Q3 2023 Personalis Inc Earnings Call
Good afternoon, and welcome to the personnel with third quarter 2023 earnings Conference call.
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Please also note that this event is being recorded today.
I would now like to turn the conference over to Caroline corner Investor Relations. Please go ahead.
Thank you operator welcome to personnel since third quarter of 2023 earnings call. Joining today's call are Chris Hall, Chief Executive Officer, and President and Aaron Tachibana, Chief Financial and Chief operating Officer, and Rich Chen Chief Medical Officer, and EVP R&D. All statements made on this call that do not relate to matters of historical.
That should be considered forward looking statements within the meaning of the U S. Securities Law for example, any statements regarding trends and expectations for our financial performance this year and longer term cash run way revenue expectations on timing.
First Michael size and booking of orders product services technology clinical milestone the outcome and timing of reimbursement decisions expectations for our existing and future collaboration activities topped expectations. The outcome of legal proceedings to enforce patents validity or of course ability of our patents and our market opportunity business outlook. These statements are.
Subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with the SEC, including the risk factors described in our most recent quarterly report on Form 10-Q for smiles undertakes no obligation to update these statements except as required by applicable law.
Our press release for the third quarter of 2023 results is available on our website www dot personnel dot com under the investors section and includes additional details about our financial results. Our website also has our latest SEC filings, which we encourage you to review a recording of today's call will be available on our website by five P. M Pacific time today.
Now I would like to turn the all over to Chris for his comments on third quarter business highlights.
Thank you Caroline and good afternoon, everyone and thank you for joining us.
We're thrilled with the progress we made since we updated you in August we exceeded our revenue goals for the third quarter and increased our full year guidance.
Presented compelling data on next personal with the team of Tracer X. We launched the next personal clinical test, we deepened our collaborators in breast cancer, and we strengthened our management team.
I'm very proud of the team at personality for delivering on the commitments, we've made to investors and our continued focus execute our winning strategy and establish next personal as the centerpiece of a better management paradigm for cancer patients.
Let's start with our commercial traction as mentioned in our press release, we reported $18 2 million in quarterly revenue powered by nice growth in each of our business lines Biopharma enterprise sales, including the terror in population sequencing for the VA MVP that performance represents 23% year over year.
Gross I'd like to point out that we manage this growth despite an environment, where biopharma companies have been cutting their spending on clinical trials and related services.
And the actions we took earlier this year to streamline and remove non profitable business given our.
Commercial traction, we're raising our guidance to $73 million to $74 million.
Now while our revenue goal in Q3 exceeded our goals and allowed us to increase guidance. We're most excited about the progress we're making in executing our winning MRV strategy emera.
<unk> testing using liquid biopsy tests to find residual recurrent cancer and to monitor treatment effectiveness is expected to grow into a $20 billion plus mark.
As a reminder, our winning an R&D strategy has four pillars first focus is launch our test in cancer types, where an ultra sensitive and liquid biopsy tests kind of unlocked significant value for patients payers and partners.
To drive reimbursement by developing robust clinical evidence and partnering with a top global collaborators.
Third to commercialize next personal with a partner centric model and fourth to leverage our deep biopharma relationships to power the development of clinical evidence by the use of next personal in clinical trials.
Next review each of these strategies and the progress we've made this quarter.
First starting with indications for ultra sensitive test.
We've chosen to focus on early stage lung cancer breast cancer, and immunotherapy monitoring because of high sensitivity test.
Is uniquely suited to detect recurrence very early and to guide treatment decisions and the D.
Escalate low risk patients off therapy.
Let me elaborate about high sensitivity and why that matters for our key indications as it's at the heart of our strategy we.
We detect cancer that was down to one part per million.
What this means is that next personal may find residual recurrent disease. When there is only as few as one circulating cancer DNA fragment. Among them then we had normal DNA fragments and what.
Allowing our testing platform to detect cancer earlier than competitive technologies.
And it can do this not just for some patients are consistently most patients across many different cancer types and stages.
We believe next personal can provide confidence that one when we detect cancer, we see it earlier when patient management can be modified to result in more favorable outcomes too when we don't see cancer patients will likely remain disease free at may not need additional therapy.
