Q3 2023 SOPHiA GENETICS SA Earnings Call

Ladies and gentlemen, and thank you for standing by my name is desert re and I will be your conference operator today.

At this time I would like to welcome everyone to the Sofia genetics third quarter 'twenty 'twenty Fleet earnings Conference call.

All lines have been please on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.

If you would like to read your your question again press the star one.

I would now like to turn the call conference over to gasoline by Alon head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us on Sofia genetics third quarter fiscal 2023 earnings call. My name is Catherine Balan and I'm the head of Investor Relations at Sofia Genetics. Joining me today are Doctor Yorkie Campbell, our co founder and Chief Exec.

<unk> Officer, and Ross <unk>, our Chief Financial Officer, and Chief operating Officer before we get started I'd like to remind you that the management team will make statements. During this call that are forward looking within the meaning of United States Federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events.

To materially differ from those anticipated additional information regarding these risks and uncertainties appears in the section entitled cautionary statement regarding forward looking statements in our form 6K for the third quarter earnings release on file with the SEC.

Sept as required by law Sofia genetics disclaims any intention or obligation to update or revise any financial.

Pipeline projections or other forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information and is accurate only as of its broadcast November 7th 2023.

The presentation includes non <unk> financial measures. These measures are calculated by management did not have any standardized meaning under ifr S. These non <unk> measures supplement ifr S measures, but should not be viewed as substitutes for ifr S. Measures. We have included a reconciliation of ifr measures to non I O R. S measure.

In our press release issued this morning, which is available on our website. Please note. Both the replay of this call in the earnings release will be available on our website in the Investor Relations section and with that I'll now turn it over to yorkie.

Thank you Katrina and good morning, everyone.

We appreciate you joining us from a recall to date.

I'm pleased to share that our third quarter results came in strong with revenue for the quarter growing 37% year over year on a constant currency ex COVID-19.

Moreover, we achieved this growth while delivering meaningful expense reductions from the prior year period.

Our operating loss on an adjusted basis was 11 8 million an improvement of $7 5 million or 39% from the third quarter of 2022, an improvement of $2 8 million or 19% from the prior quarter.

On today's call I will start by reviewing our progress in the third quarter as it relates to our business execution and the continued growth of our software platform.

He will then turn next to Ross <unk>, our Chief Financial Officer, and Chief operating officer to share our financial results for the period in more detail followed by our outlook for 2023.

We will then end by taking your questions.

Let me start with a review of the third quarter highlights and the execution of our business strategy overall.

So kitchen. It takes we are focused on driving the adoption of our software platform.

So <unk> is a cloud based software as a service platform.

The institutions analyze and generate insights from patient data.

<unk> apply artificial intelligence to complex patient data, including genomics and regimens data towards customer identify value a bold patient insights.

Our platform provides insights on a wide range of diseases with applications spanning across oncology and rare inherited disorders.

A key attribute of Sofia <unk> platform is that we leverage our network of connected customers to create a flywheel effect.

More customers use our platform to generate efficiencies sites the more powerful our insights become for the next patient.

Customers, who use <unk> are constantly upgrading patient data to the platform and providing inputs.

Apply their expertise.

As customers upload more data and provide more inputs, the algorithms, which powers Sofia VPN becomes stronger operator.

This allows healthcare institutions to benefit from the expertise and knowledge of one another and contribute to the collective intelligence of Sofia.

In the third quarter, we made great strides towards driving further adoption of <unk>.

First we added 18, new logo to our network. These customers join our more than 750 customers worldwide, who use of <unk> out of reach 431, our core genomics customers.

As a reminder, core genomic customers are those who generate revenue through our Sofia DBM plus firm in the last 12 months through our dry lab bundle and integrated access modes or your clothing, they're efficient genomic data to generate insights.

We aimed to increase the usage of Sofia begin by landing new customers and then expanding their usage of the platform.

In that regard our strong Q3 revenue performance is driven by robust utilization of <unk> across the board.

For the third quarter of 2023 analysis volume across our core genomics customers, which can be consider.

Ill close proxy for the number of patients analyzed.

$70 9784.

This represents an all time high and is up 28% year over year, when excluding COVID-19 related analogies platform analysis volume was 78709.

For the third quarter of 2023 up a very robust 36% year over year.

As mentioned earlier customer issues Sofia DBM to generate data driven insights for patients across two primary business areas oncology and <unk> and inherited disorders.

For oncology, we offer Sofia DRAM applications for a regulatory testing solid tumor profiling and a metallurgical malignancies testing. In addition to the newer applications. We added in the market for homologous recombination deficiency, HRD and liquid biopsy.

On that note. The later <unk>, HRD and liquid biopsy or the fastest growing in the quarter, while more established applications like a retiree cancer grew in line with our company's overall growth.

For Robert any respiratory disorders, we offer applications to cover a wide range of diseases.

XOMA analysis represent the fastest growing applications in this area and we are expecting to see a shift to larger gene panels over time.

Overall, we saw both the oncology and rare and inherited disorders categories grew in line with our company's overall growth and reflect strong year over year performance, while COVID-19 analyses were down year on year as expected.

I will now share some highlights during the quarter across our geographies.

In EMEA I'm excited to highlight three customers from the third quarter were using Sofia DBM to generate insights for their oncology patients first we recently announced two new customers, who were attracted to Sofia DBM by the impressive analytical performance of our platform and especially.

By our new ammonia with recombination deficiency application.

In August.

Yes, you book, though one of the largest hospital in France, when live on Sofia, DBM, and we'll be using our platform to HR the application capabilities.

In addition, Instituto Romagnolo Lois to deal with a <unk> IR.

And oncology Center in Italy went live on Sofia DBM in September and is also using our platforms HIV detection algorithms to provide personalized treatment for patients with advanced ovarian cancer.

In October we also announced a new logo with oncor made the org agnostic German based <unk> oncology clinical lab, who we use Sofia dbms and mythology application capabilities for chronic lymphocytic leukemia, TLLP common type of blood cancer.

Sure.

We welcome this new customer to the Sofia Tdm network and are excited to book them.

<unk> for their oncology needs as well as them contribute their data and knowledge to the Sofia DBM community.

In the Latam region, we announced that we expanded our relationship with laboratory your cookie collaborate to reign in the capital city of Paraguay.

<unk> became a Sofia <unk> customer in 2022, using the original theory cancer application of our platform.

This quarter they expanded their use of <unk> by adding our HR application for solid tumor testing.

Laboratory acuity side that the Sofia Dpm's two the expected turnaround time for this application will help accelerate reporting and decision making.

In the Asia Pacific Region analysis volume in the third quarter grew above company average benefiting from September of 2022 signings. When we added two labs in India Juniper.

<unk> ladder and mid genome.

These labs in addition to the <unk> Institute of genetics.

<unk> center at Eastern.

All now completed the on boarding and are using <unk> to run about 12000 analysis per year.

This large volumes in India are notably beyond what we see in other parts of the world and are underpinned by Indians large population size.

At the price points establish to suit the Indian market.

In the Asia Pacific region, we now intend to build on this early success is in India and in Australia, we speak their mind.

Which we discussed in detail last quarter and are looking to push into new territories, such as Korea and Japan.

We intend to leverage direct and indirect sales in doing so expect to add small number of sales headcount in the region.

Next turning to <unk>, we are pleased with the solid progress, we're making in the region. The room revenue growth accelerated sequentially and grew at an impressive 78% year over year, well above the company average.

<unk> benefited from above company average analysis volume growth.

As well as contribution from Biopharma.

Continue to be excited with our growth in Europe, which we consider to be a relatively under penetrated and high potential market for us.

I would like to take this time to highlight three new customers. We signed in November this quarter in <unk>.

And of that we think create fertility centre in Toronto will be using Sofia began for fertility testing.

And in the U S. We signed a great site in Seattle and bio reference outside of New York City that serves over 19 million patients annually.

Most of those reference labs are adopting Sofia DBM for liquid biopsy applications, which I'm excited to talk about in more detail now.

As you know liquid biopsy technology has the potential to revolutionize the diagnosis and management of cancer.

Today liquid biopsies are being investigated across three menu cadence.

First for diagnosis and therapy selection for cases in which obtaining a biopsy of the primary tumor is not feasible for example in subset of advanced lung and prostate cancer cases.

Second for the longitudinal monitoring of response after onset of semi.

Temeka anticancer treatments.

