Q3 2022 Sophia Genetics SA Earnings Presentation

So great to see so many of you there.

Highly encourage those of you who couldn't make it to watch the replay posted on our Investor Relations site as it is a good read throughs to better understand who we are how we sell how we innovate and how we grow sustainably.

Now, let's get back to the Q3 highlights.

Starting off with a new customer adoption.

High level overview of the reporting period and with one more quarter to go in 2020 to momentum in our business continues to be robust on a global basis.

Much like last quarter customer growth proved to be resilient, we're spending our time focused on advancing <unk> growth strategy by building long lasting relationships with customers to further increase and diversify the platform network.

With that then we added 17, new logos in Q3.

The steady momentum of Onboarding, new customers demonstrate our consistent execution and the universal nature of a competing offering.

In fact, which was very much validated during my recent travels with our sales team spending important face to face time with our customers.

Embedded reiterating that while global growth is a priority we remain highly focused on accelerating our penetration of North America.

This region represents our largest potential clinical market at an estimated 80 million Golar, where we continue to see positive developments.

I remain pleased with our progress of months already in collecting sales activity with respect to new clinical customers in this region.

The growing demand remains balanced between academic medical centers and large centralized lab.

Beyond North America, and Europe I'm also pleased to highlight some momentum we experienced in Asia Pacific and Latin America, which validates our vision of advancing the practice of data driven medicine globally.

Amongst our new deals one in the third quarter several of them are important to highlight as they are the first clinical institutions in their respective countries to adopt PSA charging solution, which is incredibly exciting.

These deals include unit, Pos and <unk>, which are two of the largest clinical labs in India. The Prince of Wales Hospital, one of Hong Kong Premier institutions, and also the National Institute of genomic Medicine, a leading research laboratory in Mexico.

We are thrilled to get our foot in the door with each of these countries to their initial utilization of PSA charging solution.

Later on the call you will also hear from Philip who will talk about the significant milestone with new clinical results. We presented two weeks ago at the annual conference of the European Society of gene ecological oncology that validates the power of Sofia They charging solution.

We're highly encouraged by this result, and do it as another compelling proof point that will help further adoption of our platform.

Broadening and deepening our existing customer relationship is crucial to our growth strategy as we employ a land and expand sales model typically of many software companies.

Our approach has always been about ensuring that new and existing customers recognized the full range of application that the Sofia DBM platform can provide.

As customers continue to benefit from the value of Sofia DBM their utilization increases.

Total recurring platform customers grew to 383 in the third quarter of this year up from 375 customers in the third quarter of 2021.

The total number of classroom analysis was approximately 62000 in the third quarter, representing flat growth compared to the prior year period.

This result stems from the growth in our core platform analogies volume being offset by continued slowdown of COVID-19 related analysis volume.

However, excluding COVID-19 related volumes transform analogies grew approximately 11% in the period.

Our oncology portfolio performed well during the third quarter.

<unk> expense was driven by triple digit growth in HRD analogies volume and continued momentum in solid tumors.

Geographically, we saw balanced growth from neuron and notably strong contribution from Latam and APAC, while EMEA underperform, mainly due to continued challenges in Turkey.

Furthermore, I am happy to report platform analogy volume I started the first quarter on a very strong note and underline our business model resilience.

Challenging macroeconomic environment.

In conjunction with landing new customers and expanding their cross application utilization, we remain competitive by also focusing on expanding and enhancing our menu of offerings, which Felipe will take you through in more detail now Felipe.

Thank you <unk>.

And good morning to all of you.

My name is Philip <unk>, and I'm, the Chief Medical officer atrophy of genetics.

Today's call I will be discussing our menu expansion efforts and the progress we sold east area in the third quarter.

And so our teams are laser focused on driving innovation across our menu offerings.

Having users, which frequent updates incorporating new features new applications, new leader modalities and new services.

We feel great excitement around the pace of our product development as we accelerate towards the future generation of our solutions and technology.

There are three specific efforts that I would like to highlight today with respect to our recent progress on the expansion of our menu offerings.

First suggests HIV solution, which you heard you speak about earlier on the call.

Second our groundbreaking new collaboration with Memorial Sloan Kettering Cancer Center.

And third our care path.

This module deployed on the Sofia platform.

Let's start with Sofia assay charity solution.

Two weeks ago, we presented the first dataset on the clinical validation of our CE IBD HIV solution at the European Society of Gynecological Oncology Congress.

We shared robust data demonstrating that our decentralized solution is highly concordant with the centralized different methods.

Also highlighting the high reproducibility of results generated by our technology decentralized.

In addition.

Consolidation or nearly 200 samples from the Delta one confirmatory clinical trial conduct.

Advanced ovarian cancer is very much in line on the progression free survival navigation metric.

This update provides clinical guidance for practitioners in Europe by demonstrating the ability to identify HRD positive ovarian cancer patients.

Potentially benefit from first line maintenance treatment with PARP inhibitors.

Results are validating the high performance of our assay and further demonstrate our algorithmic capabilities to be the signal from the noise, even when applied to a complex biomarkers, such as HRD and decentralized settings.

As Rick mentioned earlier, we are very pleased with our HRD market traction to date.

And see a long runway ahead of us.

Beyond ovarian cancer, we also see potential for <unk> HRD to be one of them going forward in other tumor types, such as breast cancer prostate cancer or pancreatic cancer as well as in other areas of synthetic authority at large we view it charges total addressable market to be approximately $800 million.

Shifting to the next effort.

Yeah, we don't work alone.

We partner with other like minded mission driven institutions with a shared objective to advance the practice of medicine to improve patient outcomes.

As announced at our Investor Day.

Credibly excited to be working on a strategic collaboration with Memorial Sloan Kettering, which is among the most prestigious cancer centers.

States and across the world.

Our collaboration will initially focus on two main areas one work with an escape to bring the appropriate <unk> assays to the world.

By Decentralizing assays, such as Mes get impact for comprehensive genomic profiling and potentially other similar technologies for liquid biopsy testing.

Second collaborate on Msas longitudinal clinical genomic therapies to generate novel insights and potentially new applications on the shipyard Carefirst module.

We see this partnership with MSG as highly synergistic whereby we can leverage our technological infrastructure global decentralized network of health care institutions, and algorithmic capabilities to get or we are doing this case deep clinical expertise in oncology and preparatory assays and datasets.

Our shared vision with Msas to expand access to world class data, including to our current network and further expand the collective intelligence of our Sofia the GM platform.

I've mentioned the collaboration also intends to combined miscues rich precision oncology data from their extensive there are various of over 65000 patient profiles.

<unk> module, which we intend to jointly leverage to support our efforts in the Biopharma space.

He will further expand upon this later on the call.

Overall, we are thrilled to work with and escape and believe it will help drive further penetration in the clinical and Biopharma end markets.

This is a new type of partnership with Sofia, and we intend to replicate similar collaborations with other leading academic medical centers across the world.

This type of relationship enables open innovation, where we leverage on the content already developed by academic medical centers to add applications and further.

Platform without reinventing the wheel.

In this context, we are very excited about the opportunity to continue partnering with organizations and in digital transformation of health care.

As we leverage our combined capabilities to spark innovation.

I would like to highlight is subject yet that which is a new module of the Sofia platform that enables the analysis of multimodal intermodal health care data.

You have heard us speak about this module in past earnings calls and more recently at our Investor Day, we're outperforming a demo of its core capabilities.

As a reminder.

Our chairperson coffers events capabilities around data visualization cohort king and eventually prediction to a single comprehensive events across oncology patient journey.

We anticipate that this module we'd be interested the biopharma community as it helps lifesciences customers generate new insights leveraging on our Ria will get upset and next generation patient stratification strategies, we feel great excitement about this new module and believe it will uniquely position Sofia typically you're in the health care space.

If you actually Ipass is currently in beta testing in select health care institutions in the U S and in Europe .

This initial deployment of Sofia I care about is taking place in the context of our ongoing international different foreign initiatives.

Which aims to pretty good response to immunotherapy at the individual patient level.