And early lung cancer, and some types of breast cancer, our approach is particularly well suited to escalate and deescalate therapy.
<unk> the cancer recurrence early may be the key to getting a patient the therapy they need to save their lives and next personal sensitivity may be key to identifying patients with low risk of recurrence. So they can potentially avoid additional treatments.
We've kicked off our commercial journey by launching our next personal cost for early access clients.
We've confirmed this quarter. The next personal can detect cancer as low as one part per million and we've completed the analytical studies documentation needed to launch the test.
The launch has been met with robust demand for several doctors sitting the samples we continue to deepen the clinical evidence of our test with early adopters and expect to ramp up rapidly post Medicare coverage as a reminder, we're managing towards obtaining Medicare coverage in late 2024.
The second part of our winning <unk> strategy is to develop clinical evidence for top institutions and thought leaders around the world.
Administrative and clinical validity and utility of our test.
And early stage lung cancer, we're working with the tracer consortium led by lung cancer expert Dr. Charles Fun and teams at cancer Research U K, The Francis Crick Institute and University College, London.
Obviously this group conducted research on prior generations in Denmark assays and identified significant opportunities for detection improvement and is now using next personal to determine the clinical value of an ultra sensitive assay for early stage lung cancer.
The trace or X team presented compelling clinical evidence.
So a couple of weeks ago, highlighting the power of the next personal assay. There were three key findings first we.
We are seeing higher sensitivity up to four times higher than other liquid biopsy test analyze by tracer acts.
We found lung cancer six to 11 months ahead of standard imaging and significantly ahead of other tests and third we have the ability to determine the low and high recurring scripts, which could lead to improved therapy decisions. We.
We expect to complete cohort results from the Tracer X study to be published in mid 2024.
Breast cancer, we're actively processing samples from our Royal Marsden collaborations Royal Marsden as one of the leading global institutions in breast cancer and our work is focusing on patients with early stage disease for several subtypes, including ER positive her two positive and triple negative breast cancer.
While Marston collaboration provides us access to a well annotated samples with known clinical outcomes.
We plan to use our work here to provide a clinical data set to support our medical coverage of breast cancer.
The dataset is expected to be showcased in mid 2024.
Finally, we recently added two new collaborators in breast cancer to augment our path for Medicare coverage first we're now working with Dana Farber in breast cancer, which provides us a robust set of her two respectively gathered samples and also against two correct, which gives us access to a study that was a prospectively gathered triple negative breast cancer.
These are extremely important because we now have multiple prospective cohort and we can leverage to drive both commercial success and underpinned our reimbursement submission.
Additionally for breast cancer, we have our own prospective clinical trial called be stronger than it has begun made progress establishing committed sites and are targeting to begin enrolling patients later this year.
Our Io therapy monitoring we have multiple collaborations underway. Our key studies are pan cancer dataset with valid at Hebron Institute of oncology P. H I O designed to demonstrate.
Demonstrated leverage the efficacy of next personal for Io therapy monitoring.
Try yoga gives us access to a large well annotated banking perspective, we gathered samples that are the cornerstone of our efforts to achieve reimbursement coverage for pan cancer Io therapy monitor we have begun testing V. H I O patient samples and we expect to present clinical data next year. This is an exciting collaboration and have joined existing work.
We've announced a melanoma and I O therapy with the University Medical Center of Hamburg, Dorf also known as U K and also our Duke relationship.
We're driving hard to process all the samples across these many collaborations and expect collaborators and investigators to report data through 2024.
To submit for multiple and to be able to submit this data into multiple publications.
With all this data gathered we plan to submit for reimbursement coverage and all three cancer types next year, and we're targeting to achieve coverage for at least one of them in 2024.
Third part of our strategy is a unique partner centric path towards commercialization.
We're seeking partnerships that help us amplify our message to the marketplace, helping us market and sell our test in a capital efficient manner.
We continue to work on that core part of our strategy and we believe it provides significant opportunities to accelerate commercial traction while minimizing investment.
