Personalis Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2023

There are 6 speakers on the call.

Operator

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Caroline Connor, Investor Relations. Please go ahead. Thank you, operator. Welcome to Personalis' 2nd quarter 2023 earnings call.

Operator

Joining 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 and D. All statements made on this call that do not relate to matters of historical fact should be considered forward looking statements within the meaning of U. S. Securities laws. For example, any statements regarding trends and expectations for our financial performance this year and longer term, cash runway, revenue expectations and timing, reimbursement goals, Slides and booking of orders, products, services, technology, clinical milestones, the outcome and timing of reimbursement decisions, Expectations for our existing and future collaboration activities, cost expectations, the outcome of legal proceedings to enforce patents, the validity or enforceability of And our market opportunity business outlook.

Operator

These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with the SEC, including the risk factors described in our most recent quarterly report on Form 10Q. Personalis undertakes no obligation to update these statements, except as required by applicable law. Our press release with our Q2 of 2023 results is available on our website, www.personalis.com under the Investors section includes additional details about our financial results. Our website also has the latest SEC filings, which we encourage you to review.

Operator

A recording of today's call will be available on our website by 5 P. M. Pacific Time today. Now, I would like to turn the call over to Chris for his comments and second quarter business highlights.

Speaker 1

Thank you, Caroline. Good afternoon, everyone, and thank you for joining us. I'm proud of our team as we continue to execute well, pursuing near term milestones that we expect To fuel our revenue growth ahead. We made progress this quarter in deepening our collaborators for NeX Personal, preparing the test for clinical use this year, And lastly, establishing Next Personal as the assay of choice for global biopharma customers. Personalis He's uniquely positioned to grow rapidly over the next several years as we'll benefit from 2 very important developments occurring in oncology.

Speaker 1

The necessity of personalized diagnostic tests to monitor patients with cancer and the development of personalized therapies. Both of these shifts in cancer management require discriminating technology to eliminate the uniqueness of a patient's disease And the ability to provide actionable information to change the arc of their treatment. Personalis' technology platform Enables the solutions needed to impart the big shifts in oncology today. Earlier this year, We laid out our Win and MRD strategy to go after what we estimate to be a $25,000,000,000 monitoring market. Our product addressing this space is a tumor informed personalized liquid biopsy test called Next Personal.

Speaker 1

Our focused strategy involves deepening evidence and pursuing coverage in 3 cancer indications: early stage lung, Early stage breast cancer and immunotherapy monitoring. We focused on these cancer types because we believe that the ultra high sensitivity of our technology It's uniquely suited to both detect recurrence very early and also to guide treatment decisions in these areas. Let me elaborate about high sensitivity and what that means as it is at the heart of our strategy. We aim to achieve cancer detection levels down to 1 Part per million. What this means is that next personal may find residual or recurring disease when there is only as few as one Circulating cancer DNA fragment among a 1000000 normal DNA fragments in the blood.

Speaker 1

And we believe it can do this not just for a few patients, But consistently for most patients across many different cancer types and stages, we believe that X Personal can detect cancer well before competitive technologies and Importantly, it provides confidence that 1, when we detect cancer, we see it earlier when patient management can be modified to result in more favorable outcomes And 2, when we don't see cancer, the patient will likely remain disease free and may not need additional therapy. Over the last few months, we've seen early data demonstrating Next Personal's performance and we expect additional data to be published in our focused cancer types. On our last call, we mentioned that we were chosen by AstraZeneca and TRASER X for their MRD studies. AstraZeneca will use Nex Personal to explore ultra sensitive MRD For Clinical Research and Drug Development, we're working with the TRASER X samples and Doctor. Charles Swanton and his leadership group To demonstrate the value of an ultra sensitive assay such as next personal and lung cancer patients.

Speaker 1

I'll add more color to the TRASER X relationship And how the evidence develops supports reimbursement in a minute. But it's important to point out that these high end collaborations are validations of our technology and performance claims. We're proud that global leaders are choosing to work with us and we're thrilled that our ultra sensitive MRD capability is being recognized and deployed. At the heart of our win in MID strategy is to make progress with clinical evidence to support reimbursement for next personal. You may recall that our goal is to have reimbursement in one disease area by the end of 2024.

