect next year that we speak about our multimodal capabilities beyond lung cancer. Speaker 400:41:42Great. Thank you very much. Speaker 200:41:44Thank you, Yoko. Have a good day. Operator00:41:48Our next question comes from the line of Dan Brennan with TD Cowen. Your line is open. Speaker 200:41:55Hey, good morning. Speaker 500:41:55This is Kyle on for Dan. Thanks for taking the questions. I had a quick one on biopharma or pharma partnerships. When should we expect these will be broken out in the revenue build? Is this sort of taking longer than expected to become more meaningful revenue contributors? Speaker 300:42:12And how should we be thinking about that moving forward? Speaker 200:42:17Yes. Thank you, Dan, and good morning. So before we get into the breakdown of the biopharma revenue, I would like to highlight again our strong performance for this quarter in the top Right. This has been a 40% year on year growth with gross profit That has as well improved by 55%. So I think this is awesome and tells a lot about the scalability of our And the demand for our technology in the market, including the biopharma. Speaker 200:42:48Now regarding the biopharma, we, I think, have been always consistent that We wouldn't speak about the numbers until this reach a certain scale, but I will let our CFO, CEO, Ross, comment. Speaker 300:43:02Thanks, Kyle. So I think respectively in terms of disclosure, right, there's rules in IFRS around certain thresholds. You can assume we haven't broken that threshold as a percentage for a given year, not necessarily for a given quarter. So We're quite happy with biopharma performance this year and the quarter was up triple digits and it was a meaningful contributor sequentially as we had kind of guided And so we'll obviously have to revisit sort of our revenue disclosures for next year assuming The current trajectory continues, but overall, we're quite happy with our execution and performance and it was A nice driver of some of the strong growth in the period. And I think if we look to next year, certainly our Activity levels and the breadth of activity we have across our 3Ds of pharma remain quite robust and we look forward to being able to update you on that going forward. Speaker 300:44:01But overall, we're quite happy with Biopharma's execution. Speaker 500:44:05Got it. Thank you. And then maybe it's a bit too early to say, but Starting out in 'twenty four, should we be sort of in that 30% to 35% constant currency growth rate in line with your long term range? Or Could any of these new partnerships being aimed drive upside to that sort of long term range over the next few years? Speaker 200:44:25So Kyle, as you well know, we have a very predictable model, right, on our forward looking performance, Given the nature of our business in the clinical market, which is a consumption based business, where the net dollar retention of Our customers is pretty good. And so this already gave us indeed a strong baseline, Probably above 30% to grow year on year. And that's just you highlighted as we are now penetrating the biopharma Segment, this gives us room to eventually grow at a faster pace. Speaker 300:45:00Yes. And just to be clear, so again, we're not giving any formalized guidance today For 2024, but I think in total, as Jyrvi mentioned, given the high recurring nature of our business and Our high levels of visibility, which we've spoken about before, we obviously feel like we executed well this quarter and have executed well for this year. We've sold strong new logos all of this year and our net dollar retention has been accelerating. And so you can assume we're set up well As we enter next year, but obviously we're always mindful of the macro environment and all of the different changes that are happening. And so We're trying to be vigilant hence. Speaker 300:45:41We did have some cost actions as well that we announced today, but I think in total, We're feeling quite good given the macro challenges around us and feel like we can continue to deliver on what we committed to On a long term basis, but obviously we'll update you more formally next year as we report our 4th quarter. Got it. Thank you. Speaker 200:46:06Thank you, Kyle. Have a good day. Operator00:46:10The end, we do have another question, comes from the line of Mark Massaro with BTIG. Your line is open. Speaker 600:46:17Hey guys, congratulations on the top and bottom line beat in the quarter. It's also nice to see the addition of BioReference Labs. Could you just speak I think you guys alluded to it, but Sounds like they're initially going to use the MSK access products for liquid biopsy. I guess, can you just give us a sense for Which types of applications, by a reference might Use over time, is it the idea that they'll start with one application, but perhaps look at some of the other DDM applications as they start with the first one. Speaker 200:47:02Thank you, Marc. Good morning, and thank you for congratulating us as well on our performance. Indeed, we both beat the top line and the bottom line. And on the bottom line, I think the performance We had with €11,800,000 loss this quarter versus €19,300,000 loss Year on year, Q3 2022 demonstrates that definitively our technology can scale And that with the investments we've been doing over the last year, so we can continue delivering strong results. On specifically, bioreference, so as you know, our strategy is a land and expand model. Speaker 200:47:44So we like to land first our Customer on initial application to build the experience of the platform and the trust, and this opens up often other opportunities. I will leave Ross to give you a sense of what would come eventually later. Speaker 300:48:00So, thanks, Mark. And obviously, you highlighted sort of What we clearly intend to do with BioReference and frankly other large labs here in the U. S. And so They saw a really unique opportunity to be able to take on a market leading premier liquid biopsy capability in MSK And so that was sort of the initial talking point, right, with them around adoption. I think, to the degree, they get That's up and running internally and we'll obviously work with them hand in hand to get that to market in some of their key geographies as quickly as possible. Speaker 300:48:39We will continue to discuss other applications within the platform. I think certainly and I'm not speaking specific to bioreference, But in general with the conversations we're having with some of the large laboratories, we are seeing still quite a lot of interest in CGP. So in the impact product as well as others that we support on our platform and so we would