And third for early detection of cancer.

However, this promising use cases do not come without challenges liquid biopsies require highly sophisticated analytical capabilities to overcome the number of signal detection challenges such as low input material.

We believe this is an area in which our algorithmic capabilities may be distinctive.

Our analysis of over $1 4 million genomic profiles to date means that we can confidently peak the signal from the noise.

In addition, we have developed our own proprietary molecular barcoding technology required for liquid biopsy analysis name <unk>, which grants us freedom to operate in this important area.

Both rare oversight and bio reference have recognized the analytical performance of our liquid biopsy applications and we're excited to welcome them to our network.

In addition to these U S customers. We also recently held centrally on behalf of leading cancer Center in France adopt software the dam for liquid biopsy testing.

Overall in Q3, our liquid biopsy analysis volumes grew 80% granted off a small base and we look forward to seeing this trend continue as we bring on new customers.

Speaking of expanding our liquid biopsy customers I would like to take this opportunity to talk about our partnership with Memorial Sloan Kettering as.

As previously announced we recently entered into a partnership with Emmis, K 12, and commercialized and deployed our liquid biopsy assay <unk> access.

MFC access as a liquid biopsy test that <unk> developed in 2019 and successfully implemented clinically over the last four years at the New York facility.

Forming over 10000 analysis to date.

This has been a resounding achievements for MSA and we are facing a lot of demand for their test. However.

However, they do not have the capacity to materially ramp faster testing volumes.

Earlier this year they turned to us with the shared vision of working together to decentralize the EMS get access that and bring it to the world.

The cloud based nature of the Sofia didn't platform uniquely positions us to alpine escape break the data silos created by the centralized on premise solution and break their vision of decentralization to reality.

We are currently in the process of working with MSA to decentralize and commercialize our liquid biopsy test.

Jack says powered by Sofia begin and make it available to customers across the globe.

<unk> run the world will be able to use a <unk> run <unk> 146 gene panel that analyze it's much too more and the remodels samples and picking the signal from the noise.

Participants who are early access program will be able to use Sofia begin before the end of 2023 with full commercial launch on track for the first half of 2020 in fact bio reference the New York City Lab, we announced earlier today is one of the first adopters of <unk> true.

This early access program.

In addition to the initial traction we also announce ahead of <unk> in October that Astrazeneca rejoined the collaboration between us and <unk> K 12 bring MSC access to a global scale.

<unk> will leverage its global footprint to help accelerate the deployment of MFC access worldwide.

In doing so institutions around the world, including boost in under recruits and underserved areas will access to accurate and reliable data and insight.

Beyond improving global equity and enabling appropriate cancer testing the network. We're building with MSA will also be very important to accelerate stander recruitment of patients for clinical trials and in partnership with Biopharma companies accelerates the development cycle of new compounds in oncology.

Having now covered the opportunity in liquid biopsy, let me move to our second fast growing application ARIA HRP.

It antibody in patients with homologous recombination deficiency HRD <unk> indentified in a biomarker that is being.

Been shown to be associated with response to PARP inhibitors in advanced ovarian cancer.

Since the launch of HIV detection capabilities on Sofia, <unk> and last year, we have seen sustained strong growth in analytics volumes.

We are now approximately 35 customers in routine use it globally and in the third quarter, we added Peter Mac in Australia to the list of countries using Sofia began for HRD detection, which include India, Brazil, Italy, France and Spain.

We recently expanded our HIV offering called Green CABG and argue obligations by offering a patented analytical algorithm and ginger.

Junior is a deep learning algorithm that our it our HIV detection capabilities. This algorithm uses low pass while genome analysis in conjunction with our appropriate very deep learning algorithm to detect patterns of genomics carrying across the genome and as a result of reductions.

Sure gateways follow homologous recombination Reaper.

Ginger is technology agnostic and can be readily deployed on any wet lab right prep, including third party CGP panels.

Overall, we are very happy with the traction of our HR the application today.

In addition to our positive momentum in the clinical stage Biopharma continues to show interest in Sofia DBM for HIV and HR testing applications, notably in the context of liquid biopsy testing.

To date.

I spent a lot of time highlighting the process, we have made selling the genomics capabilities offered by Sofia Division.

While the genomics offering you've heard about today, such as our HIV and liquid biopsy applications continues to be the key for Qs. We have always intended to complement this genomics capabilities with multi modality.

I am pleased to update you on our progress to work this multimodal vision during.

During the third quarter, we released the multimodal module of the Sofia <unk> platform. So Pietro.

So if you surpass provides customers with the ability to perform multi modal and longitudinal analysis of efficiently.

In order to ensure Sofia capacity gets off to a strong start in the market in December of 2021, we initiated a multi modal clinical study called the disciplined.

As a reminder, this flagship initiative is a real world observational study to develop AI powered realty without predictive models of response to immunotherapy in the context of stage four non small cell lung cancer.

Using the study as a springboard we have now activated Sofia career path at all 30 of the sites. We are participating in the disciplined for study and have recorded data on the 2000 patients enrolled to date.

Researchers from those 13 institutions are now using Sofia care paths to develop new clinical research hypothesis by accessing the study data in a statistical aggregated manner.

That note. We are currently working on our first planned interim analysis software around 600 patient cases, which will be reviewed by the steady ibm's key and.

Tenant external data review committee by end of this year.

This will notably be the opportunity to have a first readout regarding the performance of the predictive models being developed.

And we are looking forward to updating you on the first results in Q1 2020.

The progress that we've made to develop our multi modal capabilities could not have been achieved without the partnership of several key players in the healthcare ecosystem.

In order to continued cultivating our community of joint collaboration we've proudly or skip the AI driven precision oncology summit in New York City in September.

Attendees enjoying two keynotes, one from Michael Burger of Memorial Sloan Kettering discussing our precision oncology.

The centralized solution.

The song from David Roux, Chief Medical Officer of Microsoft, who presented opportunities and challenges with AI in health care.

Then our achieved Biopharma all feature Peter Testa Centaur hosted a panel discussion with distinguished guests from Astrazeneca Janssen and report Memorial Sloan Kettering and Microsoft with a focus on AI as potential for enhancing treatment decision, making and supporting development of novel <unk>.

<unk>.

Beyond this event, we attended asthma, the European Society for medical oncology, where our meetings with prospects and customers focus on the excitement surrounding the recent press coverage of our joint announcement with Astrazeneca and memories from Kathryn to broaden the adoption globally.

Of engine testing with a focus on patient equity.

Our biopharma team hosted meetings with most of the top 20 oncology companies to discuss the impact of this memorandum of understanding and potential for them to participate in the movement.

Labeling greater access to testing and eligibility for clinical trials and lifesaving therapies.

And just this past week, Nvidia or partner for rapid and scalable wall genome sequencing data analysis joined us in Washington D. C at ASX Chi to showcase our joint efforts.

We look forward to continue working with all of our partners to advance our shirts mission of improving those equities with data driven medicine.

Now turning to financial priorities.

I want to address our recognition of the constrained environment for capital and reiterate that Sofia genetics.

Ability to reach profitability without additional capital if necessary.

We fully expect and we'll proceed with our forward visiting under the scenario that we will not be available.

Our concerted efforts of cost containment are now in the sixth quarter of consecutive improvement ex non recurring items.

In the third quarter of 2023, our reported operating loss was reduced by 30% year over year and by 17% sequentially.

On an adjusted basis, our third quarter operating loss was $11 8 million, an improvement of 39% year over year and 19% sequentially.

I would like to emphasize is we do not take this challenging environment lately.

As such we continually inspect our spending for opportunities and improvement.

To that point I would like to share that we have identified incremental select actions that can further expedite our path to sustainability.

Were just underway with infections and expect benefit to 2024 and onwards.

So to conclude my section Sofia technology is being adopted by more than half of the 20, leading global cancer participants.

Technology and markets have shown us winning the early adopters can be helpful in longer term efforts to garner share with the major rating.

We are in the early days of the movement towards personalized medicine for cancer and our sense is that our momentum is increasing.

And so in closing I feel as excited today as ever that Sofia genetics as the elements in place that will enable us to accomplish what we set out to do 12 years ago, two rns data from the global community to generate actionable insights that contribute meaningfully to patient care and pest.

<unk> outcomes.

And now I will turn the call over to Ross to discuss our financial performance in more detail.