The fourth and final part of our strategy is to leverage our biopharma relationships and establish infrastructure to submit next person was the assay choice to determine clinical trial enrollment monitor therapy effectiveness and develop new insights into treatment pathways. This quarter, we continued to deepen our business with pharma clients in particular.
Driving next personal forward in several discussions.
These relationships is important to us and in September we announced that Mr. Shiga Bhandari joined personality as SVP regulatory quality clients. Most recently she was VP regulatory affairs at ground and has also held leadership roles at Roche diagnostics, she and her team returning a password to establish our next person when I say.
As the clinical trial with Goldman assay of choice for our pharma partners.
Next person was the key driver of revenue growth moving forward and over the last quarter. We've demonstrated strong performance for the test and one of the best datasets available globally. We've deepened the list of our Blue chip collaborators and we launched our product are.
Progress in executing on our women women <unk> strategy has been impressive. We've also made progress in other parts of the business as we've mentioned before our platform is powering personalized cancer therapies as announced earlier. This year. We are a key partner for me. During this clinical trial work as they pursue regulatory approval of their personalized therapies. We are.
Partnering with return across the clinical studies and is broken but turning to disclose they'd begun enrolling patients in their phase III clinical trial for melanoma.
We expect this partnership to be a significant driver of revenue for us in 2024, and 25 with thousands of new cancer patients each year in the U S alone our aspirations are for personalities technology to power. The development of next generation vaccines and therapies as we are doing with our <unk> partnership.
Lastly, turning to our population sequencing business. We recently received a new task order from the U S Department of veteran Affairs million Veterans program known as the VA MVP the amount of $7 $5 million. This relationship stretches back several years and we are proud to continue supporting the V. A N V P.
It's an exciting time at personality with much progress across multiple fronts and we appreciate our collaborators partners and investors being part of our journey to establish an ultra sensitive test at the forefront of B M. R. G Mark.
I'll now turn it over to Eric to review, our financial results for the quarter.
Thank you, Chris we executed very well in the third quarter and continue to meet our financial commitments.
Ill be providing detail about our third quarter financial results and guidance for the fourth quarter and full year.
Total company revenue for the third quarter of 2023 was $18 $2 million and increased 23% compared with the same period of prior year, primarily due to higher volume from Biopharma customers enterprise, which includes new terror and.
Population sequencing volume from the VA MVP.
Gross margin was 19, 1% for the third quarter compared with 28, 7% from the prior quarter and 16, 7% for the same period of the prior year.
So a decline of nine 6% was primarily due to the impact of lower selling prices to new tariffs as a result of their volume based pricing structure and to a lesser extent higher allocated facility cost to the operations lab now that all production testing has been moved from Menlo Park over to the new Fremont facility.
The year over year increase of two 4% was primarily due to operating leverage from higher revenue volume.
Operating expenses were $34 $3 million in the third quarter and included a onetime noncash impairment charge of $5 $6 million for a write down of the remaining lease asset for the Menlo Park facility that we recently vacated compared with $29 7 million for the same period of the prior year.
Excluding the onetime charge operating expenses were $28 $7 million and decreased $1 million from the same period last year.
We continue making progress to reduce our expense base by limiting investments to high priority initiatives, such as deepening clinical evidence to pursue reimbursement.
Transitioning to lower cost sequencing platforms and others.
R&D expense was $16 $7 million in the third quarter compared with 15 million for the same period last year and SG&A expense was $12 million compared with $14 8 million for the same period last year.
Net loss for the third quarter was $29 $1 million comparable net loss of $26 5 million for the same period of the prior year.
Excluding the noncash impairment charge mentioned earlier net loss would have been $23 5 million.
Net loss per share for the third quarter was 60 cents and the weighted average basic and diluted share count was $48 7 million compared with a net loss per share of 58 cents and a weighted average basic and diluted share count of $45 9 million in the same period of the prior year.
Now onto the balance sheet.
We finished the third quarter with a strong balance sheet with cash and short term investments of $127 million during.
During the quarter, we used $16 5 million of cash primarily to fund operations and we expect our cash balance to last approximately two years.
Now I'd like to turn to guidance.