expect that In our Myeloid capabilities where we are market leading. And so again, we're obviously very excited about this relationship. View them as a great long term partner in validation for us. Speaker 300:49:28And this quarter, we had nearly 80% growth in the U. S. Business in the Noren business. And Obviously, this will help set us up well for next year to continue that momentum. Speaker 600:49:39Excellent. I know in the past you guys have talked about MRD, minimal residual disease. Can you perhaps provide an update on how you're thinking about Potentially approaching the market, whether it's initially in heme or solid tumor. And if it is in heme, Which application you're targeting and roughly when you think you could roll out? Speaker 200:50:05Yes, it's a very good question, Marc. So As you know, MRD can indeed be many things, right? And in solid tumor testing, It can be quite similar as well to some liquid biopsy applications. So our main focus for next year will be in impanc, So in AML on MRD, and we will be launching new capabilities before June next year. That will enable us to further support our Inmonc clients. Speaker 200:50:37Today, The number of clients that we support in Inmont is important. We have grown our business as well nicely The last quarter, and so we see the ability to further grow our impact and our revenue within those customers, not only by Enabling them to identify why what is driving, and among cancer, but beyond that as well enabling them to Follow those patients launch internally with MRD capabilities as they are being treated. Speaker 600:51:12Excellent. Just maybe my final question. How are you guys thinking about the FDA proposed rule about potentially stepping up oversight of LDTs? Do you view that as an opportunity or potentially a near term cost? Do you think some of your applications might need to go through the FDA? Speaker 600:51:32And how are you thinking about any potential costs or opportunities to your business? Speaker 200:51:40So of course, that's something that we are following, to some extent, quite similar as well to what have been done in Europe with IBDR, Hence, the importance of having solutions which are compatible with these requirements. In our case, this means having solutions under design control. So we see that rather as an opportunity. We've always said that our platform would help scale The industry of precision medicine, industrializing data computing, and we believe that the recent questions, announcements And decisions are well in line with our strategy. Speaker 600:52:20Okay. That's it for me. Thank you. Speaker 200:52:23Thank you so much, Mark. Operator00:52:29There are no further questions at this time. Mr. Kamloong, I turn the call back over to you. Speaker 200:52:36So thank you all for participating to our earnings. I would like to thank all the Sofians as well for their hard work, commitment and passion in impacting around the world, while Delivering excellent technologies to hospitals and to biopharma customers. And with that, I would like To leave our investor community reminding you that we will be soon at the Evercore Healthcare Conference in Miami. Have a good day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSOPHiA GENETICS Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) SOPHiA GENETICS Earnings HeadlinesSophia Genetics, Precision for Medicine enter strategic partnershipApril 9, 2025 | markets.businessinsider.comPrecision for Medicine Partners with SOPHiA GENETICS to Expand Biopharma Services with the SOPHiA DDM™ Platform and its Liquid Biopsy CapabilitiesApril 8, 2025 | prnewswire.comCrypto’s crashing…but we’re still profitingMost traders are panicking right now. Bitcoin’s dropping. Altcoins are bleeding. The stock market’s a mess. The news is screaming fear. But while most traders watch their portfolios tank…April 18, 2025 | Crypto Swap Profits (Ad)Morgan Stanley Keeps Their Hold Rating on SOPHiA GENETICS (SOPH)March 20, 2025 | markets.businessinsider.comSOPHiA GENETICS (SOPH) Gets a Buy from BTIGMarch 18, 2025 | markets.businessinsider.comSOPHiA GENETICS Announces Two Million Patient Cases Analyzed, Marking a New Milestone for Data-Driven Medicine at NVIDIA GTCMarch 18, 2025 | prnewswire.comSee More SOPHiA GENETICS Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like SOPHiA GENETICS? Sign up for Earnings360's daily newsletter to receive timely earnings updates on SOPHiA GENETICS and other key companies, straight to your email. Email Address About SOPHiA GENETICSSOPHiA GENETICS (NASDAQ:SOPH) operates as a cloud-native software technology company in the healthcare space. The company offers SOPHiA DDM platform, a cloud-native software platform for analyzing data and generating insights from multimodal data sets and diagnostic modalities. Its SOPHiA DDM platform and related solutions, applications, products, and services are used by hospitals, laboratories, and biopharmaceutical companies through its own sales force as well as distributors and industry collaborators in Switzerland, France, Italy, rest of Europe, North America, the United States, Latin America, and the Asia-pacific. 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There are 7 speakers on the call. Operator00:00:00Ladies and gentlemen, and thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Saphia Genetics Third Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Operator00:00:33I would now like to turn the conference over to Katherine Bylon, Head of Investor Relations. Please go ahead. Speaker 100:00:46Good morning, and thank you for joining us on Sofia Genetics' 3rd quarter fiscal 2023 earnings call. My name is Catherine Baylon, and I'm the Head of Investor Relations at Sofia Genetics. Joining me today are Doctor. Yergi Kamlal, Our Co Founder and Chief Executive Officer and Ross Muken, our Chief Financial Officer and Chief Operating Officer. Before we get started, I'd like to remind you that the management team will make statements during this call that are forward looking within the meaning of United States Federal Securities Laws. Speaker 100:01:17These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Cautionary Statement regarding forward looking statements in the Form 6 okay for the Q3 earnings release on file with the SEC. Except as required by law, Sofia Genetics disclaims any intention or obligation to update or revise any financial Product pipeline projections or other forward looking statements whether because of new information, future events or otherwise. This conference call contains time sensitive information and is Accurate only as of its broadcast November 7, 2023. This