In the context of catastrophes non small cell lung cancer. We are very pleased with the continued strong traction and enthusiasm around the platform. We continue onboarding top tier sites, such as Mayo clinic, who recently joined the initiatives and we are proud to announce today.

To reach 1000 patients enrolled which is a fantastic milestone in our journey.

Coming back to serve you on Japan.

Efforts have been focused on getting this new module into the hands of users to <unk>.

Actively collect feedback before its official launch expected in 2023.

In this context, we were very happy to have Umass Memorial Medical Center recently become the first such users in the U S.

To date, we have had great response from both clinical and Biopharma stakeholders.

So <unk> is one of the key be seeing technological links to bring precision medicine to scale we.

We believe that we are only scratching the surface here and we see this opportunity extending well beyond lung cancer into other cancer types in the near future.

On that note. It is important to note that there has been recent updates in the U S regulatory environment, which we view as a positive for US if you have two aircrafts over the long term.

Last month, the FDA issued new guidance concerning clinical decision support software that will embargo space.

We welcome the increase in regulatory requirements, which we see as a net positive because we believe that's higher quality standards may contribute to increased adoption once in the market.

Taking a step back we want to remind you that continuously expanding our menu of offerings is one of our core strategic pillars and Sofia.

The tree highlighted examples of the HRD solution.

Collaboration with Dennis King as well as progress on our shipyard surpass module all demonstrate our steadfast commitment to constantly invest in this effort. We look forward to updating you more on this front in the future.

And with that I will now pass it back over to Juergen to continue on with the rest of the Q3 business highlights. Thank you.

Thanks for that now.

Now I'm going to dive into our advancing Biopharma strategy.

This represents a sizeable and enterprise penetrated market opportunity for us, we're making excellent strides in enhancing our business within this important customer base and believe there is significant market share that remains to be captured.

Our focus continues to be on promoting our growing menu of offerings, which we believe uniquely positions us.

At Investor Day, our Chiefs Biopharma officer, Peter Centaur introduce of yes, three D data development and deployment, which signifies our framework for growth in terms of our offerings to the biopharma market.

Starting off with the first B data.

Our ability to capture real world with intermodal data and clinical routine in real time presents a unique value proposition to our biopharma customer base.

When paired with the rich dataset coming from partners like M. S. K as well as Biopharma his own clinical trial data, we can really help our customers to better understand the differences between our control environment such as in a randomized clinical trial versus a real world setting.

Layering in our own proprietary AI technologies and algorithms allows us to take it a step further and begin to derive meaningful insights from all of this multimodal data, which can empower our customers to design better trials and stratify the right patient populations even probe.

Early signals of which patients are likely to respond or relapse when given a certain therapy.

The 70 development refers to our ability to partner alongside Biopharma to develop new genomic solutions and or predictive algorithms to select the right patient for the right drugs at the right time.

This is the essence of precision medicine.

At our Investor Day, we announced an exciting new partnership with bounded by Youre, a U S based biotech company, which develops innovative therapies targeting extra chromosomal DNA across a range of solid tumor.

To select the right patients bundles that you developed a prototype algorithm to look at Michigan signatures and our shared vision with them is to leverage on our knowledge base to further enhance its algorithm and the tight across many people ngf's technology from the <unk> platform in a decentralized manner to estimate issue.

Report there are clinical trails and increase the access to patients worldwide.

As of the third key deployment, we can help accelerate students progression of patients globally that might benefit from targeted drug therapy by deploying appropriate theory and commercial solutions on our platform.

This is exactly what we're doing with our novel HRD solution.

Currently partnered with Astrazeneca to expand access to <unk> HRD testing across laboratory retail institutions around the world.

And so far HIV has been deployed in over 30 institutions across 10 countries, which is great.

Overall, the three DS are fueling our conversations with key stakeholders in the Biopharma industry.

And it is clear that our value proposition continues to grow with the expanding scale of our medical model data and continuously improving predictive algorithms.

And speaking of Astrazeneca, our partnership with them continues to progress nicely as we have a shared vision of the importance of decentralization to promote efficient actions.

I'm excited to say that we are expanding our scope of work with them beyond HIV and in a morbidity modal capacity across the three DS.

We will have more to update you on this front in the coming months.

Furthermore, tomorrow, we are hosting an exciting panel discussion.

That is from Astrazeneca Emiscan op telephone only in Paris, and Felipe with Peter guests at Central are achieved by your from our Fisher as the motor rhetoric.

The event will take place in Switzerland at bio that are worth congrats.

Which is Europe's largest congress could bring big data topics in pharmaceutical development and healthcare.

The panel will discuss topics such as the importance of multimodal data integration to advance precision medicine, the role of AI and technology as well as how best to leverage the combination of these two in clinical practice.

Following the event.

Oster webinar with the main takeaways please stay tuned.

Turning back to our base with other strategic partnerships I'm excited to announce that we are deepening and materially expanding our long standing partnership with Microsoft to improve health care workforce globally.

Microsoft investment in the advancement of an extra rationale architecture will help us lead the way and improving mid single adult data correction development and deployment through care paths to elevate the standard of care for patients.

Microsoft will also at that scale. So that we are able to match the expected ramp in next generation sequencing volumes with competition driving down cost of sequencing and informatics, becoming increasingly important.

We are very excited about our expanding partnership with them and look forward to continuing to work closely together.

To close out the Q3, a light section I would also like to mention that I am very happy with our Sofia and so responding to the markets call for moderating operating loss in the near term and I'm very proud of the progress evident this quarter on opex. Despite the ongoing.

<unk> market challenges.

As Russ will discuss in his section shortly for continuing to actively monitor market conditions and remain focus with our capital to excel operationally as a company.

And with that I will now hand, the call over to Ross to get it to the financials Ross.

Thank you Jeremy I will begin.

My remarks by going through the financial results in more detail before turning to guidance.

We delivered steady results across the board in the third quarter total revenue grew approximately 12% year over year $11 $6 million in 2012 due from $10 4 million in 2021, despite significant FX headwinds, which negatively impacted our growth by approx.

In late 'twenty 100 basis points due to continued material depreciation of the Euro Swiss.

Swiss franc, British pound and Turkish lira against the U S dollar in the period.

Excluding the impact from Covid related revenues.

I think currency revenue growth was approximately 40% for the quarter.

With respect to the sequential acceleration in core growth Biopharma revenue continued to ramp up impressively in the period and as Juergen mentioned, we remain very encouraged by underlying trends exhibited in this very strategic customer staff.

Our net dollar retention rate decreased to 109% in Q3 from 138% in the third quarter of 2021 as mentioned earlier. The decrease was primarily driven foreign exchange movements revenue generating and key transactional currencies and the U S dollar.

With respect to the annualized revenue churn rate.

It remains slightly elevated at 6%, albeit I would note. This is still within the range of what we would consider standard in the software industry.

The total number of platform analysis remained flat at 62000 in the third quarter. However, excluding COVID-19 related volumes platform analysis grew approximately 11% in the period.

Somatic oncology portfolio highlighted by triple digit growth in HRD and strong momentum in solid tumors outperformed our inherited in rare disease portfolio.

Geographically, we saw balanced growth from nor am and notably strong contributions from Latam and APAC, while EMEA underperformed, mainly due to continued challenges in Turkey.

Average revenue per platform customer increased to approximately $91000 compared to approximately $89000 for the prior year period.

Gross profit in the third quarter of 2022 with $7 3 million, an increase of approximately 11% compared to gross profit of $6 5 million in the third quarter of 2021.

Gross margin was 63% in the third quarter of 2022 flat compared to the prior year period. Adjusted gross margin remained strong at over 65% for the third quarter of 2022 up approximately 60 basis points relative to the prior year.

As <unk> previously mentioned I'm also incredibly excited about our expanded strategic partnership with Microsoft.

Our joint vision will yield numerous benefits for our clients and patients I'm also happy to share it will yield financial and operational efficiencies in the cloud further enabling <unk> to grow sustainably in 2023 and beyond.