For the fourth quarter of 2023, we expect total company revenue between $19 million to $20 million revenue from pharma test enterprise sales and other customers between 18 five to $19 5 million in revenue from population sequencing of approximately $5 million.
And for the full year of 2023.
<unk> increased our revenue guidance due to the strong demand for both pharma and enterprise sales now.
We now expect total company revenue between $73 million to $74 million with oncology revenue from pharma enterprise sales another customers between $64 million to $65 million.
In population sequencing revenue to be approximately $9 million.
In addition, we expect net loss of approximately $103 million, which is $10 million lower than the loss of $115 million in 2022.
And the net loss of 103 million includes the one time charge of $5 6 million for the Menlo Park facility.
Cash usage is expected to be below $17 billion and represents a reduction of approximately $50 million from 2022.
We look forward to updating you on our progress during the next conference call in a few months.
With that I will turn the call back over to the operator to begin the Q&A session.
Operator.
Okay.
We will now begin the question and answer session.
Ask a question you May press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question will come from Patrick Donnelly with Citi. Please go ahead.
Hey, guys. Thanks for taking the questions maybe one just on the <unk> side, you talked about the pharma opportunity. There can you just talk about what the funnel looks like at the moment in terms of those opportunities just trying to think about how to size that revenue opportunity the activity youre seeing and expectations going forward here.
Yeah, So we as.
As you know we've worked with I think.
And the last you know over time that we work with 16 of the top 20 Biopharma companies.
Immuno <unk> platform.
And that platform powers, a lot of the translational work that they do so we built relationships and many of those companies. We have been engaged in discussions. We originally launched it is in our U bold product and we've been building the revenue base and ex personal over the last year.
We announced <unk>, we announced our relationship with Astrazeneca, where they began using the assay and some of their efforts and we've been in since the data has come out with with with Tracer X. We continue to get significant interest we'd been in benchmarking.
Pilot studies with several Biopharma companies, we expect the revenue on the Biopharma side for next personal to be one of the nice revenue growth in 2024.
We move we move through the year those trials can be larger.
You know it can be it.
It can be significant so we're excited about the journey there.
Okay. That's helpful. And then you mentioned the reimbursement side going for.
Medicare coverage in 24 can you just talk about I guess the pathway. There you know what hurdles you have to clear reimbursement timing is always always tricky. So I guess when are you thinking that could come during the year and again what are the key catalysts, we should be keeping an eye out for as you progress towards that.
Yeah, no absolutely. So I mean, we are it is one of the things that is always tricky to try to predict timing because a lot of it beyond our control, but what is what is in our control is getting the samples with collaborators.
Some of the top collaborators I think theres seven or eight studies now we're working with across our core indications.
And.
You know the key thing there is to have analytical validity studies that show that the assay is robust across multiple different conditions.
The performance numbers that we did.
Completed all that with the launch of the product will be submitting that data for publication and that'll be one of the one of the datasets the publication there that will underpin reimbursement.
Success and progress the others will be clinical evidence in each one of these indications and so the core thing to watch for over 'twenty 'twenty. Four is the publication of the clinical evidence because that publication of the clinical evidence.
Test is valid in lung cancer breast cancer Io therapy, and that there is clinical utility there I E. We can accelerate the we can accelerate a doctor and a patient knowing when cancer as president of getting that published will be important to get through the coverage hurdle with.
With Medicare and so we plan on having all that accomplished across these indications and be able to submit for coverage and 'twenty 'twenty four and our goal is to have one of those Don Patrick by the end of 'twenty for cause I think will always had some roadblocks one way to.
Depending on the different indications so are we.
We're shooting to be able to submit for all three.
We're targeting to get one over the finish line by the end of the year.
Great I appreciate it guys.
Absolutely and you know for US the quarter has been really wanted to sort of checking off more and more boxes of lowering the risk for investors, who know the risk of getting the test live we check that off.
The risk of early clinical evidence check that off this quarter with some great evidence in and next is up.
And then the next big one is reimbursement and we keep stitching together.
Check that off so that's where we are thanks for the question.
And our next question will come from Tejas Savant with Morgan Stanley. Please go ahead.
Hi, This is Jason in for Kgs, congratulations on the quarter guys. So.