presentation includes non IFRS financial measures. Speaker 100:02:00These measures are calculated by management and do not have any standardized meaning under IFRS. These non IFRS measures supplement IFRS measures, but should not be viewed as substitutes for IFRS measures. We have included a reconciliation of IFRS measures Speaker 200:02:33Thank you, Catherine, and good morning, everyone. We appreciate you joining us on our call today. I am pleased to share that our 3rd quarter results came in strong with revenue for the quarter growing 37% year over year On a constant currency ex COVID basis. Moreover, we achieved this growth while delivering meaningful expense reductions from the prior year period. Our operating loss on an adjusted basis was $11,800,000 an improvement of $7,500,000 or 39% from the Q3 of 2022, an improvement of $2,800,000 or 19% from the prior quarter. Speaker 200:03:17On today's call, I will start by reviewing our progress in the Q3 as it relates to our business execution And the continued growth of our Sofia DDM platform. I will then turn it to Ross Muken, our Chief Financial Officer and Chief Operating Officer, To share our financial results for the period in more detail, followed by our outlook for 2023. We will then end by taking your questions. Let me start with a review of the Q3 highlights and the execution of our business strategy overall. At Sofia Genetics, we are focused on driving the adoption of our Sofia DDM platform. Speaker 200:03:57Sofia DDM is a cloud based Software as a Service platform that helps health care institutions analyze and generate insights from patient data. SofiaDDM applies artificial intelligence to complex patient data, including genomics and radiomic data To help customers identify valuable patient insights, our platform provides insights on a wide range of diseases With applications spanning across oncology and rare inherited disorders. A key attribute of Sofia BDM platform We leverage our network of connected customers to create flywheel effect. As more customers use our platform to generate patient insights, The more powerful our insights become for the next patient. Customers who use SofiaDDM are constantly uploading patient data to the platform And providing inputs as they apply their expertise. Speaker 200:04:53As customers upload more data and provide more inputs, the AA algorithms, which power Ultimately, this allows healthcare institutions to benefit from the expertise and knowledge of 1 another and contribute to the collective intelligence of Sofia Didier. In the Q3, We made great strides towards driving further adoption of Sofia DTN. First, we added 18 new logo to our network. These customers join our more than 750 customers worldwide who use Sofia DBM, out Revenue through our Sofia DDM platform in the last 12 months through our dry lab bundle and integrated access modes By uploading their patient genomic data to generate insights. We aim to increase the usage of SofiaDDM by landing new customers And then expanding their usage of the platform. Speaker 200:06:00In that regard, our strong Q3 revenue performance is driven by robust utilization of Sofia BDM For the Q3 of 2023, analysis volume across our core genomic customers, which can be considered A close proxy for the number of patients analyzed was 79,784. This represents an all time high and is up 28% year over year. When excluding COVID-nineteen related analysis, Platform analysis volume was $78,709 for the Q3 of 2023, For oncology, we offer SofiaDDM applications for hereditary cancer testing, solid tumor profiling And hematological malignant system in addition to the newer applications we added in the market for homologous recombination deficiency, HRD and liquid biopsy. On that note, the later applications, HRD and liquid biopsy, were the fastest growing in the quarter, While more established applications like hereditary cancer grew in line with our company's overall growth. For rare and hereditary disorders, we offer applications to cover a wide range of diseases. Speaker 200:07:40Exome analysis represent The fastest growing applications in this area, and we are expecting to see a shift to larger gene panels over time. Overall, we saw both the oncology and rare and inherited disorders categories grow in line with our company's overall growth And reflects strong year over year performance, while COVID analysis were down year on year as expected. I will now share some highlights during the quarter across our geographies. In EMEA, I'm excited to highlight 3 customers from the Q3 who are using SofiaDDM to generate insights for their oncology patients. First, we recently announced 2 new customers who were attracted to SofiaDDM by the impressive analytical performance of our platform And especially by our new homologous recombination deficiency application. Speaker 200:08:40In August, Ciache Bordeaux, one of the largest hospital in France, went live on Sofia DTM and will be using our platform's HRD application capabilities. In addition, Instituto Romagnolo Perlo Estudio dei Tu Mori, I R S T, an oncology center in Italy, Went live on SofiaDDM in September and is also using our platform's HRD detection algorithms to help In October, We also announced a new logo with Onco Mediore Diagnostics, a German based hematology oncology clinical lab, We will use Sofia BDM's hematology application capabilities for chronic lymphocytic leukemia, CLL, a common type of blood cancer. We welcome these new customers to the SofiaDDM network and are excited to both serve them for their oncology needs as well as them Contribute their data and knowledge to the Sofia Didier community. In the LatAm region, we announced that we expanded our relationship with Laboratory of Curie, a laboratory in the capital city of Paraguay. Laboratory Opry became a SofiaDDM customer in 2022 using the hereditary cancer application of our platform. Speaker 200:10:07This quarter, they expanded their use of Sofia DDM by adding our HRR application for solid tumor testing. Laboratory Ocuri cited that the Sofia DDMs to their expected turnaround time for this application In the Asia Pacific region, Analysis volume in the Q3 grew above company average, benefiting from September of 2022 signings When we added 2 labs in India, Unipa Specialty Lab and MedGenome. These labs, in addition to the Tata Institute of Genetics and Society Center at Instern have all now completed their Onboarding and are using Sofia BDM to run about 12,000 analysts per year. These large volumes in India are notably Beyond what we see in other parts of the world and are underpinned by India's large population size, albeit