Total operating expenses for the third quarter of 2022 were $30 9 million compared.

Compared to $27 million in the third quarter of 2021.

<unk> basis.

<unk> expenses for the third quarter of 2020 to $10 $1 million, an increase from $7 $7 million in the third quarter of 2021.

The primary drivers of the year over year increase or a modest increase in employee related expenses, including share based compensation as well as professional expenses, including those related to our deep lung for non small cell lung cancer study outlets.

Sales and marketing expenses for the third quarter were $7 9 million compared to $7 $7 million in the third quarter of 2021.

This moderate increase is primarily related to a continued step up in travel and conference related costs as we shared at our recent Investor day, we remain confident with our recent targeted commercial investments and continue to believe our field force is that the right scale to enable us to efficiently achieve our medium term.

Our operating plan.

General and administrative expenses for the third quarter were $12 8 million compared to $11 7 million in the third quarter of 2021. The increase was primarily driven by modestly higher employee related expenses, including share based compensation as well as an increase in insurance related expenses.

Operating loss in the third quarter of 2022 was $23 6 million compared to $25 million in the third quarter of 2021 adjusted operating loss in the third quarter of 2022 with $19 3 million compared to $17 million in the third quarter of 2000.

'twenty one.

With respect to our operating discipline I am encouraged to highlight this is the second straight quarter in which we have recorded an improvement in our operating losses.

Spite the continued quarter over quarter improvement in constant currency revenue growth ex Covid, we remain focused on our efforts to continue monitoring our operating expense growth as we exit 2022.

Net loss for the third quarter was $23 $3 million for a loss of 36 per share compared to $21 2 million or a loss of 35 per share in the third quarter of 2021 adjusted net loss in the third quarter of 2022 with 19 million.

Or a loss of <unk> 30 per share compared to $18 million or a loss of <unk> 30 per share in the third quarter of 2021.

Cash and cash equivalents were approximately $189 2 million as of September 32022.

Turning to our full year outlook, we are reaffirming our previously provided guidance of constant currency revenue growth in the range of 30% to 35% for the full year 2022 based on our latest view of the impact of movements in foreign exchange rates between the U S dollar and our key transactions.

Currencies, including the Euro the Swiss franc, British pound and Turkish Lira, we now expect full year 2022 reported revenue to be at the low end of our previously provided range of $47 million to $49 $5 million.

No based on the latest FX trends and forecast, we now contemplate a total FX related headwinds for 2020 to an excess of $6 million.

Up by more than $2 million from our prior estimate.

Overall Q3 was another successful quarter as we continue to execute our sustainable growth strategy balancing the path toward profitability with building the foundations for our bright data driven future. This completes my section and I will now turn the call back over to <unk> for closing remarks.

Thanks, Russ dosing.

Dosing of todays call. The important takeaway is that our business has great momentum.

We're growing and steadily expanding our current base of business across the world are Sofia DBM platform is unmatched in the market as we are <unk> in this unique category of software, which are security resonated deeply with the health care industry at large.

We continue to see growing demand for our offerings, both in the clinical and Biopharma market.

As we remain focused on delivering value to the organizations, who continue to put their trust in us.

To that end I would like to take a moment to thank the <unk> for building innovating in selling the offerings setup, a low dose to be where we are today.

We couldnt achieve our results without a collaborative effort in support of the interiors of CFM.

Thank you again for joining us on our call today.

And I look forward to seeing some of you in a reason that at the credit Suisse Technology Conference later in demands.

And with that growth Philip and I are happy to take your questions and we will now turn into back over the operator.

Operator, please open the line for questions.

And ladies and gentlemen at this time, we will begin the question and answer session.

I'll ask a question you May press Star and then one on your Touchtone phone.

We are using a speaker phone, we do ask that you. Please pick up your handset prior to pressing the keys to ensure the best sound quality.

Withdraw your question you May press star into once again that is star and then one to join the question queue, we will pause momentarily to assemble the roster.

And our first question comes from payoffs Savant from Morgan Stanley . Please go ahead with your question.

Hi, this is neil on for pages.

To start you mentioned the updated FDA guidance on clinical decision support software any implications for the regulatory cost burden for care, possibly look to enter the clinical market and how should we be thinking about R&D spending trends in that context.

Yes. Thank you for the question.

Indeed, right as you may have seen the FDA come with our new guidance when it comes to CBS and software as a medical device.

And so today there is no impact in our plan for surplus, which I remind you is a clinical research to Reits that PFS, primarily using the context of the deep long haul airport and that will deploy it actually over the last months in tourist centers. So whats <unk>.

The other one being <unk>, Massachusetts and plan to basically be used and deployed by the end of the hearing to 30 sites that are using that are being on boarded and our deployment efforts. So nothing for us in terms of changing our plans, but as we highlighted in the.

In the presentation of our results we welcome in general more regulation in our space, because we believe that that can make the.

Market to be bigger and the adoption of these type of digital technologies.

This year in particular beyond the academic centers, one day in community hospitals.

And in terms of the budget.

Obviously, you saw a bit of a step up this quarter at least year on year in R&D and that was a mix.

Some of the engineering capabilities, we brought online as well as our deep lung related cost ultimately.

They'd already significant investments on the regulatory side and as you think about the plan.

On a longer term basis that we shared with you at the analyst day that had contemplated obviously none of the.

A number of these elements and so I would not expect from a pure financial standpoint at least at this point there could be any material shift in our investment needs related to.

At least that.

Piece of legislation, albeit again over time.

As we move to the clinical market there may be other elements, we may need to consider with respect to care path.

Understood. That's very helpful. And then I had a few quick questions on the multi year partnership with Microsoft So as it relates to your cloud and data management costs.

To frame the operational benefit how should we think about the margin contribution year over year and 23 from this agreement and will you still be utilizing other vendors for cloud services.

Yes. Thank you.

So indeed as you understood right. This partnership enables us to some extent as well to improve our overall cloud costs, but it goes beyond that then I think thats important to understand so our platform runs in Azure right and so the more adoption of Sofia <unk> and the better for Microsoft as well. So these parts.

Our ship really goes beyond what you are benign in terms of operating costs. So we are the plants, where we are working together on the commercial side. So that we can jointly.

For most of the offering of Azure and Sofia DB measure so primarily in the academic centers, where as well plans to work with.

Microsoft and Azure on modernizing our architecture and in particular in the context of anything we're doing in the win T mobile space.

And lastly, we may as well.

Together on leveraging on some of their capabilities when it comes to natural language processing to be able to gather data scale and presents them to our users in the academic centers, where and when they are using purpose for clinical research. So beyond that plus maybe you want to give some color as well on the rationale.

<unk> site right. So in terms of our cloud and compute costs, which are one of our largest buckets of cost overall this.

Obviously, it gives us pretty good leverage frankly, both on the Cogs and on the operating line because as you remember a number of our R&D efforts as well are happening in the cloud and so there are as well expenses there and so.

This will give us some degrees of freedom on both of those points, but I would say more importantly, if you think about particularly some of the development is happening in the sequencing space.

The anticipated uptick in volumes and the shift to larger panels like CGP or movement space like liquid biopsies or eventually even whole genome sequencing. This really puts us on a path given the importance of bioinformatics and most of those are all of those new and emerging applications.

That puts us on a path to really be able to serve the global community effectively.

Both from a cost and execution perspective, as these new types of applications really start to inflect and as the market continues to shift to where the amount of data production, it's going to be materially higher going forward.

In terms of.

Using multiple clouds, obviously, Microsoft is a tremendous partner for us.

<unk> is a market leader right, particularly in the clinical space and so we think the partnership with us and them is incredibly powerful.

ROA certain countries are specific use cases, where you may need to use another vendor, but as we see it at least over the next number of years with what we can do together with Microsoft There is an incredible amount we can help the customer base with and transform health care data finally into the cloud.

Got it I appreciate the helpful color. Thank you.

And once again, if you would like to ask a question. Please press star and one our next question comes from Julia Quinn from J P. Morgan. Please go ahead with your question.