Thank you <unk> and good morning, everyone I am pleased to share that despite the challenging macro environment. The fuel genetics delivered robust performance in the third quarter, continuing our commitment to sustainable growth turning to the financials total revenue for the third quarter of 2023 with <unk> 16.

$3 million compared.

Compared to $11 6 million for the third quarter of 2022, representing year over year growth of 40% constant currency revenue growth with 33% and constant currency revenue growth, excluding COVID-19 related revenue with 37%.

Platform analysis volume, including volumes from our integrated access customers with 79784 for the third quarter of 2023 compared to 62276 for the third quarter of 2022, the 28% year over year growth was attributable to the strength of.

Our core platform analysis volume offset by the expected continued decline of our COVID-19 related analysis volume, excluding COVID-19 related volume platform analysis grew a healthy 36% year over year in the period.

Genomic customers were 431 as of September 32023 up from 424 in the prior year period, but down sequentially by three customers. This is primarily the result of the continued decline in Covid only customers core genomic customer count included 14, new.

<unk> customers in the quarter.

Annualized revenue churn rate was 3% during the third quarter of 2023 in line with our expectations net dollar retention for the quarter improved sequentially on a reported basis to 127% constant currency net dollar retention, excluding COVID-19 related revenue was 120.

6% strong MTR and a healthy level of backlog continued to provide us with a high level of revenue visibility going forward.

Gross profit for the third quarter of 2023 was $11 $3 million compared to gross profit of $7 3 million in the third quarter of 2022, representing year over year growth of 55% gross margin was 69% for the third quarter of 2023 compared with 63.

Percent for the third quarter of 2022.

Adjusted gross profit was $11 8 million, an increase of 56% compared to adjusted gross profit of $7 6 million in.

In the third quarter of 2022, adjusted gross margin was 73% for the third quarter of 2023 compared to 65% for the third quarter of 2022 total operating expenses for the third quarter of 2023 were $27 8 million compared to $30 9 million for the third quarter of 2000.

22 <unk>.

Turning to operating loss for the third quarter of 2023, it was $16 5 million compared to $23 6 million for the third quarter of 2022 adjusted operating loss for the third quarter of 2023 was $11 8 million compared to $19 3 million for the third.

<unk> 2022, lastly, total cash burn for the quarter was $15 8 million compared to $27 4 million in the prior year quarter down over 42%. We are quite proud of this achievement and remain committed to sustainable growth moving forward cash and cash equivalents were.

Approximately $133 million as of September 32023, turning to our 2023 outlook based on our strong first three quarters of fiscal year 2023, we are reiterating all elements of our annual guidance. We continue to expect reported revenue growth to be at or above 30%.

In 2023 constant currency revenue growth, excluding COVID-19 related revenue for 2023 is expected to be between 30% and 35% in line with our previously highlighted long term expectation. Additionally, following on strong cost performance exhibited in the first quarters of 2023.

So P&G Nellix continues to expect 2023 operating losses to be below 2022 levels.

Furthermore, with respect to the anticipated revenue cadence for the final quarter of 2023 I would note. We continue to expect utilization to be up sequentially. However, currency may proved slightly less favorable than previously anticipated based on current rates. Additionally, given the timing of certain revenues recognized in the third quarter.

We would anticipate that the step up in <unk> revenue to be below what was exhibited in the prior year. This is all consistent with what we shared on our last quarterly update.

Lastly, I wanted to provide a bit more color on the remarks, <unk> made with respect to our path to profitability and the required cost actions to expedite that goal. We recently decided to take some tactical head count actions that will further optimize our operations. While also continuing to focus our R&D efforts.

And increasingly high ROI projects. These are difficult decisions, but we have prioritized sustaining medium term revenue momentum at our previously targeted communicated levels, while ensuring a reasonable timeframe to cash flow generation. Additionally, we continue to revisit our discretionary expenditures and identified potential.

Savings for 2024 and systems professional services and certain public company costs. The combined nature of these items will further our path to profitability in 2024 and beyond we commit to remaining vigilant and responsive to the environment and have attempted to balance our desire to execute against a very.

Large tam versus the practical reality of becoming self sustaining we look forward to providing more color on these matters. Once we have completed our 2020 for planning process with that I would like to turn the call back over to Europe for the closing remarks before we take your questions.

Thank you Ross we are proud of our performance, which we believe reflects our continued ability to execute on our revision and the opportunity ahead.

<unk> success comes on our ability to delight customers and continued driving one more usage of our platform.

I am encouraged and as confident as ever about the long term path that we're on.

We have a fantastic opportunity to drive compelling returns and shareholder value.

In closing, thank you to our Sofia colleagues partners customers and investors for joining us in our journey without you none of this would be possible. Please.

Please note later this month, we are attending the Evercore Outskirt conference in Miami.

I look forward to continuing to update you on <unk> future success of Democrats sizing data have you been medicine.

Operator, you May now open the line to the questions.

Thank you the floor is now open for your questions to ask a question. This time. Please press Star then the number one on your telephone keypad.

Well pause for just a moment to compile the Q&A roster.

Your first question comes from the line of such as <unk> with Morgan Stanley.

Line is open.

Hello, This is Hugo on the call.

Thank you for taking our questions could.

Could you provide more color on the bio reference lab collaboration how quickly could it scale and how meaningful could it be in terms of economics Sylvia.

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

Before we go to the specifics on bio reference I would like to remind people that recently, we signed an important.

Memorandum of understanding in partnership with <unk>.

Memories from capturing and Astrazeneca.

Two basic key shipboard decentralization of liquid biopsy testing and comprehensive genomic testing profiling testing through the usage of Sofia, DBM and <unk> equal access to proper patient diagnoses around the world, including in the U S right and so in that regard indeed.

We are adding a lot of traction a lot of demand on MSP access and I will let Rob give you some more color on the announcement of today, which by our reference lab.

Thank you. So obviously as you all know they are one of the largest central and reference laboratories in the U S and they have a great presence in the oncology field in one, particularly amongst Canadian oncology, where we historically have not played necessarily so this is a tremendous.

Partnership for Us.

Great party to be able to serve.

Our communities with this fantastic application and for US. It's also really nice validation right of our ability to be able to scale up to other large central and reference laboratories similar to what we've done in other parts.

The world as we've spoken about historically, so unfortunately, I'm not going to give you specifics on the economics, but as you well know.

They have very large patient reach particularly in a number of key geographies like New York, and Texas, and Florida, and so we would anticipate this being a <unk>.

Really nice contributor later in 2024 and into 2025 and again one of hopefully several updates we'll have for you on the early access program for MSA access, which today is garnering quite a lot of interest and as Jeremy mentioned.

Our partnership our Mou as well with MSCI and Astrazeneca.

I think that will further help on that adoption and really drive access and awareness across the globe with respect to this really unique application.

Great. Thank you for the color.

And then also as a follow up a separate follow up question.

With interim for deep lung study readout expected before year end here, what metrics would be provided to demonstrate models predictive ability.

And what do you what do you think is the bar that you must meet to see strong adoption.

So to start we view core.

Deep learning <unk> west for Us the means to do immediately postings and it's for US was to <unk> community mobile capability gauging Sofia DBM right. So with the current bus modules saw.

In that regard now this is being extremely successful and we are being able to deploy in the context of the plan to occur path in 30 centers around the world. So that's something that is extremely important.

And as we would demonstrate that we get the ability to compete beyond genomics multimodal data.

In the real World Real time set that was important to show that we're not only trusted.

Yes.

<unk> to manage and computer data, but as well to demonstrate there was a value for the Biopharma and you may remember that we had announced earlier this year at.

Neil we at St <unk>, Australia, and they come on the data side, we are leveraging on Sofia DBM care path and the data that we've gathered in the context of that.

Deep lung two out.

In their development efforts and lastly to your point, which was for us potential Cherry on the top of the cake was to demonstrate that the way you do so.

And you combine multiple sources of data that you may be able to anticipate response to therapy is expensive therapies like immunotherapy in a better way. So we are in that context. Today. So we are very proud to have.

Deployed Sofia curve by some 30 centers to have gathered data points, which are 200 can eco <unk> genomics data points from 2000 patients.

So centers and as it should be now with the independent data monitoring Committee.

His meeting up in December and is going to present.

The outcome of our predictive algorithms.

Nancy in January next year.

So I would say great.

He is already what we have achieved.

Because we have demonstrated there was value of Onboarding 30 centers around the world on the multi modal.