At the price point established to suit the Indian market. In the Asia Pacific region, we now intend to build on these Early successes in India and in Australia with Peter Marks, which we discussed in detail last quarter and are looking to push into new territories such as Korea and Japan. Speaker 200:11:30We intend to leverage direct and indirect sales. In doing so, expect to add small number of sales headcounts in the region. Next, turning to NORAM. We are pleased with the solid progress we are making in the region. NORAM revenue growth accelerated sequentially And grew at an impressive 78% year over year, well above the company average. Speaker 200:11:55NorAm benefited from above company average analysis volume growth as well as contribution from biopharma. We continue to be excited with our growth in ORAM, Which we consider to be a relatively underpenetrated and high potential market for us. I would like to take this time to highlight 3 new customers we signed in Loram this quarter. In Canada, we signed Create Fertility Centre in Toronto. We'll be using Sofia BDM for fertility testing. Speaker 200:12:26And in the U. S, we signed website in Seattle And BioReference outside of New York City that serves over 19,000,000 patients annually. Both of those reference labs are adopting Sofia BDM for liquid biopsy applications, which I'm excited to talk about in more detail now. As you know, liquid biopsy technology has the potential to revolutionize the diagnosis and management of cancer. Today, liquid biopsies are being investigated across 3 main use cases: 1st, for diagnosis and therapy Selection for cases in which obtaining a biopsy of the primary tumor is not feasible, for example, in subset of advanced lung and prostate cancer cases. Speaker 200:13:132nd, for the longitudinal monitoring of response after onset of systemic anticancer treatment And third, for early detection of cancer. However, these promising use cases do not come without challenges. Liquid biopsies require highly sophisticated analytical capabilities to overcome a number of signal detection challenges, Such as low input material, we believe this is an area in which our algorithmic capabilities may be distinctive. Our analysis of over 1,400,000 genomic profiles to date means that we can confidently pick the signal from the noise. In addition, we have developed our own proprietary molecular barcoding technology required for liquid biopsy analysis, named Qumine, Which grants us freedom to operate in this important area. Speaker 200:14:08Both rare sight And by your reference, I've recognized the analytical performance of our liquid biopsy applications, and we're excited to welcome them to our network. In addition to these U. S. Customers, we also recently helped Saint Leon Berard, a leading cancer center in France, adopt Sophia Didier for liquid biopsy Overall, in Q3, our liquid biopsy analysis volumes grew 80% granted of a small base, And we look forward to seeing this trend continue as we bring on new customers. Speaking of expanding our liquid biopsy customers, I would like to take this opportunity to talk about our partnership with Memorial and Saint Catherine. Speaker 200:14:53As previously announced, we recently entered into a partnership with MSK to help them commercialize and deploy their liquid biopsy assay, MSK ACCESS. MSK Access is a liquid diopsy test that MSK developed in 2019 and successfully implemented clinically Over the last 4 years at the New York facility, performing over 10,000 analyses to date. This has been a resounding achievement for MSK, and they are facing a lot of demand for their test. However, they do not have the capacity to materially ramp up their testing volumes. Earlier this year, they turned to us with The shared vision of working together to decentralize the MSK access test and bring it to the world. Speaker 200:15:43The cloud based nature of the Sofia BDM platform uniquely positions us to help them escape break the data failures created We are currently in the process of working with MSK to decentralize and commercialize our liquid biopsy test. MSK access powered by Sofia DDM and make it available to customers across the globe. Customers around the world will be able to use Sofia Participants to our early access program will be able to use Sofia DDM before the end of 2023 With full commercial launch on track for the first half of twenty twenty four. In fact, by reference, the New York City lab we announced earlier today He is one of the first adopters of MSK access through this early access program. In addition to this initial traction, we also announced Ahead of ESMO in October that AstraZeneca will join the collaboration between us and MSK to help bring MSK access to a global scale. Speaker 200:17:01AstraZeneca will leverage its global footprint to help accelerate the deployment of MSK Access worldwide. In doing so, institutions around the world, including those in under resourced and under served areas, will Access to highly accurate and reliable data and insights. Beyond improving global health equity and enabling proper cancer testing, The network we're building with MSK will also be very important to accelerate standard recruitment of patients for clinical trials And in partnership with biopharma companies, accelerates the development cycle of new compounds in oncology. Having now covered the opportunity in liquid biopsy, let me move to a second fast growing application area, HRD. Identifying patients with homologous recombination deficiency, HRD, means identifying a biomarker that has Been shown to be associated with response to PARP inhibitors in advance of brain cancer. Speaker 200:18:06Since the launch of HRD detection capabilities on Last year, we have seen sustained strong growth in analysis volumes. We have now approximately 35 customers in routine usage globally. And in the Q3, we added Peter Mac in Australia to the list of countries Using SofiaDDM for HRD detection, which includes India, Brazil, Italy, France and Spain. We recently expanded our HRD offering covering CIBD and RU applications by offering a patented analytical algorithm named Ginger is a deep learning algorithm that powers our HRD detection capability. This algorithm uses low pass world genome analysis in conjunction with our proprietary deep learning algorithm to detect patterns of genomic scarring across the genome and as a result of mutations associated with or homologous recombination reaper. Speaker 200:19:11Ginger is technology agnostic and can be readily deployed In addition to our positive momentum in the clinical space, Biopharma continues to show interest in