Hi, Thanks for taking the question.

Getting the HRD triple digit strength you highlighted.

Alright, thank you share a little bit more power.

El Paso believes equal.

The clinical paradigm for both medical actually upside.

Any chance at all this quarter on that in terms of the on the call back to Mark.

Yes. Thank you for the question and Judy I will start and then I will leave the TD first of all to give more cover given we have presented some data at <unk> as it goes towards Europe .

The conference for clinical logical oncology. So indeed saw the taking a step broth rights. We have started basically developing our HIV capabilities about 18 months ago.

You have heard about it in our Investor day, and it took us less than 18 months from developing these capabilities in our platform with deep learning algorithms to having these capabilities approach today.

30 centers around the world, including.

10 countries right and we've announced today as well as a few of them adopting this HRD technology beyond Northern America, and the U S. So really I think demonstrating that this solution can scale strongly around the world and so along those lines, we have been focusing primarily on the ovarian cancer, so far but we do see a benefit of.

Potentially going behind.

And I believe in our Philippics, Daniel what's happening in the space and how would this market of HIV testing could grow.

Beyond what we are doing today in ovarian cancer and how the data that we presented at ESMO make us really confident on our unique capabilities.

Thank you Rajiv and thank you Julien Good question I think you could take a step back on HRD, we remain incredibly excited with the quality and the performance of Dfc.

You mentioned that we discuss during the call. We presented very strong data that is school couple of weeks ago.

That showed very good concordance with the reference methods and also the fact that we do.

To sustain our performance to decentralize testing, which as you know is also.

Complexity that we can sell to our technology and our footprint and then we were also showing that the clinical validation aspect on the progression free survival metric was pretty much in line as well. So I think all of that is great. Having a decentralized solution really helps us position to markets. We're very pleased with the market traction we have seen today lots of interest both from the clinical antibody.

On a segment on HRD.

Looking forward, we see very clear growth opportunities axes, one touching further market share in ovarian cancer <unk> beyond ovarian cancer tumors pancreatic prostate and others.

Even bigger pool to be explored.

It seemed particularly parity at large where because our solution looks at a lot of the causes and all the consequences would look us whole genome.

Feel we're incredibly well positioned to support also biotech more discovery type initiatives there.

Thank you.

So along those lines in the Judy as you heard from Tvs to have beyond the clinical research market. Indeed.

He now as well.

Different ways of leverage on this technology, we took the biotech and biopharma prospects and customers.

That's great and then in terms of.

I know you have the Astra and the Ambry projects ramping in the second half. This year. So just curious if those ramps are progressing in line with your expectations and whether the AFP accretion is.

Enough to offset the FX headwind that you guys are cool.

So yes, so we're seeing great traction so on we just shall we work mainly on the deployment side of the solution in Europe .

But we are seeing asphalt production again northeast HIV solution across the world with 30 centers in countries and indeed, you are right in the fact that you know.

<unk>.

ASP for each of these.

So I would say higher than our standard.

ASP, Inc. And so you could expect this would be for us.

I mean is welcoming our ESD overtime, although I would say in the meantime, as unit rates in the market that we see as well as some contraction now one for example sequencing price.

While this obviously creates a bigger market for us we don't really know how it will play livestock to they are positioning that for revenue with what's happening with sequencing cause it's going lower.

And data analytics to be coming more and more important likely in the context of HIV volume should go up and our expectation is that they had issued eventually stabilize so at least an hour more of those we're not predicting it to go significantly up I don't know rub 51, plus some more color, yes, so in general right.

Actually seeing.

Well first let me step back there so theres two elements Theres price right, which is sort of same store ASP, and then theres mix right, which.

I would say is the bigger determinant here, we saw pretty good asps in the quarter. Despite a significant headwind right on the FX side right. So obviously FX gets reflected on that ASP line, the mix shift to higher priced higher asps and more complex more data robust applications continues and thats whats driving.

<unk> much of that mix right pure price remains still capture probably in the low single digit strike.

It's really a function of where the market's going and to your point on a medium to long term basis as volume growth I would say is likely to continue to accelerate given what's happening with sequencing costs on a same store basis, you probably won't see very much price expansion in certain markets you may actually see.

Prices come down slightly but the mix shift is going to higher and higher priced.

Implications right. So if you think about HRD or CGP or whole genome liquid biopsy et cetera parts of our solid tumor application portfolio that's rare.

Many of those applications are sizable above what our average ASP today. So is the growth of those continues to drive the overall mix shift of the business.

We'll see ASP trend favorably on a reported basis, albeit same store may be.

A bit less of a positive story dependent on how things play out with.

The overall reimbursement schema for Ngls.

Hey, Thanks, Mike.

Thank you.

Once again, if you would like to ask a question. Please press star and one using a touchtone telephone.

Our next question comes from Kyle <unk> from Cowen. Please go ahead with your question.

Oh, Hey, good morning, guys, it's Kyle on for Dan.

For taking the questions.

So if we think about 'twenty three revenue growth at this juncture is the 30% to 35% constant currency growth really sustainable into 'twenty, three and what are the factors that might take growth above this level and as it stands right now do you have any thoughts on FX for 'twenty three.

So obviously, we're not in a position in the third quarter could you guide for 2023, obviously, though we did provide at the analyst day right. Our medium term look at revenue growth being in the range of 30% to 35% similar to what we've seen this year. Obviously, we've also talked to you about the number of other positive factor.

<unk>.

That have benefited us, including our momentum on the pharma side, but I would say in general our business and the momentum we see in the business is quite good right. So you should think of certainly that.

That longer term range being.

What we see over the period, obviously there'll be some years, where it would be at the lower end of that range in some years above or at the upper end and so ultimately that's where we're expecting or modeling the business to land and obviously, we're also doing that being mindful on investments, but overall utilization is quite good we know.

We had a very strong October .

So no change in terms of the macro impact on the trajectory and you can see the positive mix shift on Asps and we also called out in the script pharma being quite good and that's just starting to ramp right. So we've got quite a lot buttressing us for next year in terms of continuing.

Topline momentum and obviously as I've also spoken to in the past hour.

Existing backlog, but gives us a pretty good picture on forward revenue and so our visibility into next year I would say overall is quite good now FX can move around at the moment I would say, there's probably a slight headwind.

<unk> 23, just based on where currencies are as of 930, but but again with the unprecedented movements, we're seeing in the market that could be quite different.

When we next update you and so that's not one place, where we're going to be able to to nail it down in the current environment. Unfortunately.

Got it and then so in North America, I think by our math growth slowed to maybe about 9% in <unk> and maybe we don't know the exact comp there, but could you just provide an update on North America attraction.

Is there any range of growth that we should be expecting in the region moving forward.

So thank you okay. So the traction in North America actually it's very very good.

And I have been spending quite some time myself as well.

Customer visits lakey here, Nate was as well as the conference left clicking in Phoenix. So we're very encouraged with what we see so just taking a step back right. We have announced this great partnership with MSA.

That will enable us to leverage on some of their own data to collectively create.

And intelligence system to better serve other academic centers in the U S and around the world, we have been having great traction with Mayo clinic, as well and we've announced as well the fact that they don't know part of the.

<unk>.

We are seeing as well great traction with the centralized labs, especially when you consider the trend to macroeconomic.

Constrain hence the importance of.

Being more sound when it comes to operational efficiency and in that context, the importance of leveraging on the industrialized platform such as the one off Sofia.

Rather than reinventing the wheel investing on their sanctuaries data Sam piece tends to switch are still booked in months right. So really encouraged with what we see in Northern America.

And.

We should expect in North America to continue to grow along the lines of what we have shared in the past.

Got it thank you.

And once again, if you would like to ask a question. Please press star and one.

Our next question comes from.

Mark Massaro from BT IAG. Please go ahead with your question.

Okay.

Thanks for taking my question.

So at a high level could you discuss how the competitive landscape is evolving maybe.

Maybe as a result of the increase and regulatory requirements.