On music and mobile capabilities and when it comes to the predictability of the algorithms, we will speak about that at the time of.

The reports from the independent data monitoring committee.

Got it and you also noted that the.

Predictive multimodal model can be applied to a variety of other cancer types do you plan.

Do you have a plan to start larger studies to expand that utility of the model over time into other cancer indications and are you viewing that expansion of our medium term or a longer term opportunity for you.

So indeed, the <unk> four.

From the many years, we've been investigating what we could call today, our Sofia factory, where we've been.

You know building algorithmic and world class capabilities to be able to appropriately compute sophisticated.

Challenging genomics data regimen SATA immediately mobile data.

In the context of the multi modality, we wanted to demonstrate that was of value by doing that.

In lung cancer, because lung cancer is the cancer that is getting making the most of the people who run the words.

We focus on non small cell lung cancer, and some unmet needs demonstrated the value of doing that but our factory in regards me capabilities have already proven that similar outcomes could be expected in other cancer types and in particular I would like like kidney cancer neuroblast.

And the breast cancer, where we have internally.

Internal efforts and indeed, the one could expect next year that we speak about our multi modal capabilities beyond lung cancer.

Great. Thank you very much.

Thank you and your requirement today.

Our next question comes from the line of Dan Brennan with TD Cowen Your line is open.

Hey, Good morning. This is Kyle on for Dan. Thanks for taking the questions I had a quick one on biopharma or pharma partnerships.

When should we expect these will be broken out in the revenue build.

Is this sort of taking longer than expected to become more meaningful revenue contributors and how should we be thinking about that moving forward.

Yes, Thank you Dan and good morning.

Before we get into the breakdown of the Biopharma revenue I would like to highlight again, our strong performance for this quarter in the topline right. This as being a 40% year on year growth.

With <unk>.

Russ.

<unk> status as well improved by 55%. So I think this is awesome and tells a lot about.

The scalability of our technology and the demand for our technology in the market, including the Biopharma now regarding the Biopharma, we I think are being always consistent.

Well done.

Do you think about the numbers.

This reached a certain scale, but they will let our CFO he'll Russ comment thanks.

Karl So I think respectively in terms of disclosure right, there's rules and <unk> around certain thresholds. So you can assume we haven't broken that threshold as a as a percentage for a given year not necessarily for a given quarter. So we're quite happy with Biopharma performance. This year in the quarter was up triple digits.

And it was a meaningful contributor sequentially as we had kind of guided to and expected and so we'll obviously have to revisit.

Sort of our revenue disclosures for for next year, assuming the current trajectory continues but overall.

We are quite happy with with our execution and performance and it was a nice driver of some of the strong growth in the period and I think if we look to next year, certainly our activity levels and the breadth of activity, we have across our <unk> pharma remained quite robust and.

And we look forward to being able to update you on that going forward, but overall, we're quite happy with Biopharma is execution.

Got it. Thank you and then maybe it's a bit too early to say, but starting out in 'twenty for should we be sort of in that 30% to 35% constant currency growth rate in line with your long term range or could any of these new partnerships being inked.

Drive upside to that sort of long term range over the next few years.

So Kyle as you well know we have a very predictable model right on our forward looking performance.

Given the nature of our business in the clinical market, which is a consumption based business.

Where the net dollar retention of our customers is pretty pretty good.

And so this already gives us indeed, a strong baseline probably above 30% to grow year on year and Thats. Just you highlighted as we're now penetrating the biopharma.

<unk> to add these gives us room to eventually grow at a faster pace.

And just to be clear so again, we're not giving any formalized guidance today for 2024, but I think in total.

As you already mentioned and given the high recurring nature of our business and our high levels of visibility, which we've spoken about.

Before we obviously feel like we executed well this quarter and have executed well for this year.

We showed strong new logos.

All of this year and our net dollar retention has been accelerating and so you can assume we're set up well as we enter next year, but obviously, we're always mindful of the macro environment and all of the different changes that are happening and so we're trying to be vigilant. Hence we did have some cost actions as well that we announced today, but I think in tow.

It'll work.

We're feeling we're feeling quite good given the macro challenges around us and feel like we can continue to deliver on what we committed to on a long term basis, but obviously, we will update you more formally.

Next year as we report our fourth quarter.

Got it thank you.

Thank you Kayla and good day.

And we do have another question comes from the line of Mark Massaro with BP IAG. Your line is open.

Hey, guys congratulations on the top and bottom line beat in the quarter.

It's also nice to see the addition of bio reference labs.

Could you just speak I think you guys alluded to it but it sounds like they are initially going to use the MSA access.

Products for liquid biopsy I guess can you just give us a sense for which types of applications.

Bio reference Mike.

Might use over the over time.

The idea that they will start with one application, but perhaps look at some of the other applications.

Start with the first one.

Thank you Mark good morning, and thank you for congratulating us as well and our performance. Indeed, we both beat to the topline and bottom line and on the bottom line I think the performance we had with 11 eight.

8 million loss this quarter versus $19 3 million loss.

Year on year in Q.

Q3 2022 demonstrates.

So definitively our technology can scale and that with the investments we've been doing over the last year. So we can continue delivering strong results.

Specifically bio reference so as you know our strategy is the land and expand model. So we like to land first our customer on the initial application to build the experience of the platform and the trust and this opens up often other opportunities I believe Ross I'll give you a sense of westwood's can eventually later.

So thanks.

Thanks, Mark and obviously, you highlighted sort of what we.

Clearly intend to do with bio reference and frankly other large labs here in the U S and so they saw a really unique opportunity to be able to take on our market leading.

Premier liquid biopsy capability and MSA access and so that was sort of the initial talking point right with them around adoption I think.

To the degree they get that up and running internally and we'll obviously work with them hand in hand to get that to market in some of their key geographies as quickly as possible. We will continue to discuss other applications within the platform I think certainly and I'm not speaking specific to bio reference, but in general with the <unk>.

Conversations were having with some of the large laboratories.

We are seeing still quite a lot of interest in CGP.

And the impact product as well as others that we support on our platform and so we would expect that conversation to continue we're also discussing with quite a number of players.

The ability to use our ginger algorithm for HRD on top of their existing.

<unk> and then I would say as well there is quite a lot of interest in our myeloid capabilities, where we are market, leading and so again.

We're obviously very excited about this relationship we view them as a great long term partner and validation for us and this quarter, we had nearly 80% growth in the U S business in the northern business and obviously this will help set us up well for next year to continue that momentum.

Excellent.

I know in the past you guys have talked about.

Mardi minimal residual disease can you.

<unk> provide an update on how youre thinking about.

Essentially approaching the market, whether it's initially in heme, our solid tumor and.

If it is in heme, which application you are targeting and roughly when you think you could rollout.

Yes, so very good question Mark so.

Already can indeed be many things right.

And in solid tumor testing.

It can be quite similar as well to some liquid biopsy applications. So I'll remain focus for next year will be in in bunk saw in AML.

And we will be launching new capabilities before June next year.

That will enable us to.

Further support our clients today.

A number of clients that we support any monkees importance.

We have grown our business as well nicely.

The last quarter and so we see the ability to further grow our impact in our revenue within those customers not only by enabling them to identify what is driving.

And in long term cancer, but beyond that as well, enabling them to follow those patients longitudinally with MRV capabilities that they are being treated.

Excellent.

Maybe my final question. How are you guys thinking about the FDA proposed rule about potentially stepping up oversight of <unk>.

Do you view that as an opportunity or potentially a near term cost.

You think some of your applications might need to go through the FDA and how are you thinking about any potential cost or opportunities to your business.

So Chris at some senior that we are following to some extend quite similar as well to what has been done in Europe with IV Dr.

And the importance of <unk> solutions, which are compatible with these requirements in our case this means having solutions under design control.

So we see that rather as nimble as an opportunity we've always said to that.

Our platform without scale the.

The industry of precision medicine, industrializing data computing, and we believe that the recent questions announcements and decisions are really nicely with our strategy.

Okay. That's it for me thank you.

Thank you so much mark.

There are no further questions at this time, Mr. Cam long I'll turn the call back over to you.

So thank you all for participating to our earnings I would like to thank all of the Sofia <unk> as well for their hard work.

Commitment and passion in impacting around the world, while delivering excellent technologies towards VITAS into Biopharma customers and we thought they would buy a knife to leave our investor community reminding you that we will be soon at the Evercore Oscar conference in Miami.

Have a good day.