Sofia DDM for HRD and HR testing applications, Notably, in the context of liquid biopsy testing. Today, I spent a lot of time highlighting the process we have made Selling the genomics capabilities offered by Sophia Bien. While the genomics offering you've heard about today, Such as our HRD and liquid biopsy applications continue to be a key focus, we have always intended I am pleased to update you on our progress towards this multimodal vision. During the Q3, we released the multimodal module of the Sofia DVM platform, Sofia ClearPath. Sofia ClearPath provides customers with the ability to perform multimodal and longitudinal analysis of patient data. Speaker 200:20:26In order to ensure Sofia Perpas gets off a strong start in the market, in December of 2021, we initiated a multimodal As a reminder, this flagship initiative is a real world Using the study as a springboard, we have now activated Sofia ClearPath At all 30 of the sites, we are participating in the DIPLAN-four study and have recorded data on the 2,000 patients enrolled to date. Researchers from those 30 institutions are now using Sofia ClearPath to develop new clinical research hypothesis by The study data in a statistical aggregated manner. On that note, we are currently working on a first plan interim analysis of Around 600 patient cases, which will be reviewed by the study IDMC, an independent external data review committee This will notably be the opportunity to have a first readout Regarding the performance of the predictive models being developed, and we are looking forward to updating you The progress that we've made to develop our multimodal capabilities could not have achieved without the partnership of several key players in the healthcare ecosystem. In order to continue cultivating a community of joint collaboration, We proudly hosted the AI Driven Precision Oncology Summit in New York City in September. Speaker 200:22:18Attendees enjoyed 2 keynotes, One from Michael Berger of Memorial and SunCaterine discussing a precision oncology with decentralized solutions And the second from David Groux, Chief Medical Officer of Microsoft, who presented opportunities and challenges with AI in Healthcare. Then our Chief Biopharma Officer, Peter Casasanto, hosted a panel discussion with distinguished guests from AstraZeneca, Janssen, Henry Ford, Memorial and Sant'Catherine and Microsoft with a focus on AI's potential for enhancing treatment decision making and supporting development of novel therapies. Beyond this event, we attended ESMO, The European Society For Medical Oncology, where our meetings with prospects and customers focus on the excitement Surrounding the recent press coverage of our joint announcement with AstraZeneca and Memorial Sloan Kettering to broaden the adoption globally of NGS testing The impact of this memorandum of understanding and potential for them to participate in the movement, Enabling greater access to testing and eligibility for clinical trials and life saving therapies. And just this past week, NVIDIA, our partner for rapid and scalable genome sequencing data analysis, Joining us is in Washington, D. C. Speaker 200:23:56At ASHG to showcase our joint efforts. We look forward to continue working with all of our partners to advance our shared mission of improving our equity through data driven medicine. Now turning to financial priorities. I want to address our recognition of the constraint environment for capital and rate to rate that Sofia Genetics has the ability to reach profitability without additional capital, if necessary. We fully expect and will proceed with our forward budgeting under the scenario that will not be available. Speaker 200:24:39Our concerted efforts of cost containment are now in the 6th quarter of consecutive improvement, Excellent recurring items. In the Q3 of 2023, our reported operating loss was reduced by 30% year over year And by 17% sequential. On an adjusted basis, our 3rd quarter operating loss was $11,800,000 an improvement of 39% year over year and 19% sequentially. I would like to emphasize this, we do not take this challenging environment lightly. As such, We continually inspect our spending for opportunities and improvement. Speaker 200:25:25To that point, I would like to share that we have identified incremental select actions that can further expedite our path to sustainability. We're just underway with these actions and expect benefits to 2024 and onwards. So to conclude my section, Sofia Technology has been adopted by more than half of the 20 Leading global cancer participants. As technology markets have shown us, winning the early adopters can be helpful in longer term efforts We are in the early days of the movement towards personalized medicine for cancer, And our sense is that our momentum is increasing. And so in closing, I feel as excited today as ever that To harness data from the global community to generate actionable insights that contribute meaningfully to patient care and patient outcomes. Speaker 200:26:34And now, I will turn the call over to Ross to discuss our financial performance in more detail. Speaker 300:26:42Thank you, Yergi, and good morning, everyone. I'm pleased to share that despite the challenging macro environment, Sofia Genetics delivered robust performance in the Q3, continuing our commitment to sustainable growth. Turning to the financials. Total revenue for the Q3 of 2023 was $16,300,000 compared to $11,600,000 And constant currency revenue growth, excluding COVID-nineteen related revenue, was 37%. Platform Analysis volume, Including volumes from our integrated access customers was 79,784 for the Q3 of 2023 Compared to 62,276 for the Q3 of 2022, the 28% year over year growth was attributable to strength of our core platform analysis volume offset by the expected continued decline of our COVID-nineteen related analysis Excluding COVID related volume, platform analysis grew a healthy 36% year over year in the period. Speaker 300:28:00Core Genomic customers were 431 as of September 30, 2023, up from 424 in the prior year period, But down sequentially by 3 customers. This is primarily the result of a continued decline in COVID only customers. Core Genomic customer count included 14 new routine customers in the quarter. Annualized revenue churn rate quarter improved sequentially on a reported basis to 127%. Constant currency net dollar retention, excluding COVID related revenue, With 126 percent, strong NDR and a healthy level of backlog continued to provide us with a high level of revenue visibility going forward. Speaker 300:28:52Gross profit for the Q3 of 2023 was $11,300,000 compared to gross