I know you mentioned at your analyst day that using them directly so I see that as a key differentiator.

Just curious if you run into any competitive dynamics in terms of price for analysis.

Yes, good morning, and thank you for your question.

So definitively we see a lot of positive trends right. So one being.

I would say competitive landscape. The fact that you have now many more components, which are rolling out <unk> to target the clinical market.

So let's talk about the sequencing costs keep going lower right. So with that we expect definitively volumes to go up.

In the clinical market, and we expect as well that academic centers and central us will need.

Industrialized partner to compute the growing volumes in genomics.

On genomics and I think probably it is what you referred to write you referred to what we have been doing Thats what was I missed gain in terms of data so we understand that.

There is more and more eagerness from some academic centers and get to pull data for research purposes, but as well to pull this data. So that we can better serve our clients across the globe. When it comes to decision, making leveraging on this intelligence and basically making sure that the knowledge that has been gathered some worse.

The other patients in directly in other centers.

Okay perfect. Thank you.

Maybe just a quick housekeeping question could you just comment on cash runway.

As I said, yes, you're prioritizing.

And remind us what your head count and I know you also talked about our long term revenue targets out of your analyst day. So just any thoughts you have on a path to profitability.

On the Microsoft partnership.

Sure. So we've been speaking and redone the Investor day about our plan when it comes to bus profitability and cash run rate, maybe Russ you want to reiterate that we set.

Yes so.

On the topic, obviously, we're happy to despite accelerating organic growth show, our second quarter in a row of sequential decline in adjusted operating loss. So we're obviously very focused on balancing our ability to deliver on our top line commitments, which I highlighted before as well as moving toward profitability.

<unk>.

I think the most important metric that I provided at the analyst day with respect to this.

Discussion is really around incremental margins right and so I think there you can look at what we highlighted in terms of the dropdown on future revenue and some of that also ties back to us being particularly aggressive on the capitalization side versus most software businesses and so as new revenue comes in that drop down will be quite significant and that will be.

<unk> down the overall losses as it converts to.

Profit ultimately overtime and so we think that again, if you if you sort of map. It out you can get a pretty good sense of when.

That crossover will occur on the head count side and again, we've talked about that being a predominance of our spend.

Head count remains roughly flattish at around 500, and a lot of the work we're doing.

Is aimed on the cost side efficiency with our labor base and making sure. We're very focused on what we're working on making sure. We're controlling a lot of our discretionary spend and also I would say on the R&D side ensuring.

We've got the highest.

ROIC type projects that.

That we're pushing forward. Additionally, what we're doing on the partner side also helps us with respect to leverage right, whether that's through selling channels, whether that's through R&D.

And getting sponsorship for different investments of programs et cetera, and so I would say, we're very focused on and again that sort of theme of growing sustainably and I feel quite confident on our ability to deliver what we discussed at the analyst day.

Great. Thanks, so much for taking the questions.

Thank you Vivian.

And ladies and gentlemen, with that we will be concluding today's question and answer session I would like to turn the floor back over to management for any closing remarks.

Yes. Thank you all so it was great because you are being with you today.

We're very much looking forward to update you in the future. So we really disclosing additional partnerships and contracts in the next months.

And for the ones that will be at credit Suisse Conference in Arizona at the end of the month. So we would very much looking forward to see you there have a good day.

And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We thank you for joining you may now disconnect your lines.

[music].

[music].

Good morning, everyone and welcome to the Sofia Genetics third quarter 2022 earnings Conference call.

All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May press Star and then one to withdraw your question you May Press Star two.

Please also note today's event is being recorded.

At this time I'd like to turn the floor over to you Jennifer Pottage.

Of Investor Relations Ma'am. Please go ahead.

Good morning, and thank you for joining us on the Sofia genetics Q3 fiscal 2022 earnings call.

My name is Jennifer Pottage, and I'm, the head of Investor Relations at Sofia.

Joining me today are Dr. Gordon Campbell, our co founder and Chief Executive Officer, Dr Fleet menu, our Chief Medical Officer.

Ross Me again, our Chief Financial Officer.

Before we get started I would like to remind you that management will be making statements. During this call that are forward looking within the scope of U S Federal Securities laws.

These statements are based on management's current views and assumptions, which are subject to material risks and uncertainties that could cause actual results or events to differ materially from those projected.

Additional information regarding these risks and uncertainties are included in the section entitled cautionary statement regarding forward looking statements and exhibit 99.2 of the report on form 6K filed today with the SEC.

Except as required by law Sofia genetics disclaims any intention or obligation to update or revise any 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 <unk> 2022.

Please note both the replay of this call and a copy of the earnings release will be available on our website in the Investor Relations section.

Thank you, Jim and Hello, everyone.

I'm pleased to share that our resolution for the third quarter remained strong with accelerating organic growth and improved operating leverage demonstrating our commitment to sustainable growth. Despite the negative impact from foreign exchange rates on our reported results.

Total revenue for the period grew 40% year over year on a constant currency basis.

Digging the impact from Covid related revenue.

This shows that even in an environment of challenging that the one we are operating today. So CHP is proving to be the preferred the <unk> analytics platform trusted by forward thinking healthcare institutions around the globe.

The combination of our differentiated technology robust commercial traction improving operational discipline and a world class Global team continues to drive steady growth and demonstrates that we are well positioned to thrive under the economic scenarios that may lay ahead.

We firmly believe we are in a great sports to grow as the leader, we see green and supporting the precision medicine software market.

I will start off today's call by reviewing our progress of the quarter as it relates to new customer adoption and platform consumption trends next you will hear from our Chief Medical Officer, who will discuss updates regarding our ammonia expansion strategy.

After which I will finish off with the Q3 business highlights by discussing our increased traction in the biopharma market and update with some of our strategic partnerships.

And finally, Russ Mckenzie, our Chief Financial Officer, who will go through our financial results and full year outlook in more detail.

But before I go on I would like to thank those of you who joined our team Bridgestone in virtually all of our first Investor day, we hosted a little over a month ago in New York.

It was a fantastic event and it was so great to see so many of you there.

I would highly encourage those of you who couldn't make it to watch the replay posted on our Investor Relations site as it gives a good read throughs to better understand who we are how we sell how we innovate and how we grow sustainably.

Now, let's get back to the Q3 highlights.

Starting off with the new customer adoption as a high level overview of the reporting period end with one more quarter to go in 2020 to momentum in our business continues to be well those kind of global basis.

Much like last quarter customer growth proved to be resilient, we're spending our time focused on advancing <unk> growth strategy by building long lasting relationships with customers to further increase and diversify the platform network.

With that then we added 17, new logos in Q3.

The steady momentum of Onboarding, new customers demonstrates our consistent execution and the universal nature offer a compelling offering.

Pending important face to face time with our customers.

Embedded reiterating that while global growth is a priority we remain highly focused on accelerating our penetration of North America.

This region represents our largest potential can you co market at an estimated 8 billion dollar where we continued to see positive developments.

I remain pleased with our progress of months already collecting sales activity with respect to new clinical customers in this region.

Growing demand remains balanced between academic medical centers and large since relate to that.

Beyond North America, and Europe I'm also pleased to highlight the momentum we experienced in Asia Pacific and Latin America, which validates our vision of advancing the practice of data driven maybe you can go back.

These deals include unit, Pos and <unk>, which are two of the largest clinical labs in India. The Prince of Wales Hospital, one of Hong Kong Premier institutions, and also the National Institute of genomic Medicine, a leading research laboratory in Mexico.

We are thrilled to get our foot in the door with each of these countries to their initial utilization of PSA charging solution.

Later on the call you will also hear from <unk>, who will talk about the significant milestone with new clinical results, we presented two weeks ago.

Utilization increases.

However, excluding COVID-19 related volumes.

Our oncology portfolio performed well during the third quarter and expense was driven by triple digit growth in HRD analogies volume and continued momentum in solid tumors.

Geographically, we saw balanced growth from neuron and notably strong contribution from Latam and APAC, while EMEA underperformed, mainly due to continued challenges in Turkey.