Speaker 1

While it's an aggressive timeline, We have already established key collaborators and studies in each of our focused cancer types and we continue to believe that this goal will be realized next year. We now have ANCHOR studies lined up in each of our key indications and are on target to be able to submit for coverage in 2024. Let's run through the focused indications. I'll start first in lung cancer where the TRASER X collaboration is our anchor study. The TRASER X consortium is led by lung cancer expert, Doctor.

Speaker 1

Charles Swan and teams at Cancer Research UK, the Francis Crick Institute And University College London. Previously, this group conducted research on prior generations of MRD assays And identify significant opportunities for detection improvement. The study will now deploy next personal to determine the clinical value of an ultra sensitive assay For early stage lung cancer and we expect data to be presented at an upcoming scientific conference this year. 2nd in breast cancer, we secured a relationship with Royal Marston in the U. K.

Speaker 1

Royal Marston is one of the leading institutions Globally in breast cancer and our work with them will focus on patients with early stage disease for several subtypes, including ER positive, HER2 positive and triple negative breast cancer. The Royal Marsden collaboration provides access to a large well annotated set of samples with clinical outcomes that we believe We'll provide a foundation for coverage in breast cancer. Additionally, our prospective trial V Stronger That's kicked off and we plan to enroll approximately 900 patients at up to 30 U. S. Sites.

Speaker 1

We made significant progress establishing committed sites this Quarter and expect to be enrolling patients this year. The BE STRONGER trial is a collaboration with the academic breast cancer consortium and criteria And will be carried out in 2 stages. In the first stage, samples will be collected from each patient for both pathological complete response or PAS CR And MRD analysis to assess whether MRD using next personal correlates with standard of care path CR measures. This Phase 1 involves a 5 year follow-up to further establish clinical validity and performance of NeX Personal at early stage triple negative breast cancer. We're expecting these studies and trials to showcase Next Personal's ultra sensitivity and ability to provide insights important for patient therapy decisions.

Speaker 1

3rd, we have a new collaboration with Valdem Hebron Institute of Oncology or VHIO to demonstrate and leverage the efficacy of next personal for IO therapy monitoring. Notably, the VHIO gives us access to a large well annotated bank of retrospective samples that are the cornerstone of our efforts to achieve reimbursement coverage For pan cancer I O therapy monitoring. This exciting collaboration joins existing work we've announced on melanoma and I O therapy The University Medical Center Hamburg Eppendorf also known as UKE and our previously announced Duke and UCSF relationship. As a reminder, we have presented compelling data already for the work with the UKE at the AACR at ASCO this year. Also, as we march towards establishing Personalis as a market leader in MRT, we remain on track to launch next Personal as a clinical laboratory developed test or LDT to be used by oncologists in the Q4 of this upcoming year Excuse me, this year.

Speaker 1

Our proprietary technology is key to enabling our next personal product to transform the cancer diagnostic market and it's also powering The next generation of our customers oncology biopharma products. We've made strong progress with multiple global biopharma customers this quarter, Including the recently announced collaboration with National Cancer Center Hospital East and Ono Pharmaceutical Company To better predict immunotherapy response for rectal cancer. This is yet another validation of our technology by a world renowned KOL And large pharmaceutical companies wanting to be a part of our journey to change the paradigm for cancer detection as well as treatment. We are investing heavily to win an MRD and our proprietary platform is a leap forward for the field. It's important to defend our investment, which is why we continue To aggressively defend our industry leading intellectual property portfolio and initiated a second patent infringement lawsuit against Foresight Diagnostics With 3 additional patents, which means we now have a total of 7 patents asserted in our lawsuits against Foresight.

Speaker 1

We have continued to expand our patent estate And we believe it reinforces our market leadership position. We intend to continue to vigorously defend the investment we're making in transforming the active management of cancer Through breakthrough personalized testing for the benefit of our investors, our customers and our patients. While NeX Personal has the potential to lead the industry in personalized assays To monitor cancer progression, equally exciting is how Personalisys technology is powering the development of the best personalized therapies. As announced earlier this year, we are a key partner for Moderna's clinical trial work as they pursue regulatory approval of their personalized therapy. As Merck and Moderna disclosed, they have begun enrolling patients in their Phase 3 clinical trial.

