Q4 2023 Personalis Inc Earnings Call

Operator: Earnings, and welcome to the Personalis fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Thanks, and welcome to the personnel its fourth quarter 2023 earnings conference call.

This time, all participants are in a listen only mode.

Operator: A brief question and answer session will follow the formal presentation. Once you require operator assistance during the conference, please press star zero on your telephone keypad. Reminder: the conference is being recorded. It is now my pleasure to introduce your host, Caroline Corner of Investor Relations. Thank you. You may begin.

A question and answer session will follow the formal presentation.

If you require operator assistance during the conference. Please press star zero on your telephone keypad.

Reminder, conference being recorded it is now my pleasure to introduce your host Caroline corner Investor Relations. Thank you you may begin.

Caroline V. Corner: Thank you, operator. Welcome to Personalis' fourth quarter and full year 2023 earnings call. Joining today's call are Chris Hall, Chief Executive Officer and President, Aaron Tachibana, Chief Financial and Chief Operating Officer, and Richard Chen, Chief Medical Officer and EVP, RN. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of U.S. securities laws.

Caroline V. Corner: Thank you operator, welcome to personnel since fourth quarter and full year 2023 earnings call. Joining today's call are Chris Hall, Chief Executive Officer, and President Aaron Tachibana, Chief Financial and Chief operating Officer, and Mr. Cheung, Chief Medical Officer, and EVP R&D.

Caroline V. Corner: All statements made on this call that do not relate to matters of historical facts should be considered forward looking statements within the meaning of the U S Securities laws.

Caroline V. Corner: For example, any statements regarding trends and expectations regarding our financial performance this year and longer term, cash runway, revenue expectations and timing, reimbursement goals, size and booking of orders, product, services, technology, clinical milestones, the outcome and timing of reimbursement decisions, expectations for our existing and future collaboration activities, cost expectations, our market opportunity, and 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 filing. Personalis undertakes no obligation to update these statements except as required by applicable law.

Caroline V. Corner: Example, any statements regarding trends and expectations for our financial performance this year and longer term cash run way revenue expectations on timing, but yes, we are.

Caroline V. Corner: Pressman golf cycling booking of orders product services technology clinical milestone the outcome and timing of reimbursement decisions expectations for our existing and future collaboration activities cost expectations, our market opportunity and business outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our car.

Caroline V. Corner: Expectations, we encourage you to review our most recent filings with the SEC, including the risk factors described in our most recent filings.

Caroline V. Corner: Personnel undertakes no obligation to update these statements except as required by applicable law.

Caroline V. Corner: Our press release with full year and fourth quarter 2023 results is available on our website, www.personalis.com, under the investor 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 5 p.m. Now, I would like to turn the call over to Chris for his comments on full year and fourth quarter business. Thank you, Caroline.

Caroline V. Corner: Our press release with the full year fourth quarter 'twenty 'twenty. Two result is available on our website www dot personnel of Dot com under the investors section and includes additional details about our financial results our website all towards our latest SEC filings, which we encourage you to review.

Caroline V. Corner: 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 call over to Chris for his comments on full year and fourth quarter business highlights.

Caroline V. Corner: Yeah.

Christopher M. Hall: Thank you Caroline and good afternoon, everyone and thank you for joining US 2023 was your strong performance for personality as we built a culture of execution and winning.

Christopher M. Hall: Good afternoon, everyone, and thank you for joining us. 2023 was a year of strong performance for Personalis as we built a culture of execution and winning. We focused on the MRD market, reduced our annual expenses by $35 million, and extended our cash runway to two years. We delivered on all of our commitments to investors and positioned our company for a pivotal 2024. We ended the year with $73.5 million in revenue, a 13% year-over-year growth. And our culture of execution yielded many important wins.

Christopher M. Hall: We're focused on the <unk> market reduced our annual expenses by $35 million and extended our cash runway to two years delivered on all of our commitments to investors investors and positioned our company for a pivotal 2024.

Christopher M. Hall: We ended the year with $73 5 million in revenue, 13% year over year growth.

Christopher M. Hall: And our culture of execution yielded many important wins, we received Medicare coverage for next year.

Christopher M. Hall: We received Medicare coverage for NEXT-DX, which is our high-performance, comprehensive genomic profiling, or CTP test. We launched an early access program for our ultra-sensitive MRD test, NEXT-Personal. We presented compelling early-stage lung cancer MRD data with our partners at Tracer X.

Christopher M. Hall: Our high performance comprehensive genomic profiling or CGP tests, we launched an early access program for ultra sensitive D. Tests next personal we presented compelling early stage lung cancer data with our partners at <unk>, we entered collaborations with multiple leading cancer centers to develop.

Christopher M. Hall: We entered collaborations with multiple leading cancer centers to develop robust clinical evidence. We entered partnerships with companies, including Myriad, Tempus, and Moderna, and we extended our agreement. With momentum across our business, we're excited for what lies ahead. Taking a step back, we're focused on achieving scale and our 100 million in 2025 plan, where we intend to cross 100 million in annual revenue in 2025. And then we put in place a growth strategy with three engines to propel us. First and most importantly, we are executing on our WIN and MRD strategies.