Providing users with frequent updates incorporating new features new applications, Utica modalities, and new services, we feel great excitement around the pace of our product development as we accelerate towards the future generation of our solutions and technology.

First suggests HIV solution, which you heard us speak about earlier on the call.

And third <unk> care if at all.

Weeks ago, we presented the first data set on the clinical validation of our <unk> HIV solution at the European Society of Gynecological Oncology Congress.

Advanced ovarian cancer is very much in line on the progression free survival navigation metric.

Beyond ovarian cancer, we also see potential for <unk> HRD to be rather than going forwards and other tumor types, such as breast cancer prostate cancer or pancreatic cancer.

As well as in other areas, we've seen particular therapy at large.

Shifting to the next effort.

We don't work alone we.

We partner with other like minded mission driven institutions with a shared objective to advance the practice of data driven medicine to improve patient outcomes.

As announced at our Investor Day, we are in.

Credibly excited to be working in a strategic collaboration with Memorial Sloan Kettering, which is among the most prestigious cancer centers.

States and across the world.

Our collaboration will initially focus on two main areas one worked with an escape to bring the appropriate engineers assays to the world.

By Decentralizing assays, such as Mes get impact for comprehensive genomic profiling and potentially other similar technologies for liquid biopsy testing.

Second collaborate on the MH skus longitudinal clinical genomic therapies to generate novel insights and potentially new applications on the <unk> module.

We see this partnership with MSG as highly synergistic whereby we can leverage our technological infrastructure global decentralized network of health care institutions, and algorithmic capabilities to get her where dentist case deep clinical expertise in oncology and appropriately.

<unk> and datasets.

Our shared division within escapes to expand access to world class data, including to our current network and further expand the collective intelligence of course.

<unk> will further expand upon this later on the call.

In this context, we are very excited about the opportunity to continue partnering with organizations and in digital transformation of health care as we leverage our combined capabilities to spark innovation.

The first effort I would like to highlight shipyard Japan.

We anticipate that this module would be of high interest in the Biopharma community as it helps lifesciences customers generate new insights leveraging on our Ria will get assets and Mexican emission patient stratification strategies, we feel great excitement about this new module and believe it will uniquely positions us as a typically your health care space.

In this context, we were very happy to have Umass Memorial Medical Center recently become the first such users in the U S.

To date, we have had great response from both clinical and Biopharma stakeholders <unk> as one of their TBC technological leagues to bring precision medicine to scale.

We believe that we are only scratching the surface here and we see this opportunity extending well beyond lung cancer into other cancer types in the near future.

And that note. It is important to note that there has been recent updates in the U S regulatory environment, which we view as a positive for US if you have two aircrafts over the long term.

Last month the FDA.

You Shouldnt guidance concerning clinical decision support software between cargo space.

We welcome the increase in regulatory requirements, which we see as a net positive because we believe that's higher quality standards may contribute to increased adoption once in the market.

Taking a step back we want to remind you that continuously expanding our menu of offerings is one of our core strategic Peters Sophia.

Highlight examples of that.

<unk> solution.

Richard will then escape as well as progress on our shipyard surpass module all demonstrate our steadfast commitment to constantly invest in this effort. We look forward to updating you more on this front in the future.

With that I will now pass it back over to Juergen to continue on with the rest of the Q3 business highlights. Thank you.

Thanks, Phillip now what I'm going to dive into our advancing Biopharma strategy.

This represents a sizeable and enterprise <unk> market opportunity for us, we're making excellent strides in enhancing our business within this important customer base and believe there is significant market share that remains to be captured.

Our focus continues to be on promoting our growing menu of offerings, which we believe uniquely positions us.

At Investor Day, our Chief Biopharma Officer, Peter Kerr for Central introduce of yes, three D data development and deployment, which signifies our framework for growth in terms of our offerings to the biopharma market.

Starting off with the first B data.

Our ability to capture real world community model data and clinical routine in real time presents a unique value proposition to our biopharma customer base.

When paired with the rich dataset coming from partners like <unk> as well as Biopharma, one clinical trial data, we can really help our customers to better understand the differences between our control environment such as in a randomized clinical trial versus a real world setting.

Layering in our own proprietary AI technologies and algorithms allows us to take it a step further and begin to derive meaningful insights from all of these community model data, which can empower our customers to design better trials and stratify the right patient populations even probe.

Early signals of which patients are likely to respond.

When given a certain therapy.

The silicon development, the first of our ability to partner alongside Biopharma to develop new genomic solutions and or predictive algorithms to select the right patient for the right drugs at the right time.

This is the essence of precision medicine.

At our Investor Day, we announced an exciting new partnership with bounded by a U S based biotech company, which develops innovative therapies targeting extra cuomo's unwell DNA across a range of solid tumor.

To select the right patient bonus that you developed a prototype algorithm to look at U C D and E signatures and our shared vision with them is to leverage on our knowledge base to further enhance its algorithm in the paid across municipal Ngf's technology on the Sofia DBM platform in a decentralized manner to estimate issue.

Further our clinical trails, and increasing access to patient towards life.

As of the third key deployment, we can help accelerate speed entity cash efficient globally that might benefit from targeted drug therapy by deploying appropriately and commercial solutions on our platform.

This is exactly what we are doing with our novo HRD solution.

There are currently partnered with Astrazeneca to expand access to e-mail HIV testing of course got broad retail institutions around the world.

And so far HIV has been deployed in over 30 institutions across 10 countries, which is great.

Overall, the three DS are fueling our conversations with key stakeholders in the Biopharma industry.

And it is clear that our value proposition continues to grow with the expanding scale of our immediately model data and continuously improving predictive algorithms.

And speaking of Astrazeneca, our partnership with them continues to progress nicely as we have a shared vision of the importance of decentralization to promote deficient action.

Im excited to say that we are expanding our scope of work with them beyond HRD and morbidity mobile capacity across the three DS.

We will have more to update you on this front in the coming months.

Furthermore, tomorrow, we are hosting an exciting panel discussion with representatives from Astrazeneca Emiscan op telephone inquiries and phillipe with Peter guests at Central are achieved by your from our Pizza Hut model retro.

The event will take place in Switzerland at Biota.

Our World Congress.

Which is Europe's largest congress can bring big data topics in pharmaceutical development and healthcare.

Panel will discuss topics such as the importance of multimodal pain progression to advance precision medicine team the role of AI and technology as well as how best to leverage the combination of these two.

In clinical practice.

Following the event, we will ask the webinar, we the main takeaways please stay tuned.

Turning back to our base with other strategic partnerships I'm excited to announce that we are deepening and not really extending our longstanding partnership with Microsoft to improve health care workforce globally.

Microsoft investment in the Advancement of next generation architecture will help us lead the way and improving mid single cell data creation development and deployment through Kurt back to elevate the standard of care for patients.

Microsoft will also as the scale. So that we are able to match the expected ramp up in next generation sequencing volumes with competition driving down cost of sequencing and informatics, becoming increasingly important.

We are very excited about our expanding partnership with them and look forward to continuing to work closely together.

Gross out the Q3, a late section I would also like to mention that I am very happy with our Sofia and so responding to the markets call for moderating operating loss in the near term and I'm very proud of the progress evident this quarter on opex. Despite the on.

<unk> market challenges.

As Russ will discuss in his section shortly or are continuing to actively monitor market conditions and remain focused with our capital to excel operationally as a company.

And with that I will now hand, the call over to Ross to get it to the financials Ross.

Thank you.

Again, my remarks by going through the financial results in more detail before turning to guidance we.

We delivered steady results across the board in the third quarter total revenue grew approximately 12% year over year $11 $6 million in 2012 due from $10 4 million in 2021, despite significant FX headwinds, which negatively impacted our growth by approximate.

<unk> thousand 100 basis points due to continued material depreciation of the Euro Swiss.

Swiss franc, British pound and Turkish lira against the U S dollar in the period.

Excluding the impact from Covid related revenues constant currency revenue growth was approximately 40% for the quarter.