This concludes today's conference call you may now disconnect.

Okay.

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Ladies and gentlemen, and thank you for standing by my name is desert re and I will be your conference operator today at this time I would like to welcome everyone to the Sofia Genetics third quarter 2020 Fleet earnings Conference call.

All lines have been please on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.

If you would like to withdraw your question again press the star one.

I would now like to turn the call for a conference over to gasoline by Alon head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us on Sofia genetics third quarter fiscal 2023 earnings call. My name is Catherine Balan and I'm the head of Investor Relations at Sofia Genetics. Joining me today are Doctor Yorkie Campbell, our co founder and Chief Exec.

<unk> Officer, and Ross Newton, our Chief Financial Officer, and Chief operating Officer before.

Before we get started I'd like to remind you that the management team will make statements. During this call that are forward looking within the meaning of United States Federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated additional information regarding these risks and uncertainties appears in his section.

Entitled Cautionary statement regarding forward looking statements in our form 6K for the third quarter earnings release on file with the SEC, except as required by law Sofia genetics disclaims any intention or obligation to update or revise any financial product pipeline projections or other forward looking statements, whether because of new information future events or otherwise.

This conference call contains time sensitive information and is accurate only as of its broadcast November seven 2023. This presentation includes non <unk> financial measures. These measures are calculated by management did not have any standardized meaning under ifr S. These non <unk> measures supplement ifr.

[noise] measures, but should not be viewed as substitutes for ifr S. Measures. We have included a reconciliation of ifr measures to non I O. R. S measures in our press release issued this morning, which is available on our website. Please note. Both the replay of this call in the earnings release will be available on our website in the Investor Relations section and with that I will now.

Now I'll turn it over to yorkie.

Thank you Katrina and good morning, everyone. We.

We appreciate you joining us from a recall to date.

I am pleased to share that our third quarter results came in strong with revenue for the quarter growing 37% year over year on a constant currency ex COVID-19.

Moreover, we achieved this growth while delivering meaningful expense reductions from the prior year period.

Our operating loss on an adjusted basis was 11 8 million an improvement of $7 5 million or 39% from the third quarter of 2022, an improvement of $2 8 million or 19% from the prior quarter.

On today's call I will start by reviewing our progress in the third quarter as it relates to our business execution and the continued growth of our software defined platform.

I will then turn it to Ross <unk>, our Chief Financial Officer, and Chief operating officer to share our financial results for the period in more detail followed by our outlook for 2023.

We'll then end by taking your questions.

Let me start with a review of the third quarter highlights and the execution of our business strategy overall.

So kitchen. It takes we are focused on driving the adoption of our software platform.

<unk> is a cloud based software as a service platform.

Institutions analyze and generate insights from patient data.

<unk> apply artificial intelligence to complex patient data.

<unk> genomics and regimens data towards the customer identify valuable patient insights.

Our platform provides insights on a wide range of diseases with a pre cash and spanning across oncology and rare inherited disorders.

The key attribute of Sofia <unk> platform is that we leverage our network of connected customers to create flywheel effect.

As more customers use our platform to generate patient insights the more powerful our insights become for the next patient.

Customers, who use of yet the gamer constantly a protein patient data to the platform and providing inputs.

Apply their expertise.

As customers upload more data and provide more inputs, the aaas algorithms, which powers will begin become stronger over at <unk>.

This allows healthcare institutions to benefit from the expertise and knowledge of one another and contribute to the collective intelligence of social media.

In the third quarter, we made great strides towards driving further adoption of Sofia.

First we added 18, new logo to our network. These customers join our more than 750 customers worldwide, who use of <unk> out of which 431, our core genomics customers.

As a reminder, core genomic customers are those who generate revenue through our Sofia DCM platform in the last 12 months through our dry labs bundle and integrated access modes are uploading their patient genomic data to generate insights.

We aim to increase the usage of Sofia begin by landing new customers and then expanding their usage of the platform.

In that regard our strong Q3 revenue performance is driven by robust utilization of <unk> across the board.

For the third quarter of 2023 analysis volume across our core genomics customers, which can be consider a close proxy for the number of patients analyzed.

$70 9784.

This represents an all time high and is up 28% year over year, when excluding COVID-19 related analogies platform analysis volume was 78709.

For the third quarter of 2023.

Every robust 36% year over year.

As mentioned earlier customer issues Sofia DBM to generate data driven insights for patients across two primary areas oncology and <unk> and inherited disorders.

For oncology, we offered Sofia became applications for a regulatory counsel testing solid tumor profiling and a metallurgical malignancies tense team. In addition to the newer applications. We added in the market for homologous recombination deficiency, HIV and liquid biopsy.

On that note. The later <unk> HRD and liquid biopsy with a faster growing in the quarter, while more established application take a retiree cancer grew in line with our company's overall growth.

For Robert any rarity disorders, we offer applications to cover a wide range of diseases.

XOMA analysis represent the fastest growing applications in this area and we are expecting to see a shift to larger gene panels over time.

Overall, we feel both the oncology and <unk> and inherited disorders categories were in line with our company's overall growth and reflect strong year over year performance, while Covid analysis were down year on year as expected.

I will now share some highlights during the quarter across our geographies.

In EMEA I am excited to a night three customers from the third quarter were using Sofia DBM to generate insights for their oncology patient first.

First we recently announced two new customers, who were attracted to Sofia DBM by the impressive analytical performance of our platform and especially by our new ammonia with recombination deficiency a peak issue.

In August.

Sure.

One of the largest hospital in France, when live on Sofia, <unk>, and we'll be using our platform to HR the <unk> capabilities.

In addition, Instituto Romagnolo studio of <unk> IR.

Loan quality center in Italy went live on Sofia DBM in September and is also using our platform HIV detection algorithms to provide personalized treatment for patients with advanced ovarian cancer.

In October we also announced a new logo with Hong Kong made the Aurora diagnostics, a German based <unk> oncology clinical lab, who we use Sofia dbms and metallurgy application capability for chronic lymphocytic leukemia, PLL <unk> type of blood cancer.

We welcome this new customer to the Sofia DBM network and are excited to book them.

<unk> for their oncology needs as well as them contribute their data and knowledge to the Sofia begin community.

In the Latam region, we announced that we expanded our relationship with laboratory a cookie.

Our laboratory in the capital city of Paraguay.

<unk> became a Sofia <unk> customer in 2020 tool using the original theory cancer application of our platform.

This quarter they expanded their use of <unk> by adding our HR application for solid tumor testing.

Laboratory <unk> cited that the Sofia Dpm's two the expected turnaround time for this application will help accelerate reporting and decision making.

In the Asia Pacific Region analysis volume in the third quarter grew above company average benefiting from September of 2022 signings. When we added two labs in India, Juniper speciality ladder and mid genome.

These labs in addition to the <unk> Institute of genetics.

So safety center at Eastern.

<unk> now completed the on boarding and are using <unk> to run about 12000 analysis per year.

This large volumes in India are notably beyond what we see in other parts of the world and are underpinned by Indians large population size.

At the price point established to suit the Indian market.

In the Asia Pacific region, we now intend to build on this early success using and yet any note Australia, we speak their mind.

Which we discussed in detail last quarter and are looking to push into new territories, such as Korea and Japan.

We intend to leverage direct and indirect sales in doing so expect to add small number of sales headcount in the region.

Next turning to <unk>, we are pleased with the solid progress, we're making in the region <unk> revenue growth accelerated sequentially and grew at an impressive 78 <unk> year over year, well above the company average.

Neuron benefited from above company average analysis volume growth.

As well as contribution from Biopharma.

Continue to be excited with our growth in Europe, which we consider to be a relatively under penetrated and high potential market for us.

I would like to take this time to highlight three new customers. We signed in November this quarter.

Canada, We think creates fertility centre in Toronto will be using Sofia DBM for fertility testing.

And in the U S. We signed Greg site in Seattle, and bio reference outside of New York City that serves over 19 million patients annually.

Loss of boost Retrans labs are adopting Sofia DBM for liquid biopsy applications, which I'm excited to talk about in more detail now.

As you know liquid biopsy technology has the potential to revolutionize the diagnosis and management of cancer.

Today liquid biopsies are being investigated across three menus cadence.

First for diagnosis and therapy selection for cases in which you're obtaining a biopsy of the primary tomorrow is not feasible for example in subset of advancement and prostate cancer cases.