So my question is are the VA MVP to extending our contract for next year for $7 $5 million. This is down from $10 million. The previous year. What do you think it was a driver behind the lower rate and how should we think about this number going forward.
Hi, Jason This is Aaron in terms of the VA contract.
They don't say specifically the rationale for a dollar amount here and there, but it's our belief that was what they had been line from a budgetary standpoint.
It was down a little bit in terms of the way, we look at that $7 $5 million. It's good business, we've been doing business with the P. Eight for several years now back to 2012.
Our focus is really on the oncology business and so you know everything we do inside of our company is focused on driving.
Clinical evidence.
Commercial engine getting towards reimbursement driving M. R D with pharma.
Working with PCB manufacturers to be able to go in next point that technology and so in terms of you know.
Long answers here, but the focus is really on the I'll call. It your reference of a V. A it's been nice business for us in the past, but looking forward.
One college business is really more important for us.
Got it. Thank you that was helpful. And then if I may ask a follow up.
The core of the $121 million in cash.
Previously guided at just providing about two years of cash runway. So it's another three months to pass US how you think about cash management and financing opportunities over the next year.
Yeah. So.
You know earlier this year, we took some actions to extend our cash runway reduced expenses, we continue to reduce expenses every quarter, we're looking at and.
Discretionary spend and we're looking at what we absolutely critically need to go and invest in right along the path to go get clinical evidence done or reimbursement.
Other types of things, where we can defer or eliminate spend we've been doing so over the last few quarters. We've been continuously saying we have two years of cash runway and that's because we're successful in pushing things out deferring in different places right. So in terms of where we're at today. We believe we have a strong balance sheet to weather the storm the capital markets are very good.
As Chris mentioned, we have several milestones in front of us here in 2024.
Meaning getting more clinical evidence out being able to submit for reimbursement.
And yes, our targets are to be able to get reimbursed for at least one cancer type in 2024. So we believe we have enough capital to get us to reimbursement and be able to start to go up the ramp and then it starts to show some revenue for next personal in the clinic.
Thank you that was helpful.
Thanks, Jason.
And our next question will come from Dan Brennan with TD Cowen. Please go ahead.
What do you think so thanks for the questions guys, maybe it's on the commercial partner can you just kind of remind us on.
The type of partner, you're looking for kind of how advanced those discussions and when something like this might come about.
Yeah.
Thanks, Dan we've always said that like since.
It's finding a commercial partner was key to ultimately you know helping us bring this to market I've always believed that you're better off partnering these types of things that go on a lot of this particular climate.
In particular, it's.
You know, it's it's better to do that we think that the type of partner that works well.
As a part of it doesn't have an <unk> solution, but yet calls on and talks to oncologist.
So that they have those call points and they have those relationships and they can integrate this and and.
And ideally that partner would be able to integrate it into their into their call cycle and their talk track.
<unk>.
It helps to distinguish them.
The cutting edge.
Product that they're ringing.
Its luster two to their brand.
And so we've been engaging in those discussions continue to engage in discussions don't have anything.
To report.
At this point, but it's been a key part of our strategy because quite frankly, you know.
If we can if we can find a partner.
That gets that helps us commercialize through that journey and that reduces dramatically the amount of capital that we need to build a sales arkadi engine.
And I've done this in many several companies now built these out I know how to do that but at a cost of capital and so being able to leverage somebody to do it through.
Through the journey as part of our strategy, we have been able to execute on that yet, but I think having the product live and having great clinical data. It is and we're sitting where we are right now.
Feel like we're well situated to continue moving the ball down the field.
And would that be would that be something more likely.
After Medicare coverage gets in place. So you have more power or just kind of any any sense on timing of a commercial partnership.
When when we identify the right partner and get an agreement put together.
When we would announce something I think I think sooner.
Sooner is always better than later in these things honestly. The reason is because this current period that we're in we call. It early access program. So we're currently we have a set of early adopters that and we have you know demand in more sort of working through.
This is the time that you work through the system as you work through your call points.
Tracks you worked through your marketing material you build more clinical evidence you're starting to develop advocates and so and then when we get Medicare coverage, we expect to be all systems go pushing the gas down on the on the pushing.