With respect to the sequential acceleration in core growth Biopharma revenue continued to ramp up impressively in the period and as Juergen mentioned, we remain very encouraged by underlying trends exhibited in this very strategic customer set.

Our net dollar retention rate decreased to 109% in Q3 from 138% in the third quarter of 2021 as mentioned earlier. The decrease was primarily driven foreign exchange movements revenue generating and key transactional currencies, but in the U S dollar.

With respect to the annualized revenue churn rate.

It remains slightly elevated at 6%, albeit I would note. This is still within the range of what we would consider standard in the software industry.

The total number of platform analogies remained flat at 62000 in the third quarter. However, excluding COVID-19 related volumes platform analysis grew approximately 11% in the period.

<unk> oncology portfolio highlighted by triple digit growth in HRD and strong momentum in solid tumors outperformed our inherited in rare disease portfolio.

Geographically, we saw balanced growth from Knorr and.

And notably strong contributions from Latam and APAC, while EMEA underperformed, mainly due to continued challenges in Turkey.

Average revenue per platform customer increased to approximately $91000 compared to approximately $89000 for the prior year period.

Gross profit in the third quarter of 2022 with $7 3 million, an increase of approximately 11% compared to gross profit of $6 5 million in the third quarter of 2021.

Gross margin was 63% in the third quarter of 2022 flat compared to the prior year period.

Adjusted gross margin remained strong at over 65% for the third quarter of 2022 up approximately 60 basis points relative to the prior year.

As <unk> previously mentioned I'm also incredibly excited about our expanded strategic partnership with Microsoft while our joint vision will yield numerous benefits for our clients and patients.

I'm also happy to share it will yield financial and operational efficiencies in the cloud further enabling <unk> to grow sustainably in 2023 and beyond.

Total operating expenses for the third quarter of 2020 to $30 9 million.

Compared to $27 million in the third quarter of 2021.

<unk> basis.

<unk> expenses for the third quarter of 2020 to $10 $1 million, an increase from $70 $7 million in the third quarter of 2021.

The primary drivers of the year over year increase for a modest increase in employee related expenses, including share based compensation as well as professional expenses, including those related to our deep lung for non small cell lung cancer study efforts.

Sales and marketing expenses for the third quarter were $7 9 million compared to $7 7 million in the third quarter of 2021.

This moderate increase is primarily related to a continued step up in travel and conference related costs as we shared at our recent Investor day, we remain confident with our recent targeted commercial investment and continue to believe our field force is that the right scale to enable us to efficiently achieve our medium term.

<unk> operating plan.

General and administrative expenses for the third quarter were 12.

<unk> $8 million compared to $11 7 million in the third quarter of 2021. The increase was primarily driven by modestly higher employee related expenses, including share based compensation as well as an increase in insurance related expenses.

The loss in the third quarter of 2022 was $23 6 million compared to $25 million in the third quarter of 2021 adjusted operating loss in the third quarter of 2022 with $19 3 million compared to $17 million in the third quarter of 2021.

With respect to our operating discipline.

To highlight this is the second straight quarter in which we have recorded an improvement in our operating losses.

Despite the continued quarter over quarter improvement in constant currency revenue growth ex Covid, we remain focused on our efforts to continue monitoring our operating expense growth as we exit 2022.

Net loss for the third quarter was $23 $3 million or a loss of 36 per share compared to $21 2 million or a loss of 35 cents per share in the third quarter of 2021, adjusted net loss in the third quarter of 2022 with 19 million.

Or a loss of <unk> 30 per share compared to $18 million or a loss of <unk> 30 per share in the third quarter of 2021.

Cash and cash equivalents were approximately $189 2 million as of September 32022.

Turning to our full year outlook, we are reaffirming our previously provided guidance.

And currency revenue growth in the range of 30% to 35% for the <unk>.

Full year 2022.

<unk> latest view of the impact of movements in foreign exchange rates between the U S dollar and our key transactional currencies, including the euro the Swiss franc, British pound and Turkish Lira. We now expect full year 2022 reported revenue to be at the low end of our previously provided range.

Up $47 million to $49 $5 million.

Based on the latest FX trends and forecast, we now contemplate a total FX related headwinds for 2022 in excess of $6 million up by more than $2 million from our prior estimate.

Overall Q3 was another successful quarter as we continue to execute our sustainable growth strategy balancing the path toward profitability with building the foundations for our bright data driven future. This completes my section and I will now turn the call back over to <unk> for closing remarks.

Thanks Ross.

Dosing of today's call. The important takeaway is that our business has great momentum.

They are growing and steadily expanding our current base of business across the world.

Our Sofia DBM platform is unmatched in the market as we are <unk> in this unique category of software, which has clearly resonated deeply with the health care industry at large.

Continue to see growing demand for our offerings, both in the clinical and Biopharma market as.

As we remain focused on delivering value to the organizations, who continue to put their trust in us.

And I would like to take a moment to thank the <unk> for building innovating in selling the offerings setup, a low dose to be where we are to date.

Couldnt achieve our results without a collaborative effort in support of the interiors for PFS.

Thank you again for joining us on our call today and I look forward to seeing some of you in Arizona at the Credit Suisse Technology Conference later in demands.

And with that growth Philip and I are happy to take your questions and we will now turn into back over the operator operator. Please open the line for questions.

And ladies and gentlemen at this time, we will begin the question and answer session.

To ask a question you May press Star and then one on your Touchtone phones. If you are using a speaker phone. We do ask that you. Please pick up your handset prior to pressing the keys to ensure the best sound quality.

So withdraw your question you May press star into once again that is star and then one to join the question queue.

Pause momentarily to assemble the roster.

And our first question comes from payoffs Savant from Morgan Stanley . Please go ahead with your question.

Hi, this is neil on for pages.

So to start you mentioned the updated FDA guidance on clinical decision support software any implications for the regulatory cost burden for care path as we look to enter the clinical market and how should we be thinking about R&D spending trends in that context.

Yes. Thank you for the question.

So indeed right as you may have seen the FDA come with our new guidance when it comes to CBS and software of medical device.

And so today there is no impact in our plan for care path, which I remind you is a clinical research to Reits that PFS, primarily using the context of the deep lung for airport and that would deploy it actually over the last months towards centers, so, let's get that assuming the deal as well.

The other one being new Matthew, Massachusetts, and plan to basically be used and deployed by the end of the year into 30 sites that are using that are being on boarded and our deployment efforts. So nothing for us in terms of changing our plans, but as we highlighted in green.

In the presentation of our results we welcome in general more regulation in our space, because we believe that that can make the.

Market to be bigger and the adoption of these type of digital technologies.

This year in particular beyond the academic centers, one day in community hospitals.

And in terms of the budget.

Obviously, you saw a bit of a step up this quarter at least year on year in R&D and that was a mix.

Some of the engineering capabilities, we brought online as well as our deep lung related costs ultimately.

Made already significant investments on the regulatory side and as you think about the plan.

On a longer term basis that we shared with you at the analyst day that had contemplated obviously none of the.

A number of these elements and so I would not expect from a pure financial standpoint at least at this point there to be any material shift in our investment needs related to.

At least that.

Piece of legislation, albeit again over time.

As we move to the clinical market there may be other elements, we may need to consider with respect to care path.

Understood. That's very helpful. And then I had a few quick questions on the multi year partnership with Microsoft So as it relates to your cloud and data management costs.

To frame the operational benefit how should we think about the margin contribution year over year and 23 from this agreement and will you still be utilizing other vendors for cloud services.

Thank you.

So indeed as you understood right. This partnership enables us to some extent as well to improve our overall cloud desktop, but it goes beyond that then I think that's important to understand so our platform runs in Azure right and so the more adoption of Sofia, the and the better for Microsoft as well. So these parts.

Our ship really goes beyond what you are behind in terms of operating costs. So we are the plants, where we are working together on the commercial side. So that we can jointly.

For most of the offering of Azure and <unk>, so primarily in the academic centers, where as well plans to work with.