Speaker 1

This is an exciting development for us. And as we've said, while Still early days. We expect this to be a significant driver of revenue in 2024. With thousands of new cancer patients each year in the U. S.

Speaker 1

Alone, Our aspirations are for personalisis technology to power the development of the next generation vaccines and therapies as we're doing with our Moderna partnership. And turning to population sequencing, we were recently notified by the United States Department of Veterans Affairs 1,000,000 veterans I'm the PA, MPP that they exercise the next year option, which starts in September 2023. As a reminder, We received last year's task order for up to $10,000,000 late in September and our expectation is that we would receive the 2023 task quarter Late this coming September, we are excited to continue supporting the VA MVP and their initiatives. We're also excited And Doctor. Ken Witter has joined our Board of Directors.

Speaker 1

Ken brings to us an extensive experience set within the healthcare and molecular diagnostic In addition to his wealth of public company experience and we're pleased to have him working with us. It's an exciting time at Personalis and we continue to make progress on multiple We appreciate all of our partners and investors being part of our journey. With that, I'll now turn it over to Aaron to review our financial results. Thank you, Chris. We executed well in the Q2 and continue to meet our financial commitments.

Speaker 1

I will be providing detail about our 2nd quarter financial results and guidance for the Q3 and full year. Total company revenue for the Q2 2023 was $16,700,000 and decreased 8% compared with the same period of the prior year, Primarily due to the timing of customer sample receipts, biopharma economic headwinds, reducing unprofitable business And VA MVP revenue. Gross margin was 28.7% for the 2nd quarter compared to 25.1% for the prior quarter and 23.5% for the same period of the prior year. The sequential increase of 3.6% And year over year increase of 5.2% were primarily due to dedicating more operational resources to perform tests Required for clinical evidence generation, which is non revenue and therefore categorized as R and D expense. This includes sample processing for collaborations that include TRACERx, Duke, UKE and others.

Speaker 1

Operating expenses were $30,100,000 in the 2nd quarter and included a one time non recurring restructuring charge The $100,000 associated with the closure of our China Map operation compared with $32,200,000 for the same period as the prior year. Excluding the restructuring charge, our operating expenses were $30,000,000 and decreased $2,200,000 from the same period last year. R and D expense was $17,900,000 in the 2nd quarter compared with $16,300,000 for the same period last year and SG and A expense It was $12,100,000 compared with $15,900,000 for the same period last year. Net loss for the Q2 was $24,000,000 compared with a net loss of $27,500,000 for the same period of the prior year. The net loss per share for the Q2 was $0.50 and the weighted average basic and diluted share count was 47,700,000 Compared with a net loss per share of $0.60 and a weighted average basic and diluted share count of 45,600,000 for the same period of the prior year.

Speaker 1

Now onto the balance sheet. We finished the 2nd quarter with a strong balance sheet with cash and short term investments $137,200,000 In the 2nd quarter, our net cash usage was $11,700,000 Which was significantly down compared with the last 5 quarters, primarily due to completing the new facility build out And paying for it earlier this year. Also, the timing of payments received from customers was optimal in the second quarter, Which helped our cash flow. Now, I'd like to turn to guidance. For the Q3 of 2023, We expect total company revenue of approximately $17,000,000 revenue from Pharma tests, enterprise sales and other customers Of approximately $14,000,000 and revenue from population sequencing of approximately 3,000,000 For the full year of 2023, we tightened our revenue guidance range with the midpoint increasing.

Speaker 1

We now expect total company revenue to be $70,000,000 to $72,000,000 with oncology revenue from pharma, enterprise sales and other customers To be $61,000,000 to $63,000,000 population sequencing revenue to be approximately $9,000,000 and expected to be recognized during the 1st three quarters Net loss of approximately $103,000,000 which is $10,000,000 lower than the loss of $113,000,000 in 2022. Cash usage of approximately $70,000,000 which is now $5,000,000 lower than our prior estimate from last quarter And represents a reduction of almost $50,000,000 from 2022. We look forward to updating you on our milestones And as we make progress throughout the rest of the year. And with that, I will turn the call back over to the operator to begin the Q and A session.

Operator

We ask that you limit your questions to 1 and one follow-up so that others may have an opportunity to ask questions. First question comes from Tejas Lamont with Morgan Stanley. Please go ahead.