profit of $7,300,000 23 compared with 63% for the Q3 of 2022. Adjusted gross profit was $11,800,000 An increase of 56% compared to adjusted gross profit of $7,600,000 in the Q3 of 2022. Adjusted gross margin was 73% for the Q3 of 2023 compared to 65% for the Q3 of 2022. Total operating expenses for the Q3 of 2023 were $27,800,000 compared to $30,900,000 for the Q3 of 2022. Turning to operating loss, for the Q3 of 2023, it was $16,500,000 compared to $23,600,000 Thank you, operator. Speaker 300:29:57Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Speaker 300:30:00Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Speaker 300:30:03Thank you, operator. Thank you, operator. Thank you, compared to $19,300,000 for the Q3 of 2022. Lastly, total cash burn for the quarter was $15,800,000 compared to $27,400,000 in the prior year quarter, down over 42%. We are quite proud of this achievement and remain committed to sustainable growth moving forward. Speaker 300:30:27Cash and cash equivalents were approximately $133,000,000 As of September 30, 2023. Turning to our 2023 outlook. Based on our strong first three quarters of fiscal year 2023, We are reiterating all elements of our annual guidance. We continue to expect reported revenue growth to be at or above 30% in 2023, Constant currency revenue growth excluding COVID-nineteen related revenue for 2023 is expected to be between 30% 35%, In line with our previously highlighted long term expectations. Additionally, following on strong cost performance exhibited in the 1st quarters of 2023, Sofia Genetics continues to expect 2023 operating losses to be below 2022 levels. Speaker 300:31:16Furthermore, With respect to the anticipated revenue cadence for the final quarter of 2023, I would note we continue to expect utilization to be up sequentially. However, currency may prove slightly less favorable than previously anticipated based on current rates. Additionally, given the timing of certain revenues recognized in We would anticipate that the step up in 4Q revenue to be below what was exhibited in the prior year. This is all consistent with what we shared on our last quarterly update. Lastly, I wanted to provide a bit more on the remarks Yergi made with respect to our path to profitability and the required cost actions to expedite that goal. Speaker 300:31:57We recently decided to take some tactical headcount actions that will further optimize our operations, We're also continuing to focus our R and D efforts on increasingly high ROI projects. These are difficult decisions, But we have prioritized sustaining medium term revenue momentum at our previously targeted communicated levels, while ensuring a reasonable timeframe The cash flow generation. Additionally, we continue to revisit our discretionary expenditures and have identified potential savings for 2024 In systems, professional services and certain public company costs. The combined nature of these items will further our path to Profitability in 2024 and beyond, we commit to remaining vigilant and responsive to the environment and have attempted to balance our desire to execute Against a very large TAM versus the practical reality of becoming self sustaining. We look forward to providing more color on these matters Once we have completed our 2024 planning process. Speaker 300:32:59With that, I would like to turn the call back over to Yergi for the closing remarks before we take your questions. Speaker 200:33:07Thank you, Ross. We are proud of our performance, which we believe reflects our continued ability to execute on our vision And the opportunity ahead. Sofia's success stands on our ability to delight customers and continue driving more and more usage of our platform. I am encouraged and as confident as ever about the long term path that we are on. We have a fantastic opportunity to drive compelling returns In closing, thank you to our Sofia colleagues, partners, customers and investors for Joining us in our journey, without you, none of this would be possible. Speaker 200:33:47Please note, later this month, We are attending the Evercore Healthcare Conference in Miami. I look forward to continuing to update you on SOPIA's future success With that, operator, you may now open the line to the questions. Operator00:34:09Thank you. The floor is now open for your questions. Your first question comes from the line of Tejas Savant with Morgan Stanley. Your line is open. Speaker 400:34:40Hello. This is Yuko on the call for Tejas. Thank you for taking our questions. Could you provide more color on the BioReference Lab collaboration? How quickly could it scale and how meaningful could it be in terms of economics, Sofia? Speaker 200:34:53Yes. Good morning, Yuko, and thank you for your question. So before we go to the specifics on bioreference, I would like to remind people that recently we signed an important Memorandum of Understanding partnership with Memorial Sloan Kettering and AstraZeneca to basically Support decentralization of liquid biopsy testing and comprehensive genomic testing, profiling testing through the usage of Sofia BDM And ultimately give equal access to proper patient diagnosis around the world, including in the U. S, right? And so in that regard, indeed, we are having a lot of traction, a lot of demand on MSK Access. Speaker 200:35:38And I will let Ross give you some more color on the announcement of today with BioReference Lab. Speaker 300:35:45Thank you. So obviously, as you all know, They are one of the largest central and reference laboratories in the U. S. And they have a great presence in the oncology field and one particularly Amongst community oncology where we historically have not played necessarily. So this is a tremendous partnership for us. Speaker 300:36:06They are a great party to be able to serve their communities with this fantastic application. And for us, it's also really nice validation sight of our ability to be able to scale up to other large central and reference laboratories similar to what we've done in other parts Of the world as we've spoken about historically. So unfortunately, I'm not going to give you specifics on the economics, but as you well They have very large patient reach, particularly in a number of key geographies like New York and Texas And Florida. And so we would anticipate this being a really nice contributor later in 2024 and into 2025. And again, one of Hopefully, several updates we'll have for you on the early access program for MSK access, which to date is garnering quite a lot And as Jurgi mentioned, with our partnership or MoU as well with MSK and AstraZeneca, I think that will further help On