Second for the longitudinal monitoring of response after onset of.

Spermic anticancer treatments.

And third for early detection of cancer.

However, this promising use cases do not come without challenges liquid biopsies require highly sophisticated analytical capabilities to overcome a number of signal detection challenges such as low input material.

We believe this is an area in which our algorithmic capabilities may be distinctive.

Our analysis of over $1 4 million genomic profiles to date means.

We can confidently peak the signal from the noise.

In addition, we have developed our own proprietary molecular barcoding technology required for liquid biopsy analogies name <unk>, which grants us freedom to operate in this important area.

Bulk railroad site and bio reference have recognized the analytical performance of our liquid biopsy applications and we're excited to welcome them to our network.

In addition to these U S customers. We also recently held centrally on behalf of leading cancer Center in France adopt Sofia the dam for liquid biopsy testing.

Overall in Q3, our liquid biopsy analysis volumes grew 80% granted off a small base and we look forward to seeing this trend continue as we bring on new customers.

Speaking of expanding our liquid biopsy customers I would like to take this opportunity to talk about our partnership with memories from Tiptree.

As previously announced we recently entered into a partnership with Emmis, K 12, and commercialized and deployed our liquid biopsy assay <unk> access.

<unk> is a liquid biopsy test that <unk> locked in 2019 and successfully implemented clinically over the last four years at the New York facility.

Forming over 10000 analysis to date.

This has been a resounding achievements for MSA and we are facing a lot of demand for their test.

However, they do not have the capacity to materially ramp up their testing volumes.

Earlier this year they turned to us with the shared vision of working together to decentralize the EMS access that and bring it to the world.

The cloud based nature of the Sofia platform uniquely positions us to help them escape break the data silos created by the centralized on premise solution and break their vision of decentralization to reality.

We are currently in the process of working with MSA to decentralize and commercialize our liquid biopsy test.

<unk> says powered based off yet again and make it available to customers across the globe.

<unk> run the world will be able to use a <unk> run <unk> 146 gene panel that analyze it's much more and the remodel samples and picking the signal from the noise.

Participants to our early access program will be able to use Sofia begin before the end of 2023 with full commercial launch on track for the first half of 2020 in fact bio reference the New York City Lab, we announced earlier today is one of the first adopters of <unk> true.

This early access program.

In addition to the initial traction. We also announce ahead of <unk> in October that Astrazeneca rejoinder collaboration between Us and <unk> K 12 to bring MSC access to a global scale.

<unk> will leverage its global footprint to help accelerate the deployment of MFC access worldwide.

In doing so institutions around the world, including those in underway through tender underserved areas.

SaaS to IV accurate and reliable data and insight.

Beyond improving global equity and enabling appropriate cancer testing. The network. We are building with <unk> will also be very important to accelerate standard recruitment of patients for clinical trials and in partnership with Biopharma companies accelerates the development cycle of new compounds in oncology.

I think the corporate the opportunity in liquid biopsy, let me move to our several fast growing application IRA HRC.

At <unk> in patients with homologous recombination deficiency HRD means indentified in a biomarker that is being.

Been shown to be associated with response to PARP inhibitors in advanced ovarian cancer.

Since the launch of HIV detection capabilities on Sofia began last year, we have seen sustained strong growth in analytics volumes.

We are now approximately 35 customers in routine use it globally and in the third quarter, we added pizza or Mac in Australia to the list of countries using Sofia began for HIV detection, which include India, Brazil, Italy, France and Spain.

We recently expanded our HIV offering called Green CABG and argue obligations by offering a patented analytic algorithm ginger.

Junior.

<unk>, a deep learning algorithm that outward our HIV detection capabilities. This algorithm uses low pass while genome analysis in conjunction with our appropriate <unk> deep learning algorithm to detect patterns of genomics carry across the genome and as a result of reductions associated with volume.

Homologous recombination Reaper.

Ginger is technology agnostic and can be readily deployed on any wet lab right prep, including third party CGP panels.

Overall, we are very happy with the traction of our HR the application today.

In addition to our positive momentum in the clinical stage Biopharma continues to show interest in Sofia GBM for HRD and HR testing applications, notably in the context of liquid biopsy testing.

To date.

I spent a lot of time highlighting the process, we have made selling the genomics capabilities offered by <unk>.

While the genomics offering you've heard about today, such as our HIV and liquid biopsy applications continues to be a key focus.

We have always intended to complement this genomics capabilities with multi modality.

I am pleased to update you on our progress to work this multimodal vision during.

During the third quarter, we released a multimodal module of the Sofia the game platform So Pietro path.

So if you have surpassed provides customers with the ability to perform multi modal and longitudinal analysis of efficiently.

In order to ensure Sofia capacity gets off to a strong start in the market in December of 2021, we initiated a multi modal clinical study called the dip loan.

As a reminder, this flagship initiative is a real world observational study to develop AI powered realty without predictive models of response to immunotherapy in the context of stage four non small cell lung cancer.

Using the study as a springboard we have now activated Sofia career path at all 30 of the sites. We are participating in the dip loan for Siggi and have recorded data on the 2000 patients enrolled to date.

Researchers from those 13 institutions are now using Sofia clear path to develop new clinical research a part disease by accessing the study data in a statistical Aggregative monitor.

That note. We are currently working on the first planned interim analysis software run 600 patient cases, which will be reviewed by the stood the ibms and.

External data review committee by end of this year.

This will notably be the opportunity to have a first readout regarding the performance of the predictive models being developed.

We are looking forward to updating you on the <unk> results in Q1 2020.

The progress that we've made to develop our multimodal capabilities could not have been achieved without the partnership of several key players in the healthcare ecosystem.

In order to continue through 2018, a community of joint collaboration we are proud of.

E driven precision oncology summit in New York City in September.

Attendees enjoyed two keynotes, one from Michael Burger of Memorial Sloan Kettering discussing our precision oncology.

The centralized solution.

And the second from David Roux, Chief Medical Officer of Microsoft, who presented opportunities and challenges with AI in health care.

Then our achieved Biopharma all feature Peter Testa Centaur hosted a panel discussion with distinguished guests from Astrazeneca Johnson and report Memorial Sloan Kettering and Microsoft with a focus on AI as potential for enhancing treatment decision, making and supporting development of novel <unk>.

<unk>.

Beyond this event, we attended Eskimo European Society for medical oncology.

Our meetings with prospects and customers focus on the excitement surrounding the recent press coverage of our joint announcement with Astrazeneca and memory and some <unk> to broaden the adoption globally of engine testing with a focus on patient equity.

Our biopharma team hosted meetings with most of the top 20 oncology companies to discuss the impact of this memorandum of understanding and potential for them to participate in the movement.

Enabling greater access to testing and eligibility for clinical trials and lifesaving therapies.

And just this past week, Nvidia or partner for rapid and scalable while genome sequencing data analysis joined US is Washington D. C at ASX Chi to showcase our joint efforts.

We look forward to continue working with all of our partners to advance our shirts mission of improving those equities through data driven medicine.

Now turning to financial priorities.

I want to address our recognition of the constrained environment for capital and right through eight that Sofia genetics.

Our ability to reach profitability without additional capital if necessary.

We fully expect and we'll proceed with our forward rejecting under the scenario that we will not be available.

Our concerted efforts of cost containment are now in the sixth quarter of consecutive improvement ex non recurring items.

In the third quarter of 2020 screen, a reported operating loss was reduced by 30% year over year and by 17% sequentially.

On an adjusted basis, our third quarter operating loss was $11 8 million, an improvement of 39% year over year and 19% sequentially.

I would like to emphasize is we do not take this challenging environment liking.

As such we continually inspect our spending for opportunities and improvement.

To that point I would like to share that we have identified incremental select actions that can further expedite our path to sustainability.

Were just underway with infections and expect benefit to 2024 and onwards.

So to conclude my section. So if your technology is being adopted by more than half of the 20, leading global cancer participants.

As technology markets have shown us winning the early adopters can be helpful in longer term efforts to garner share with the major rating.

We're in the early days of the movement towards personalized medicine for cancer and our sense is that our momentum is increasing.

So in closing I feel as excited today as ever that Sofia genetics as the elements in place that will enable us to accomplish what we set out to do 12 years ago, two rns data from the global community to generate actionable insights that contribute meaningfully to patient care and patient Doug.

<unk>.

And now I will turn the call over to Ross to discuss our financial performance in more detail.