Pushing the gas down and really trying to build revenue as quickly as we can on the back of that and so ideally having a commercial partner before we do that so we learned how to work together would be you'd be would be would be.
We're shooting for.
So we did we did announce that we've launched the product we have an early access program. So we are engaged with oncologists, we have real tests coming in to our operation now.
And in terms of the sales team, we have a small sales team today, but we will continue to add to that and build that into it at the right time until we have a partner right and so we're planning for success and like Chris mentioned.
Who is going to help us be capital efficient, we won't have to go and hire a really large sales force and spend a lot of money on that you know assuming we can find a partner soon.
Sooner rather than later, but we're going to continue down the path to build the commercial team until we do have something John Yeah.
And maybe just one follow up just on filing the three assays next year could you just give us a sense of like by the time you file what kind of dialogue you've had with Medicare are ahead of it just to ensure like you've got the right data package in place and.
I guess, it's fair to think out of colorectal breast would be the bigger opportunity just given the size of the market or that that'll be you know one of those two will be.
Are you where you probably feel you have the most opportunity just maybe any color on those two questions I think well I think it's a good it's a.
It's an interesting yeah. So the answer is yes, we will we will engage we've already had you already have had dialogues with with Palmetto.
We will continue to have dialogues with them as we go forward I think so the the three indications or lung breast and io or in different spots. So you know lung.
Is is one where we have a shot to be really like C.
Kind of the the early the first coverage really in that indication I think it's fair to say in early stage.
And we think the data is really compelling and had really great there and I O therapy. It was one of the first indications after CRC that got coverage and so there's a really nice nice benchmark set a date out there that we feel like we will have as robust or more complete or larger dataset can exceed can exceed at its size and so.
We feel like Io are well positioned in the breast cancer. We've just stitching together a wealth of studies as we've really pushed out on that that's one where theres coverage now by another player.
And so we you know you get some sense by what other players have done what you need to do and so we have a good sense of that but long as long as probably more open and the other ones are more clear about what we need to do but we feel like we'll be at good position across the three.
Great. Thank you.
And our next question will come from Mark Massaro with BTG. Please go ahead.
Hey, guys. Thank you for taking the questions. So my first one you know it was great to see the initial trace Rex study data readout.
Just for housekeeping is it right that we should see that next group of patients data readout around mid 24, that's the first part of my question.
Yeah, Hey, this is a this is rich I think that's a reasonable.
A reasonable target for us.
You know things can intervene to kind of make it come in or come out a little bit in terms of timing, but that's that's probably a reasonable assumption.
Okay, Great and then rich this one might be for you I think one of the interesting things about <unk> is that I think you know it started in non small cell lung cancer and I know, that's a big focus, but I believe Ah other cancer states like melanoma, prostate and renal cancer are being investigated.
Is that the case still and.
Are you guys, having some conversations with Charlie's group about potentially expanding beyond.
Beyond lung cancer into other cancer types.
Yeah, we haven't.
Publicly talked about them expanding beyond lung cancer, because lung cancer is our major focus but you can imagine there are discussions about.
Different avenues, such as cancer types with expanding our relationship with <unk>.
Okay.
I also wanted to ask about next Dx, which [laughter] yeah, I didn't hear any comments on how are the reimbursement discussions going there and then you know any.
Any update in terms of adoption and demand for the test.
Yeah, I mean, it's it's.
Yeah. So we continue the dialogue on next Dx and reimbursement we are still aspirational to get coverage ended the year still possible.
We know where we're managing towards that.
We you know we have a small handful of reps in the field and they do talk about it and they work on it and we are seeing samples.
<unk> coming in we are.
Our scene, we've always believed that works hand in glove with with Io monitoring for next personal and our early experience. So far is it that's true so that they.
<unk> often may be ordered together.
You know what.
But ah patients diagnosed in their later stage and they go on I O therapy for their candidate for that the Doctor will want to both create a baseline for next personal while at the same time enjoying being therapy selection and so we're seeing in our early access sites that that's that's that's the case.
So we're optimistic that the products will work.