that adoption and really drive access and awareness across the globe with respect to this really unique application. Speaker 400:37:20Great. Thank you for the color. And then also as a separate follow-up question, With interim for deep lung study readout expected before year end here, what metrics would be provided to demonstrate models predictive ability? And what do you think is the bar that you must meet to see strong adoption? Speaker 200:37:42So to start with, Yuco, Dipland for study was for us a means to do multiple things. And first was to build multimodal capabilities in Right, so the KerPass module. So in that regard, now this has been extremely successful. And we are being able to deploy in the context of deep lung, a curb path in 30 centers around the world. So that's something that is extremely important. Speaker 200:38:092nd, as we would demonstrate that we had the ability to compute Beyond Genomics multimodal data In a real world, real time setup, it was important to show that we're not only trusted by the hospitals To manage and compute their data, but as well to demonstrate there was a value for the biopharma. And you may remember that we had announced earlier this year A deal we had signed with AstraZeneca on the data side, where we are leveraging on Sofia Didier and Curpaz and the data that we've gathered In the context of DeepLang to help IZ in their development efforts. And last, to your point, which was for us potential cherry on the top of the cake, was to demonstrate that while you do so And you combine multiple sources of data, you may be able to anticipate response to therapies, expensive therapies like immunotherapy In a better way. So we are in that context today. So we are very proud to have deployed Sofia Kerpaz in 30 centers to have Gathered data points, which are 200 clinical radiomics, genomics data points on 2,000 patients across the centers. Speaker 200:39:28And as it should be, now it's an independent data monitoring committee that is meeting up in December and is going to present The outcome of our predictive algorithms independently in January next year. And so I would say Great. It's already what we have achieved, because we have demonstrated there was value of Onboarding 30 centers around the world on multimodal capabilities. And when it comes to The predictability of the algorithms, we will speak about that at the time of the reports from the independent data monitoring committee. Speaker 400:40:11Got it. And you also noted that the this predictive multimodal model can be applied to And are you viewing that expansion as a medium term or a longer term opportunity for you? Speaker 200:40:34So indeed, Yuko, For many years, we've invested in what we could call today our Sofia factory, where we've been Building algorithmic and workforce capabilities to be able to properly compute sophisticated, In the context of the multimodality, we wanted to demonstrate there was a value by doing that In lung cancer, because lung cancer is the cancer that is killing, I think, the most of the people around the world. We focus on non small single lung cancer and some unmet needs, demonstrated the value of doing that. But our Factory and algorithmic capabilities have already proven that similar outcomes could be expected in other cancer types. And in particular, I would highlight kidney cancer, uioblastoma and breast cancer, where we had internal efforts. And indeed, one could expect next year that we speak about our multimodal capabilities beyond lung cancer. Speaker 400:41:42Great. Thank you very much. Speaker 200:41:44Thank you, Yoko. Have a good day. Operator00:41:48Our next question comes from the line of Dan Brennan with TD Cowen. Your line is open. Speaker 200:41:55Hey, good morning. Speaker 500:41:55This is Kyle on for Dan. Thanks for taking the questions. I had a quick one on biopharma or pharma partnerships. When should we expect these will be broken out in the revenue build? Is this sort of taking longer than expected to become more meaningful revenue contributors? Speaker 300:42:12And how should we be thinking about that moving forward? Speaker 200:42:17Yes. Thank you, Dan, and good morning. So before we get into the breakdown of the biopharma revenue, I would like to highlight again our strong performance for this quarter in the top Right. This has been a 40% year on year growth with gross profit That has as well improved by 55%. So I think this is awesome and tells a lot about the scalability of our And the demand for our technology in the market, including the biopharma. Speaker 200:42:48Now regarding the biopharma, we, I think, have been always consistent that We wouldn't speak about the numbers until this reach a certain scale, but I will let our CFO, CEO, Ross, comment. Speaker 300:43:02Thanks, Kyle. So I think respectively in terms of disclosure, right, there's rules in IFRS around certain thresholds. You can assume we haven't broken that threshold as a percentage for a given year, not necessarily for a given quarter. So We're quite happy with biopharma performance this year and the quarter was up triple digits and it was a meaningful contributor sequentially as we had kind of guided And so we'll obviously have to revisit sort of our revenue disclosures for next year assuming The current trajectory continues, but overall, we're quite happy with our execution and performance and it was A nice driver of some of the strong growth in the period. And I think if we look to next year, certainly our Activity levels and the breadth of activity we have across our 3Ds of pharma remain quite robust and we look forward to being able to update you on that going forward. Speaker 300:44:01But overall, we're quite happy with Biopharma's execution. Speaker 500:44:05Got it. Thank you. And then maybe it's a bit too early to say, but Starting out in 'twenty four, should we be sort of in that 30% to 35% constant currency growth rate in line with your long term range? Or Could any of these new partnerships being aimed drive upside to that sort of long term range over the next few years? Speaker 200:44:25So Kyle, as you well know, we have a very predictable model, right, on our forward looking performance, Given the nature of our business in the clinical market, which is a consumption based business, where the net dollar retention of Our customers is pretty good. And so this already gave us indeed a strong baseline, Probably above 30% to grow year on year. And that's just you highlighted as we are now penetrating the biopharma Segment, this gives us room to eventually grow at a faster pace. Speaker 300:45:00Yes. And just to be clear, so