Speaker 2

Hey, guys. Good evening and thanks for the time here. Maybe to kick things off, Chris or Aaron perhaps, can you help us think through the personalized cancer vaccine opportunity? You flagged it a couple of times now as a very important growth driver for 2024. But any color you can share in terms of the revenue potential here?

Speaker 2

And how you sort of plan to expand your book of business now that you have Moderna and a couple

Speaker 3

of other people signed up?

Speaker 1

Hi, Tay Josh. This is Aaron. Thanks for the question. In terms of the PCV opportunity, so as we had mentioned in the prepared remarks, Moderna and Merck they both started the Phase 3 clinical trial enrolling patients in their multiple sites. In terms of sample flow to us, it's been a little bit slow right now.

Speaker 1

So it's our expectation that through the rest of this year here in the second half, No, the revenue could be moderate and start to ramp significantly as we get into 2024. On the last call, we did talk a little bit about the Natera business tailing off in Q1. And it's our expectation that the VAMP On the Moderna side, could potentially offset what we lose on the Moderna side of the business? Yes. I would note, it's Chris, that we've always talked that we have had Over the arc of time, 18 clients for personal cancer vaccines.

Speaker 1

Some of those companies are not around anymore, but many of Stowar and we believe we are by far the market leader partnering with companies with personal cancer vaccines, because the platform that we have has been Uniquely designed to be able to support people building those personalized therapies. And so we're positioned well as that industry comes together To be the partner of choice.

Speaker 2

Got it. That's helpful. And then, Alan, one quick one for you here. You mentioned, Natera, you're heading into 2024. How are you thinking philosophically about that contribution?

Speaker 2

Will you essentially assume it to be 0 when you guide with the possibility of a more modest sort of like step down if you will? And same question on the MVP side of things. Now that you have the renewal and you're expecting the task order in by the end of September here, should we expect sort of a 3,000,000 ish Contribution per quarter through sort of September of 2024?

Speaker 1

Yes. So we'll take the MVP one 1st, because that one's probably easier to deal with. In terms of MVP, so we expect an order at the end of September. We don't know exactly how large it will be. So our expectation or our estimates don't include anything in the Q4 of this year.

Speaker 1

We're assuming it's the same size as The last order, so we'll assume somewhere in the $9,000,000 to $10,000,000 range in 2024 probably fulfilled over the 1st 3 quarters of the year. Okay. In terms of the question on Natera, so consistent with our last call, We did have a revised agreement on volumes with Natera. So we've agreed to minimum quantities. And that agreement takes us through the end of Q1 with volume starting to taper off and we're seeing that here in Q2 or we saw it in Q2 down from Q1.

Speaker 1

Our expectation now here for the second half is things could be flattish from the Q2 through the rest of this year. In terms of what happens beyond that, it will depend upon what's happening with Natera's volumes. I think their volumes continue to grow. And to the extent that they do need an outsourced partner for additional capacity and capability, we could be that partner for them. And More to come here.

Speaker 1

We don't have exact clarity on the volumes into 2024, but we our estimates would include them tapering off In the Q1 timeframe at this point in time based on what we know.

Speaker 2

Very helpful. Thanks guys. Appreciate the color.

Speaker 1

Sure. Thanks guys.

Operator

Next question Patrick Donnelly with Citi. Please go ahead.

Speaker 1

Hi. You have Brendan on for Patrick. I wanted to start it off with the revisions the guidance, so you raised the midpoint by $1,000,000 mainly driven by the pharma and enterprise sales. I just wonder if you could provide any commentary or color on what's driving that confidence? Yes.

Speaker 1

So, great question. In terms of our confidence for The back half of twenty twenty three, we see the back half being a little bit higher than the first half. The funnel of opportunities With pharma for MRD continues to grow. And even though we haven't had a lot of revenue being recognized Earlier this year or even last year from pharma with MRD, we believe it's poised to take off later this year primarily because we're providing more clinical evidence Into the marketplace based upon what we're doing with collaborators. In addition, on the Natera side, so On the last call, we did mention that volume should start to taper off.

Speaker 1

We're seeing that volume is probably going to be flattish the second half of the year compared to what we saw here in the second quarter. Great. Thank you. And then Moving on to the cash usage for the quarter. So lowering the cash usage for the year from 75 to around 70, Can you kind of go through the puts and takes of what led to the decline there?