Together in the marketplace from a messaging standpoint, so rather than send the C. G. B tests to vendor a and then send the next personal to us would be better to be able to just send them both to us and have a one stop shop and so we're seeing evidence that that will happen and so the two products the growth will actually happen to synergistically.
Okay. Great last question for me is on the modernity partnership.
I believe our modern is phase III melanoma clinical trial was expected to start in the second half of the year.
Do you have any update on that and how should we think about Madonna and some of that a broad interest on personalized cancer vaccines into the model in 2024.
Hey, Mark this is Aaron so yeah, so mcdermott did.
Start enrolling patients in the phase III trial in the second half like it was planned.
Things did get pushed to the right a little bit and so the enrollment has been slower than what we originally thought so although we're recognizing some revenue here in the fourth quarter, it's smaller than what we originally thought so it's our expectation now at this point in time that the ramp should start here into 2024 and.
And then into 2025 right. So the next two years could be quite lucrative.
Personality in terms of revenue ramp from.
The phase III work.
Okay. That's it for me thank you.
Thanks Mark.
And again, if you have a question you May press Star then one to join the queue.
Our next question here will come from swim cooler Rama <unk> with H C. Wainwright. Please go ahead.
Thank you.
Taking my questions.
I just wanted to.
I understand that a little bit more about.
What you're doing in terms of partnerships.
Our our commercialization. So you said that's one of your pillars for growth.
Can you expand on that.
Yeah sure so yeah.
I think we think that.
So we we offer and we have a test that we believe is the most sensitive M. R. D. Test, we think that product is unique and differentiated and you know my own experience in commercializing. These products with partners is that when you have a set of relationships.
With oncologists or other physicians.
As a sales group, having a new cutting edge products that you can bring in and walk in and talk to us actually.
It is actually something that distinguishes you. It makes you more valuable and that's that's that's that's good and so we're thinking that we're seeking partnerships that can help to augment that the partners.
Set of products to help them grow and build their talk tracks inside customers and deepen their relationships and broaden and broaden their offering at the same point in time for US you know.
While we know how to do this and we know how to build these products it's expensive to do it by ourselves and we will never in a relationship where we turn it over to somebody else, but being able to commercialize side by side would allow us to move a lot faster with a lot less investment and a lot less fundraising kit and so one of the things we've been very focused on.
One is how do we become ever more efficient ever more focused on the mission at hand here, which is to capture a decent part of this $20 billion market and part of that is having is having a partner to allow us to move faster because that will either be it will have less investment capital needed to be able to dramatically scale the company's revenue.
Or it will free up more capital to invest right back into the clinical study evidenced neither one of those either one of those two scenarios is good for shareholders. So that's what we're focused on.
Okay. Thank you thanks for taking my question.
Sure.
And our next question will come from Mike Matson with Needham. Please go ahead.
Hi, guys. This is Joseph on for Mike.
Hopefully this wasn't addressed already but I'm looking at your transcript right now I'm not seeing CNS. So was just wondering if maybe you could.
Talk about your expectations for cash burn as we start to you know move into 2024.
I guess is the is the strategy kind of similar to what was being done in 2023 I don't know if you guys still have much more wood to chop there but.
You know as you're nearing some of these commercial milestones.
We expect that to change pretty materially.
Hi, Jason This is Aaron so in terms of the cash burn cash runway question that you asked so we ended the quarter ended Q3 with close to a $121 million of cash and we said has basically two years of runway in 2023, our cash usage.
Gonna be below $70 million.
So looking into 2024, our expectation at this point in time and our estimates are for cash usage to be less in 2023 next year and change so.
As we go forward and that's going to there's going be a multitude of different things that contribute to reducing the cash usage.
Some revenue growth be gross margin expansion.
There are a lot of initiatives to improve gross margin.
In addition.
You know controlling our opex similar to what we've done this year, we reduced opex some $10 million, excluding the impairment charge that you just saw and you know we're going to continue to be prudent as we go into 2024.
Yeah.
Yeah.
Yeah.
Okay. Yeah, that's perfect. Thank you very much.
That's the only question from US appreciate it you guys.
Thanks, Jason.
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