again, we're not giving any formalized guidance today For 2024, but I think in total, as Jyrvi mentioned, given the high recurring nature of our business and Our high levels of visibility, which we've spoken about before, we obviously feel like we executed well this quarter and have executed well for this year. We've sold strong new logos all of this year and our net dollar retention has been accelerating. And so you can assume we're set up well As we enter next year, but obviously we're always mindful of the macro environment and all of the different changes that are happening. And so We're trying to be vigilant hence. Speaker 300:45:41We did have some cost actions as well that we announced today, but I think in total, We're feeling quite good given the macro challenges around us and feel like we can continue to deliver on what we committed to On a long term basis, but obviously we'll update you more formally next year as we report our 4th quarter. Got it. Thank you. Speaker 200:46:06Thank you, Kyle. Have a good day. Operator00:46:10The end, we do have another question, comes from the line of Mark Massaro with BTIG. Your line is open. Speaker 600:46:17Hey guys, congratulations on the top and bottom line beat in the quarter. It's also nice to see the addition of BioReference Labs. Could you just speak I think you guys alluded to it, but Sounds like they're initially going to use the MSK access products for liquid biopsy. I guess, can you just give us a sense for Which types of applications, by a reference might Use over time, is it the idea that they'll start with one application, but perhaps look at some of the other DDM applications as they start with the first one. Speaker 200:47:02Thank you, Marc. Good morning, and thank you for congratulating us as well on our performance. Indeed, we both beat the top line and the bottom line. And on the bottom line, I think the performance We had with €11,800,000 loss this quarter versus €19,300,000 loss Year on year, Q3 2022 demonstrates that definitively our technology can scale And that with the investments we've been doing over the last year, so we can continue delivering strong results. On specifically, bioreference, so as you know, our strategy is a land and expand model. Speaker 200:47:44So we like to land first our Customer on initial application to build the experience of the platform and the trust, and this opens up often other opportunities. I will leave Ross to give you a sense of what would come eventually later. Speaker 300:48:00So, thanks, Mark. And obviously, you highlighted sort of What we clearly intend to do with BioReference and frankly other large labs here in the U. S. And so They saw a really unique opportunity to be able to take on a market leading premier liquid biopsy capability in MSK And so that was sort of the initial talking point, right, with them around adoption. I think, to the degree, they get That's up and running internally and we'll obviously work with them hand in hand to get that to market in some of their key geographies as quickly as possible. Speaker 300:48:39We will continue to discuss other applications within the platform. I think certainly and I'm not speaking specific to bioreference, But in general with the conversations we're having with some of the large laboratories, we are seeing still quite a lot of interest in CGP. So in the impact product as well as others that we support on our platform and so we would expect that In our Myeloid capabilities where we are market leading. And so again, we're obviously very excited about this relationship. View them as a great long term partner in validation for us. Speaker 300:49:28And this quarter, we had nearly 80% growth in the U. S. Business in the Noren business. And Obviously, this will help set us up well for next year to continue that momentum. Speaker 600:49:39Excellent. I know in the past you guys have talked about MRD, minimal residual disease. Can you perhaps provide an update on how you're thinking about Potentially approaching the market, whether it's initially in heme or solid tumor. And if it is in heme, Which application you're targeting and roughly when you think you could roll out? Speaker 200:50:05Yes, it's a very good question, Marc. So As you know, MRD can indeed be many things, right? And in solid tumor testing, It can be quite similar as well to some liquid biopsy applications. So our main focus for next year will be in impanc, So in AML on MRD, and we will be launching new capabilities before June next year. That will enable us to further support our Inmonc clients. Speaker 200:50:37Today, The number of clients that we support in Inmont is important. We have grown our business as well nicely The last quarter, and so we see the ability to further grow our impact and our revenue within those customers, not only by Enabling them to identify why what is driving, and among cancer, but beyond that as well enabling them to Follow those patients launch internally with MRD capabilities as they are being treated. Speaker 600:51:12Excellent. Just maybe my final question. How are you guys thinking about the FDA proposed rule about potentially stepping up oversight of LDTs? Do you view that as an opportunity or potentially a near term cost? Do you think some of your applications might need to go through the FDA? Speaker 600:51:32And how are you thinking about any potential costs or opportunities to your business? Speaker 200:51:40So of course, that's something that we are following, to some extent, quite similar as well to what have been done in Europe with IBDR, Hence, the importance of having solutions which are compatible with these requirements. In our case, this means having solutions under design control. So we see that rather as an opportunity. We've always said that our platform would help scale The industry of precision medicine, industrializing data computing, and we believe that the recent questions, announcements And decisions are well in line with our strategy. Speaker 600:52:20Okay. That's it for me. Thank you. Speaker 200:52:23Thank you so much, Mark. Operator00:52:29There are no further questions at this time. Mr. Kamloong, I turn the call back over to you. Speaker 200:52:36So thank you all for participating to our earnings. I would like to thank all the Sofians as well for their hard work, commitment and passion in impacting around the world, while Delivering excellent technologies to hospitals and to biopharma customers. And with that, I would like To leave our investor community reminding you that we will be soon at the Evercore Healthcare Conference in Miami. Have a good day.Read morePowered by