Microsoft and Azure on modernizing our architecture and in particular in the context of anything we're doing in the win T mobile space.

Lastly, we may as well work together on leveraging on some of their capabilities. When it comes to natural language processing to be able to gather data scale and presents them to our users in the academic centers, where they are using purpose for clinical research. So beyond that plus maybe you want to give some color.

As well on the operational expenses side right. So in terms of our cloud and compute costs, which are one of our largest buckets of cost overall. This obviously gives us pretty good leverage frankly, both on the Cogs and on the operating line because as you remember a number of our R&D efforts as well.

Happening in the cloud and so there are as well expenses there and so.

This will give us some degrees of freedom on both of those points, but I would say more importantly, if you think about particularly some of the development is happening in the sequencing space.

And the anticipated uptick in volumes and the shift to larger panels like CGP or movement space like liquid biopsies or eventually even whole genome sequencing. This really puts us on a path given the importance of bioinformatics and most of those are all of those new and emerging.

So it puts us on a path to really be able to serve the global community effectively.

Both from a cost and execution perspective, as these new types of applications really start to inflect and as the market continues to shift to where the amount of data production, it's going to be materially higher going forward.

In terms of using multiple clouds, obviously, Microsoft is a tremendous partner for us.

<unk> is a market leader right, particularly in the clinical space and so we think the partnership of Boston that is incredibly powerful.

Certain countries are specific use cases, where you may need to use it.

Another vendor, but as we see it at least over the next number of years with what we can do together with Microsoft There is an incredible amount.

We can help the customer base with <unk> and transform health care data finally into the cloud.

Yeah.

Got it I appreciate the helpful color. Thank you.

Yeah.

And once again, if you would like to ask a question. Please press star and one our next question comes from Julia Quinn from J P. Morgan. Please go ahead with your question.

Hi, Thanks for taking the question.

Yeah.

Getting the HRD triple digit frankly are highlighted in our prepared remarks, alright, good to hear a little bit more color.

Past I believe you said that.

The clinical paradigm for both local capacity upsides.

Chad at this quarter on that in terms of the on the call back to follow up on our model.

Yes. Thank you for the question Judy.

And then I will leave the TD as well to give more cover given we have presented some data at the European.

Catherine so clinical logical oncology, so indeed saw.

Taking a step breath right we have started.

Developing our HIV capabilities about 18 months ago.

You have heard about it in our Investor day, and it took us less than 18 months from developing these capabilities in our platform with deep learning algorithms to adding these capabilities the approach today.

30 centers around the world, including.

10 countries right and we've announced today as well as a few of them adopting this HRD technology beyond Northern America, and the U S. So really I think demonstrating that this solution kind of skated strongly around the world.

And so along those lines, we have been focusing primarily on the ovarian cancer, so far but we do see a benefit of potentially going beyond and I will leave now filipe extent, what's happening in the space and how would this market of HIV testing could grow.

Beyond what we are doing today.

In cancer and how the data that we presented at ESMO make us really confident on our unique capabilities.

Thank you Rajiv and thank you Julien for your question I think you could take a step back on HRD, we remitted.

To be excited with the quality and the performance of the USA.

You mentioned that we discuss during the call we presented very strong data.

School couple of weeks ago.

That showed very good concordance with the reference method and also the fact that we can.

Sustained performance to decentralize 50, which as you know he's also a complexity that we can pull through our technology and our footprint and then we were also showing that the clinical validation aspect on the progression free survival metric was pretty much in line as well. So I think all of that is great. Having decentralized solution really helps us position to market. We're very pleased with the mark.

Construction, we've seen today lots of interest both from the clinical and Biopharma segment on HRD I think looking forward, we see very clear growth opportunities.

One further market share in ovarian cancer.

Beyond ovarian cancer tumors, pancreatic prostate and others and entry even bigger pool to be explored which seemed particularly parity at large where because our solution looks at a lot of the causes and all the consequences. We do look us whole genome, we feel we're incredibly well positioned to support also biotech more discovery.

It.

And the ways of leverage on this technology with the biotech and biopharma prospects and customers.

ASP for each of these.

I mean thats welcome increase our ESP over time, although I would say in the meantime, as you know Reits in the market that we see as well as some contraction now one for example sequencing price.

And data analytics to be coming more and more important likely in the context of HIV volumes should go up and our expectation is that they had issued eventually stabilize so at least an hour more of those were not predicting I just need to get some <unk>. Some more color, yes. So in general right. We're obviously seeing.

Well first let me step back there is theres two elements Theres price right, which is sort of same store ASP, and then theres mix right, which.

Right. So if you think about HRD or CGP or whole genome liquid biopsy et cetera parts of our solid tumor application portfolio that's rare.

The overall reimbursement scheme for Ngls.

Our next question comes from Kyle <unk> from Cowen. Please go ahead with your question.

30% to 35% constant currency growth really sustainable into 'twenty, three and what are the factors that might take growth above this level and as it stands right now do you have any thoughts on FX for 'twenty three.

So obviously, we're not in a position in the third quarter could you guide for 2023, obviously, though we did provide at the analyst day right. Our medium term look at revenue growth being in the range of 30% to 35% similar to what we've seen this year. Obviously, we've also talked to you about the number of other positive factor.

Yes.

You should think certainly that.

So no change in terms of the macro impact on the trajectory.

Existing backlog gives us a pretty good picture on forward revenue and so our visibility into next year I would say overall is quite good now FX can move around at the moment I would say, there's probably a slight.

Got it and then so on North America, I think by our math growth slowed maybe about 9% in <unk> and maybe we don't know the exact comp there, but could you just provide an update on North America attraction.

Is there any range of growth that we should be expecting in the region moving forward.

As well as the conference last week in Phoenix. So we're very encouraged with what we see so just taking a step back right. We have announced this great partnership with MSA that.

<unk>.

Constraints and the importance of.

Being more sound when it comes to operational efficiency and in that context, the importance of leveraging on the industrialized platform such as the one of Sofia.

Other than reinventing the wheel investing on their sanctuaries data scientists and stool switch are still booked in months right. So really encouraged with what we see in Northern America.

We should be expecting North America to continue to grow along the lines of what we have shared in the past.

And once again, if you would like to ask a question. Please press star and one.

Mark Massaro from BT IAG. Please go ahead with your question.

I have a high level could you discuss how the competitive landscape is evolving maybe as a result of the increase and regulatory requirements.

You mentioned at your analyst day that using them directly so I see that as a key differentiator. So just curious if you run into any competitive dynamics in terms of price for analysis.

In the clinical market, and we expect as well that academic centers and central us we'd need.

Industrialized partner to compute the growing volumes in genomics beyond genomics and I think probably it is what you referred to write you referred to what we have been doing Thats what was I missed gain in terms of data so we understand that.

The other patients in directly in other centers.

Okay perfect. Thank you.

And remind us where your head count plans.

Sure.

Discussion is really around incremental margins right and so I think there you can look at what we highlighted in terms of the dropdown on future revenue and some of that also ties back to us being particularly aggressive on the capitalization side versus most software businesses and so as new revenue comes in that drop down will be quite significant and that will be.

<unk> down the overall losses as it converts to.

Profit ultimately overtime and so we think that again, if you sort of map. It out you can get a pretty good sense of when.

That crossover will occur on the head count side and again, we've talked about that being a predominance of our spend.

Is aimed on the cost side efficiency with our labor base and making sure. We're very focused on what we're working on making sure. We're controlling a lot of our discretionary spend and also I would say on the R&D side, ensuring we've got the highest.

ROIC type projects that.

And ladies and gentlemen, with that we will be concluding today's question and answer session I would like to turn the floor back over to management for any closing remarks.

Yes. Thank you all so it was great because you are being with you today.

We're very much looking forward to update you in the future. So we really not disclosing additional partnerships and contraction in the next months.

In our region at the end of the month. So we will very much looking forward to see you there have a good day.

And ladies and gentlemen, with that we'll conclude today's conference call and presentation. We thank you for joining you may now disconnect your lines.