Speaker 1

Yes. So year over year, we're declining cash usage by about $50,000,000 In 2022, we had a heavy amount of investment, $45,000,000 to $50,000,000 for our new facility. Most of that is beyond us now. In terms of The headcount reduction that took place in the Q1, we reduced headcount by some 30%, which saved us $20,000,000 On an annual basis going forward from a cash usage standpoint, in addition, we've been looking at all discretionary spend and Being prudent in terms of what we can defer or reduce and not spend at all. Great.

Speaker 1

Thank you.

Operator

Sure. Next question, Mark Massaro with BTIG. Please go ahead.

Speaker 4

Hey, guys. Thanks very much

Speaker 5

for the

Speaker 4

questions. My first one is on the TRACERx trial. Charlie Swanton has used at least 2 other MRD tests in his work in lung cancer. It would be really interesting to hear what you know about why he chose Personalis as Nick, the 3rd or maybe the 4th test, what was it about the first couple of tests that may have had a limitation? And What exactly was the interest in the next personal test?

Speaker 4

And then as a follow-up to that, you guys talked about reading out A lung study, I believe later this year. Can you give us a sense for the size of that clinical study and what the endpoints are?

Speaker 1

Awesome. Mark, it's Chris. Rich is here and is going to jump in and talk about the Tracer S. A. Since he's worked with the collaborators, Hi, sir.

Speaker 1

It's a collaboration.

Speaker 3

Yeah. Hi, Mark. This is Rich. Great. Thank you for the question.

Speaker 3

So I think as you noted, Charlie Has been in this field of MRD testing for many, many years, looked at other platforms. And I think as many have noted, not just Charlie that there is a there are areas of Not just lung cancer, but other cancers where the 1st generation of tests did not was not sensitive enough to pick up The cancer. So I think that's a it's a large reason he chose to work with us. He noted that We have an ultra sensitive platform. He saw the promise of that very early on.

Speaker 3

We started working with him over a year, year and a half ago on this. So I think that was really exciting for him to be able to start this collaboration with us. And In terms of the data generation,

Speaker 1

we're and to think of

Speaker 3

it right now, we're on track to start to talk about this data Before the end of the year. And I think the data is looking encouraging.

Speaker 1

And to give you a step back, I mean, we've always seen it 1 part Per million, the personnel's technology being up to 100 times more sensitive and that gives us the opportunity to be able to see What others can't see whether it's standard of care of engineering or whether it's other assays in the marketplace. So we're really Positioned to be able to be a leap forward in MRD detection.

Speaker 4

Okay, great. And I know conceptually Actually, hundreds of patients have enrolled in the TRACERx trial. Is the idea that each of the folks that are still alive Would get a next personal test. And if that's true, can you talk about the opportunity for repeat time points because clearly MRD Has value over serial testing. So I'd just be curious to get a sense for what type of visibility you have The number of tests that you think you could generate over time?

Speaker 3

Yes. So that's a great question, Mark. So the TRACERx cohort is actually a retrospective cohort. So the collection has already been done for all these patients. And the great thing there is that Charlie and his team had Foresight to collect a lot of plasma along the way longitudinally for these patients.

Speaker 3

And now we know Because they've been followed up for many, many years, we actually know the clinical outcomes for these patients. So it makes sense for an ideal A cohort for us to test our technology on because in some sense we already know what the outcomes for these patients are and we can show that we can predict that Using our test. And we can also examine if we're going to be looking at data from all those time points that were collected And looking at sort of what kind of decisions could be made with all those any of those time points along the journey of the patient. And I think we're going to find that there's going to be utility in the test at various points in the patient journey and that's part of what

Speaker 1

we want to establish here. When we think if you step back, we've talked through the pipeline of studies across the 3 focused cancer indications And each one of those give us access to a large set of retrospective data set with multiple time points With clinical truth for us to be able to show the efficacy of the approach of an ultra sensitive assay in cancer types that have been hard Hard to inform on traditionally.

Speaker 4

Okay. That's it for me. Thank you, guys.

Speaker 1

Thanks. Thanks, Mark.

Operator

Next question comes from Swayampakula with H. C. Wainwright. Please go ahead.