Thank you <unk> and good morning, everyone I am pleased to share that despite the challenging macro environment.

<unk> delivered robust performance in the third quarter, continuing our commitment to sustainable growth.

Turning to the financials total revenue for the third quarter of 2023 with $16 3 million.

Compared to $11 6 million for the third quarter of 2022, representing year over year growth of 40%.

Constant currency revenue growth with 33% and constant currency revenue growth, excluding COVID-19 related revenue with 37%.

Platform analysis volume, including volumes from our integrated access customers with 79784 for the third quarter of 2023 compared to 62276 for the third quarter of 2022, the 28% year over year growth was attributable to the strength of.

Our core platform analysis volume offset by the expected continued decline of our COVID-19 related analysis volume, excluding COVID-19 related volume platform analysis grew a healthy 36% year over year in the period.

Genomic customers were 431 as of September 32023 up from 424 in the prior year period, but down sequentially by three customers. This is primarily the result of the continued decline in Covid only customers core genomic customer count included 14, new.

<unk> customers in the quarter.

Annualized revenue churn rate was 3% during the third quarter of 2023 in line with our expectations net dollar retention for the quarter improved sequentially on a reported basis to 127% constant currency net dollar retention, excluding COVID-19 related revenue was 120.

6% strong MTR and a healthy level of backlog continued to provide us with a high level of revenue visibility going forward.

Gross profit for the third quarter of 2023 was $11 $3 million compared to gross profit of $7 3 million in the third quarter of 2022, representing year over year growth of 55% gross margin was 69% for the third quarter of 2023 compared with 63.

<unk> for the third quarter of 2022.

Adjusted gross profit was $11 8 million, an increase of 56% compared to adjusted gross profit of $7 6 million in.

In the third quarter of 2022, adjusted gross margin was 73% for the third quarter of 2023 compared to 65% for the third quarter of 2022 total operating expenses for the third quarter of 2023 were $27 8 million compared to $39 million for the third quarter of 2000.

22 <unk>.

Turning to operating loss for the third quarter of 2023, it was $16 5 million compared to $23 6 million for the third quarter of 2022 adjusted operating loss for the third quarter of 2023 was $11 8 million compared to $19 3 million for the third.

<unk> 2022, lastly, total cash burn for the quarter was $15 8 million compared to $27 $40 million in.

In the prior year quarter down over 42%, we are quite proud of this achievement and remain committed to sustainable growth moving forward cash and cash equivalents were approximately $133 million as of September 32023, turning to our 2023 outlook based on our strong first three quarters.

Fiscal year 2023, we are reiterating all elements of our annual guidance.

Could you expect reported revenue growth to be at or above 30% in 2023 constant currency revenue growth. Excluding COVID-19 related revenue for 2023 is expected to be between 30% and 35% in line with our previously highlighted long term expectations.

Additionally, following on strong cost performance exhibited in the first quarters of 2023. So pag Nellix continues to expect 2023 operating losses to be below 2022 levels.

Furthermore, with respect to the anticipated revenue cadence for the final quarter of 2023 I would note. We continue to expect utilization to be up sequentially. However, currency may proved slightly less favorable than previously anticipated based on current rates. Additionally, given the timing of certain revenues recognized in the third quarter.

We would anticipate that the step up in <unk> revenue to be below what was exhibited in the prior year. This is all consistent with what we shared on our last quarterly update.

Lastly, I wanted to provide a bit more color on the remarks, <unk> made with respect to our path to profitability and the required cost actions to expedite that goal. We recently decided to take some tactical head count actions that will further optimize our operations. While also continuing to focus our R&D efforts on <unk>.

Increasingly high ROI projects. These are difficult decisions, but we have prioritized the stating medium term revenue momentum at our previously targeted communicated levels, while ensuring a reasonable timeframe to cash flow generation. Additionally, we continue to revisit our discretionary expenditures and identified potential sale.

Things for 2024 and systems professional services and certain public company costs. The combined nature of these items will further our path to profitability in 2024 and beyond we commit to remaining vigilant and responsive to the environment and has attempted to balance our desire to execute against a very long.

<unk> Tam versus the practical reality of becoming self sustaining we look forward to providing more color on these matters. Once we have completed our 2020 for planning process.

With that I would like to turn the call back over to Europe for the closing remarks before we take your questions.

Thank you Ross.

Proud of our performance, which we believe reflects our continued ability to execute on our revision and the opportunity ahead.

So PFS success tons on our ability to delight customers and continued driving one more usage of our platform.

I am encouraged and as confident as ever about the long term path that we're on.

We have a fantastic opportunity to drive compelling returns and shareholder value.

In closing, thank you to our Sofia colleagues partners customers and investors for joining us in our journey without you none of this would be possible.

Please note later this month, we are attending the Evercore Outskirt conference in Miami.

I look forward to continuing to update you on <unk> future success of Democrats sizing data have you been medicine.

Operator, you May now open the line to the questions.

Thank you the floor is now open for your questions to ask a question. This time. Please press Star then the number one on your telephone keypad.

We'll pause for just a moment to compile the Q&A roster.

Your first question comes from the line of such as Savant with Morgan Stanley. Your line is open.

Hello. This is Hugo on the call. Thank you for taking our questions.

Could you provide more color on the bio reference lab collaboration how quickly could it scale and how meaningful could it be in terms of economics Sylvia.

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

Before we go to this specifics on Biodefense, they would like to remind people that recently, we signed an important.

Memorandum of understanding partnership with memory, and some catering and astrazeneca.

Basically shipboard decentralization of liquid biopsy testing and comprehensive genomic testing profiling testing for the usage of Sofia, DBM, and making either equal access to proper patient diagnoses around the world, including in the U S right and so in that regard indeed.

We are adding a lot of traction a lot of demand on MSG access and I will let Ross to give you some more color on the announcement of today, which by our reference lab.

Thank you. So obviously as you all know they are one of the largest central and reference laboratories in the U S and they have a great presence in the oncology field in one, particularly amongst community oncology, where we historically have not played necessarily so this is a tremendous.

<unk> for us.

They're a great party to be able to serve.

Their communities with this fantastic application and for US. It's also really nice validation of our ability to be able to scale up to other large central and reference laboratories similar to what we've done in other parts of the world as we've spoken about historically, so unfortunately, I'm not going to give you specifics on.

The economics, but as you well know.

They have very large patient reach particularly in a number of key geographies like New York, and Texas, and Florida, and so we would anticipate this being a really nice contributor later in 2024 and into 2025 and again one of hopefully several updates we'll have for you.

The early access program for MSP access, which to date is garnering quite a lot of interest and as you already mentioned.

Our partnership our Mou as well with MSCI and Astrazeneca.

I think that will further help on that adoption and really drive access and awareness across the globe with respect to this really unique application.

Great. Thank you for the color.

And then also as a separate follow up question.

With interim for deep lung study readout expected before year end here, what metrics would be provided to demonstrate models predictive ability and what do you. What do you think is the bar that you must meet to see strong adoption.

So to start we view core.

Deep learning for us to be worse for us the means to do immediately postings and its first west to fuels music T mobile capability gauging Sofia DBM right. So the current bus modules saw.

In that regards now besides being extremely successful and we are being able to deploy in the context of deep learning curve path in 30 centers around the world. So that's something that is extremely important second.

Would demonstrate that we get the ability to compute beyond genomics medicine mobile data.

In the real World Real time set that was important to show that we're not only trusted by the <unk> to manage and control their data, but as well to demonstrate there was a value for the Biopharma and you may remember that we had announced earlier this year.

Neal we have signed with us rather than they can on the data side, we are leveraging on Sofia DBM care path and the data that we've gathered in the context soft.

Deep lung.

AEG.

In their development efforts and lastly to your point, which was for us potential Cherry on the top of the cake, what's would demonstrate that the way you do it saw in.

Our new combined community. Both sources of data that you may be able to anticipate response to therapies expensive therapies like immunotherapy.

Better way. So we are in that context today. So we are very proud to have.

Deployed Sofia curb cuts in 30 centers to have gathered data points, which are 200 can eco <unk> genomics data points on 2000 patients.

A cluster of centers.

And as it should be now independent data monitoring committee.

His meeting up in December and is going to present.

Outcome of our predictive algorithms independency in January next year.

So I would say great.

Is already what we have achieved.

Because we have demonstrated there was value of.

Onboarding 30 centers around the world on the multi modal.

