Personalis, Inc. Q3 FY2024 earnings call

Key Points - Personalis is a leader in the MRD testing market, with the MRD market expected to reach $20B. - Third quarter revenue was $25.7M, up 41% Y/Y, driven by biopharma and VA MVP. - Three growth engines: Win-in-MRD (focus on cancer types, reimbursement, biopharma adoption, commercialization), leveraging ImmunoID NeXT platform for biopharma customers, and growing Personalis insight approach for enterprise customers. - Progress on Win-in-MRD: NeXT Personal launched in early access, collaboration with Tempus expanded, clinical evidence being built for reimbursement in breast, lung, and IO therapy indications. - Financials: Gross margin improved, operating expenses decreased, cash balance at $143.7M at quarter end.

Total company revenue for the third quarter of 2024 was $25.7 million, a 41% increase year-over-year. Biopharma revenue grew 96% year-over-year, driven by higher ImmunoID NeXT volume from Moderna's PCV projects. VA MVP revenue increased 85% year-over-year. Gross margin expanded to 34% in Q3 2024 from 19.1% in the prior year's same period, primarily due to favorable customer mix and operating leverage. Biopharma contributed significantly, with revenue from biopharma making up a substantial portion of the growth, and the VA MVP also saw growth. The MRD product, NeXT Personal, is showing positive traction with increasing clinical tests and physician retention.

Guidance - Fourth quarter 2024 revenue expected $15M-$16M. - Full year 2024 revenue revised to $83M-$84M, up from prior $79M-$81M. - Biopharma revenue expected $76M-$77M, including ~$24M from Natera. - VA MVP revenue ~$7M, down from prior $8M. - Net loss ~$85M, including non-cash warrant expense. - Cash usage $53M-$55M, down from prior guidance.

Risks - Uncertainties in reimbursement timelines for NeXT Personal indications. - Clinical trial timelines and outcomes for biopharma partnerships may impact revenue. - Market competition in the MRD testing space could affect adoption and revenue growth.

Q: Unidentified Analyst from Morgan Stanley asked about the rationale behind expanding the NeXT Personal patient sample quantity with Tempus ahead of reimbursement and balancing volume ramp.

A: Chris Hall and Rich Chen responded that the product is well-received, the expansion allows more reps to promote the product, and they're positioned for faster revenue growth post-reimbursement.

Q: Dan Brennan from TD Cowen asked about sequential growth in MRD or CGP revenues and opportunity before Medicare approvals.

A: Chris Hall and Rich Chen replied that Moderna drove most biopharma growth, MRD revenue from biopharma is starting to traction with longer buying cycles but positive momentum.

Q: Mark Massaro from BTIG asked about NeXT Personal's reception vs other MRD tests and resource deployment post-reimbursement.

A: Chris Hall and Rich Chen stated the ultrasensitive range is well-received, retention is high, and they'll deploy more resources post-reimbursement to scale commercial efforts.

Q: Thomas Flaten from Lake Street Capital asked about reimbursement for indications and impact of Merck/Moderna melanoma study on targets.

A: Chris Hall responded they aim for reimbursement on multiple indications, still pushing for $100M target despite melanoma study progress.

Q: Joseph from Needham & Company asked about predominant volume drivers for NeXT Personal and data sets driving awareness.

A: Chris Hall replied volume is seen across indications, TRACERx data and others have driven awareness of NeXT Personal's ultrasensitive capabilities.

Q: Li Chen from H.C. Wainwright asked about 2025 gross margin guidance.

A: Aaron Tachibana responded 2024 gross margin expected low 30s, 2025 guidance to be provided later.