Speaker 5

Thank you. Good afternoon, Chris and Aaron. Just to follow-up from the previous set of questions. So with TRASERx data that you would get at the end of this, obviously, You define your test a little bit better. And with that data set or with that experience, How would you monetize this beyond what is being done now?

Speaker 1

Well, so we'll be launching the test into the clinical market at the end of This year towards the end of this year, which means for the first time next person will be available to doctors around the United States to be able to use And that's significant because it will be one of the next entrants into the market and we're super excited about. We've got a lot of feedback. And we will take the TRACERx data. Ultimately, we expect it to be published at some point. And our hope is that that will drive The foundations of getting covered for the products so that we get paid by health insurance companies We're doing testing in early stage lung cancer.

Speaker 1

That's one snapshot. But the other snapshot of the business is that we have a large robust biopharma Set of clients with many of the big biopharma companies. They're all deeply involved in MRD usage For analysis and having great data sets to be able to inform those conversations helps us continue to get studies and be a further revenue driver. So we see that data along with the other data sets that we're working with Duke and UCSF and Royal Marston and DHIO etcetera. We expect all those to help us fuel additional conversations and or business from biopharma customers and form the foundation to To get insurance coverage, which ultimately will build a base of revenue around the clinical samples that we get from patients and doctors around the country.

Speaker 1

Is that helpful, RK?

Speaker 5

Yes. Thanks for that. Then on the BE STRONGER trial, that includes Like a 5 year follow-up in this breast cancer patients. So does that mean we will be continuously Getting data in the interim or is it one of those things where you have to wait for a longer Time period. To give you a little bit of data set.

Speaker 1

Yes. Rich can go into a little deeper. We did structure it With a early interim set of data that we can help that can help us, we believe coverage and ultimately payment and then clinical adoption in Triple negative breast cancer. So we'll get data well before the whole 5 year follow-up. Do you

Speaker 3

have anything to add No, that's exactly right. It's been specifically designed to follow-up for follow in those 5 years, but We have specific interim readouts on the data that are planned, where we can get an early glimpse as to, the performance at At earlier time points.

Speaker 5

Thank you. And thank you both for taking my questions.

Speaker 1

No, absolutely. Thanks for the questions.

Operator

Next question, Dan Brennan with Cowen. Please go ahead.

Speaker 1

Great. Thank you. Thanks for taking the questions. Maybe just Same with MRD. Just you mentioned in the prepared remarks about some presentations later this year.

Speaker 1

Just wondering if you can kind of flush out a little bit what we can expect from that?

Speaker 3

Yes. This is Rich. Thank you for the question. Yes, we're on track to hopefully be able to report out on some of this data Later this year, there is an upcoming conference at ESMO. It's a very large oncology conference In Europe, where we expect to present some of this early data on TRACERx And there's several other conferences later in the year that we're also targeting for additional data On the breast cancer side.

Speaker 1

And in terms of contribution from all the pharma relationships here, just kind of Apologize if you guys already discussed this, but what kind of impact is kind of assumed in 2023? And then how do we think about The potential opportunity for Pharma in 2024. Hey, Dan, this is Aaron. Thanks for the question. We didn't talk specifically about Pharma contribution, but in terms of what's baked into the guide, somewhere in the $31,000,000 to $32,000,000 range for pharma inclusive of TCV.

Speaker 1

Got it. And specifically for MRD, like what's the contribution specifically for MRD within that? Just trying to frame what the opportunity there is. Yes. So we haven't said publicly anything about these Exact numbers about MRD in terms of where it would be, but it's going to be single digit millions later in the year.

Speaker 1

So, I mean, it's a smallish piece, but we I mean, we're really super excited about the potential in 2024, 5. Especially as these data sets start to come together and we're positioned with all the large biopharma customers Because of the work that we've always traditionally done in the translational side with the Immuno ID platform to be able to capture a much bigger Piece of the spending and move into the MRD market. And we've gotten a lot of interest from those companies and they have Different types of trials and make offs and test with us, but we expect that to be a big driver Moving forward of the revenue in 2024, 2025, especially as we deploy the next personal assay In the clinical trials, because that's where some of the bigger opportunities are than just doing translational work For biopharma customers. So we're super excited to that be a growth driver. But the focus is right now is getting the evidence out there And marching towards coverage and getting doctors to be able to use it and do that in a really smart cost effective way In terms of sales and marketing and moving along the journey and then having the biopharma customers at the same point in time Be driving revenue as we go through that commercial journey.