On music and mobile capabilities and when it comes to the predictability of the algorithms, we will speak about that at the time of.

The reports from the independent data monitoring committee.

Got it and you also noted that the best predictor of multimodal model can be applied to the priority of other cancer types. Do you plan do you have a plan to start larger studies to expand that utility of the model over time into other cancer indications and are you viewing that expansion is a medium term.

Our a longer term opportunity for you.

So indeed, you call for many years, we've been investigating what we could call today, our Sofia factory, where we've been.

Building algorithmic and world class capabilities to be able to appropriately compute sophisticated.

LNG genomics data regimens <unk> mobile data in.

In the context of the multi modality, we wanted to demonstrate that was of value by doing that.

In lung cancer, because lung cancer is the cancer that is getting making the most of the people that run the word.

We focus on non small cell lung cancer, and some unmet needs demonstrated the value of doing that but our factory in regards me capabilities have already proven that similar outcomes could be expected in other cancer types and in particular I would like like kidney cancer neuroblast.

And the breast cancer, where we have internally.

The internal efforts and indeed, the one could expect next year that we speak about our multimodal capabilities beginning of lung cancer.

Great. Thank you very much.

Thank you and your requirement today.

Our next question comes from the line of Dan Brennan with TD Cowen Your line is open.

Hey, Good morning. This is Kyle on for Dan. Thanks for taking the questions I had a quick one on Biopharma pharma partnerships.

When should we expect these will be broken out in the revenue build.

Is this sort of taking longer than expected to become more meaningful revenue contributors.

Should we be thinking about that moving forward.

Yes, Thank you Dan and good morning, so before we get into the breakdown of the Biopharma revenue I would like to highlight again, our strong performance for this quarter in the topline right. This as being a 40% year on year growth.

Gross.

Profits that will improve by 55%. So I think this is awesome and tells a lot about.

This scalable.

Our technology and the demand for our technology in the market, including the Biopharma now regarding the Biopharma, we I think I've been always consistent.

Well done.

Do you think about the numbers.

This reached a certain scale, but they we let our CFO he'll Russ comment thanks.

Karl So I think respectively in terms of disclosure right, there's rules and <unk> around certain thresholds. So you can assume we haven't broken that threshold as a as a percentage for a given year not necessarily for a given quarter. So we're quite happy with Biopharma performance. This year in the quarter was up triple digits.

And it was a meaningful contributor sequentially as we had kind of guided to and expected and so we'll obviously have to revisit.

Sort of our revenue disclosures for for next year, assuming the current trajectory continues but overall.

We are quite happy with with our execution and performance and it was a nice driver of some of the strong growth in the period and I think if we look to next year, certainly our activity levels and the breadth of activity, we have across our <unk> pharma remained quite robust and.

And we look forward to being able to update you on that going forward, but overall, we're quite happy with Biopharma is execution.

Got it. Thank you and then maybe it's a bit too early to say, but starting out in 'twenty for should we be sort of in that 30% to 35% constant currency growth rate in line with your long term range or could any of these new partnerships being.

Drive upside to that sort of long term range over the next few years.

So Kyle as you well know we have a very predictable model right on our forward looking performance.

Given the nature of our business in the clinical market, which is a consumption based business.

The net dollar retention of our customers.

Pretty good.

And so this already gives us indeed, a strong baseline probably above 30% to grow year on year and Thats. Just you highlighted as we are now penetrating the biopharma.

Segment. These gives us room to eventually grow at a faster pace.

And just to be clear so again, we're not giving any formalized guidance today for 2024, but I think in total.

As Juergen mentioned and given the high recurring nature of our business and our high levels of visibility, which we've spoken about.

Before we obviously feel like we executed well this quarter and have executed well for this year.

So strong new logos all of this year and our net dollar retention has been accelerating and so you can assume we're set up well.

As we enter next year, but obviously, we're always mindful of the macro environment and all of the different changes that are happening and so we're trying to be vigilant. Hence we did have some cost actions as well that we announced today, but I think in total.

Ceiling, we're feeling quite good given the macro challenges around us and feel like we can continue to deliver on what we committed to on a long term basis, but obviously, we will update you more formally.

Next year as we report our fourth quarter.

Got it thank you.

Thank you guys have a good day.

And we do have another question comes from the line of Mark Massaro with BP IAG. Your line is open.

Hey, guys congratulations on the top and bottom line beat in the quarter.

It's also nice to see the addition of bio reference labs could.

Could you just speak I think you guys alluded to it but it sounds like they are initially going to use the <unk> access.

Products for liquid biopsy I guess can you just give us a sense for.

Which types of applications.

Bio reference Mike.

Use over the over time.

Is it the idea that they'll start with one application, but perhaps look at some of the other.

Applications as they.

Start with the first one.

Thank you Mark good morning, and thank you for congratulating us as well and our performance. Indeed, we both beat to the topline and the Bottomline and on the bottom line I think the performance we had with the 11.8.

8 million loss this quarter versus $19 3 million loss.

Year on year Q3, 2022 demonstrates.

So definitively our technology can scale and that with the investments we've been doing over the last year. So we can continue delivering strong results on specifically <unk>. So as you know our strategy is the land and expand model. So we'd like to land first our customer on the initial application too.

Fueled the experience of the platform and the trust and this opens up often other opportunities I believe Ross to give you a sense of what's going on eventually later so.

Thanks, Mark and obviously, you highlighted sort of what we.

Clearly intend to do with bio reference and frankly other large labs here in the U S and so they saw a really unique opportunity to be able to take on our market leading.

Premier liquid biopsy capability and MSA access and so that was sort of the initial talking point right with them around adoption I think.

To the degree they get that up and running internally and we'll obviously work with them hand in hand to get that to market in some of their key geographies as quickly as possible. We will continue to discuss other applications within the platform I think certainly and I'm not speaking specific to bio reference, but in general with the <unk>.

Conversely issues, we're having with some of the large laboratories.

We are seeing still quite a lot of interest in CGP.

And the impact product as well as others that we support on our platform and so we would expect that conversation to continue we're also discussing with quite a number of players.

The ability to use our ginger algorithm for HRD on top of their existing HRD, and then I would say as well there's quite a lot of interest in our myeloid capabilities, where we are market, leading and so again.

We're obviously very excited about this relationship we view them as a great long term partner and validation for us and this quarter, we had nearly 80% growth in the U S business in the northern business and obviously this will help set us up well for next year to continue that momentum.

Okay.

Excellent.

I know in the past you guys have talked about.

Mardi minimal residual disease can you, perhaps provide an update on how youre thinking about potentially approaching the market whether it's initially in heme, our solid tumor and if it is in heme, which application you are targeting and roughly when you think you could rollout.

Yes, so very good question Mark so.

Already can indeed be many things right.

And in solid tumor testing.

It can be quite similar as well to some liquid biopsy applications. So I'll remain focus for next year will be in in punk saw in AML.

And we will be launching new capabilities before June next year that will enable us to.

Further support our clients today.

Number of clients that we support the Monkees importance.

We have grown our business as well as key.

The last quarter and so we see the ability to further grow our impact in our revenue within those customers not only by enabling them to identify what is driving.

And in long term cancer, but beyond that as well, enabling them to follow those patients longitudinally with MRV capabilities that they are being treated.

Excellent.

Maybe my final question. How are you guys thinking about the FDA proposed rule about potentially stepping up oversight of <unk>.

Do you view that as an opportunity or potentially a near term cost.

You think some of your applications might need to go through the FDA and how are you thinking about any potential cost or opportunities to your business.

So Chris at some senior that we are following to some extend quite similar as well to what have been the one in Europe with IV Dr.

And the importance of <unk> solutions, which are compatible with these requirements in our case this means having solutions under design control.

So we see that rather as an as an opportunity we've always said to that.

Our platform without scale.

History of precision medicine, Industrializing data computing, and we believe that the recent questions announcements and decisions are really nicely with our strategy.

Okay. That's it for me thank you.

Thank you so much mark.

There are no further questions at this time, Mr. Cam long I'll turn the call back over to you.

So thank you all for participating to our earnings I would like to thank all of the Sofia <unk> as well for their hard work commitment and passion in impacting around the words why.

Delivering.

Excellent technologies towards VITAS into Biopharma customers, and we thought they would buy a knife to leave our investor community reminding you that we will be soon at the Evercore Oscar conference in Miami have a good day.

This concludes today's conference call you may now disconnect.