Speaker 1

And have you guys discussed at all kind of how we think about pricing For biopharma side on a per sample or any kind of quantification there? We have not disclosed the pricing. But now the I mean the next person It is available and is being used by biopharma customers. There is a version of it, an RUO, which is substantially the same. We're just finishing the analytical validity work for the LDT.

Speaker 1

But it's being used right now by several biopharma customers. We've not disclosed pricing on that and we've not priced the clinical lab product yet. Got it. Okay. And then, Tom, I know you talked about maybe getting coverage by the end of next year.

Speaker 1

Amongst the 3 lead areas, I mean, have you disclosed Which of the 3? Is it along the breast or the eye?

Speaker 2

Which of the 3 are the No,

Speaker 1

I mean, in a perfect row, we get covered all 3 right at the same time. But our expectation is that we're driving data simultaneously. And what you have to do to get coverage as you know is the articles The data needs to be put into an article. It needs to be accepted in a peer review journal. We need to submit for coverage and then there's inevitably A period of back and forth and discussion that happens with Palmetto, right?

Speaker 1

That process is a little bit beyond our control because both getting the Data into publication is a bit on how the collaborators move etcetera. But then that process of getting it into the public domain and accepted There's another set of journeys. And so we don't expect that all three of those will go at the same rate. Some may go quickly in the publication, Some may go slower, some could go through a couple of different iterations, etcetera. And so that tail is largely Beyond our control, what we can control is getting the data to the collaborators, so that they can write the articles and get those submitted.

Speaker 1

And then there's a period of time in this journey Where there's a back and forth between the collaborators and the journals etcetera and then we'll take it from there and drive it Choice coverage. And so we're moving aggressively on these three fronts and our expectation is that one of them will go And we'll be able to make progress, but that's the way we're thinking about it. And we'll keep you all updated, obviously, as data is submitted and as Things come together, but that's the journey that we've laid out and we're committed to executing on. And sorry, the final one, just on the balance sheet, like how should we think about the need for financing and how you guys address that going forward? Yes.

Speaker 1

So we continue to extend our cash runway again. At the end of Q2, we had $137,000,000 of cash, Which is 2 years of cash runway. So in terms of where we're at today, we continuously Defer expenses where we can. We're being prudent in terms of discretionary spend. Obviously, we have clinical evidence Things like that, that we have to go get done.

Speaker 1

So we're spending where only where we need to. But in terms of where we're at today, right, short term, I think we're in good shape. Perfect. Okay. Thanks a lot.

Speaker 1

Thank you, Dan. Thanks, Dan.

Operator

Next question comes from Mike Matson with Needham and Company. Please go ahead.

Speaker 1

Yes, thanks. I joined the call a little late. I apologize if you've been through this, but I figured I'd ask anyway. Just the So the MVP renewal, do you have a feel for how much revenue that's going to Generate, over the next year? Yes.

Speaker 1

So what we've said, Mike, thanks for the question. We basically said that we expect an order sometime late September this year. Don't know exactly how much it's going to be. So we're not assuming any revenue You fulfilled in the Q4 from that new order. And then in terms of 2024, our assumption sitting here today is that it's Same level from an order standpoint or volume standpoint that we had last year.

Speaker 1

So somewhere in the $9,000,000 to $10,000,000 range. Okay. All right. And then it looks like you've reduced the expected cash burn by like 5 It's a small change, but obviously in the right direction. So what's driving that?

Speaker 1

Well, we basically reduced expenses earlier this year and each quarter we continue to reduce expenses, right, and defer. Yes. Okay. All right. And then just the ramp down in Natera revenue, is that Still consistent with your prior expectations?

Speaker 1

It is at this point in time. And so we saw ramp down from Q1 to Q2 in terms of the Natera volume, our assumption right now is that it stays relatively flat from Q2 through the rest of this year. And then per our agreement with Natera, it could go down a little bit more in the Q1, but we'll have to wait and see. Okay. Got it.

Speaker 1

Thank you. Thank you.

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Earnings Conference Call
Personalis Q2 2023
00:00 / 00:00