Christopher M. Hall: Robust clinical evidence, we entered partnerships with companies, including myriad Tempus and maternal and we extended our agreement with them.

Christopher M. Hall: With momentum across our business. We're excited for what lies ahead.

Speaker Change: Taking a step back.

Speaker Change: Focused on achieving scale and our $100 million in 2025 plan, we intend to cross $100 million in annual revenue in 2025, and then we put in place a growth strategy with three engines to propel us there.

Speaker Change: First and most importantly, we are executing on our winning strategy <unk> market using liquid biopsy to find evidence of molecular residual disease or cancer recurrence is estimated to mature into a $20 billion opportunity and we are establishing personality as a leading company in this space.

Christopher M. Hall: The MRD market using liquid biopsy to find evidence of molecular residual disease or cancer recurrence is estimated to mature into a $20 billion opportunity, and we are establishing Personalis as a leading company in the space. The clinical evidence is coming together to demonstrate that an ultrasensitive test provides tremendous value to patients, doctors, and partners, and that puts Personalis in a position to grow rapidly. Second, we're leveraging our core ImmunoID Next platform to support biopharma customers in their drug discovery efforts and personalized cancer vaccine companies in their efforts to establish a new generation of. Our proprietary solutions create a unique molecular fingerprint of a patient's cancer, allowing for new insights and pushing the entire field forward. Third, we are deepening and expanding our relationships with our enterprise customers, such as Natara and the VA MVP, with our Personalis Insight approach that allows customers to leverage our technology and ability to produce cost-effective assets.

Speaker Change: The clinical evidence is coming together to demonstrate that an ultra sensitive test provides tremendous value to patients doctors and partners Annapolis personnel, Allison and are positioned to grow rapidly.

Speaker Change: We're leveraging our core immuno <unk> next platform to support Biopharma customers in their drug discovery efforts and personalized cancer vaccine companies and their efforts to establish a new generation of therapies.

Speaker Change: Brian Carey solutions create a unique molecular fingerprint of a patient's cancer, allowing for new insights and pushing the entire field forward.

Speaker Change: Third we are deepening and expanding our relationships with our enterprise customers such as new tearing the P. A M V P with our personnel inside approach that allows customers to leverage our technology and ability to produce cost effective assays.

Christopher M. Hall: I'll now walk you through a more tactical view of our 2024 strategy as we push into delivering on our $100 million in 2025 plan. Before I turn it over to Aaron, who will detail our 2023 financial highlights and our guidance for this year. Starting with NextPersonal, our first growth engine, I'll quickly remind you that our WIN and MRD strategy has four pillars. First, focus on and launch our test in cancer types where an ultrasensitive liquid biopsy test can unlock significant value for patients, payers, and partners.

Christopher M. Hall: Now I'll walk you through a more tactical view of our 2024 strategy as we push into deliberate on our $100 million in 2025 planned before I'll turn it over to Eric who will detail, our 2023 financial highlights and our guidance for this year 2024.

Christopher M. Hall: Starting with next personal our first growth engine I'll quickly remind you that our winning new marquee strategy has four pillars first focus on launch our test in cancer types, where an ultra sensitive liquid biopsy test can unlock significant value for patients payers and partners second.

Christopher M. Hall: Second, drive reimbursement by developing robust clinical evidence and partnering with the top global collaborators. Third, to leverage our deep pharma relationships to accelerate adoption and power our revenue growth by using NexPersonal in clinical trials, and fourth, to commercialize NexPersonal with a partner center. Now delving into the first pillar, we previously explained how we're developing evidence to support next personal's clinical usage in early stage lung cancer, breast cancer, and IOtherapy monitoring. Our focus on these cancers is intentional, as we believe we can win with our ultrasound. At each indication, we believe that detecting a recurrence as early as possible can dramatically impact a patient's health and that a highly sensitive test can be used to deescalate patients from ineffective treatments, potentially saving payers money and sparring patients therapies and procedures they may not need.

Christopher M. Hall: To drive reimbursement by developing robust clinical evidence and partnering with a top global collaborators.

Christopher M. Hall: Third to leverage our deep pharma relationships to accelerate adoption and power our revenue growth by using an extra personnel using next personal and clinical trials and fourth to commercialize next personal with a partner centric model.

Christopher M. Hall: Now delving into the first pillar. We previously explained how we are developing the evidence to support next personal clinical usage in early stage lung cancer breast cancer and Io therapy monitoring.

Christopher M. Hall: Our focus on these cancers is intentional as we believe we can win with our ultra sensitive approach in each indication, we believe that detecting a recurrence as early as possible can dramatically impact a patient's health and that a highly sensitive test can be used to deescalate patients from ineffective therapies potentially saving payers money.

Christopher M. Hall: Inspiring patients therapies and procedures they may not.

Christopher M. Hall: You might recall that we launched our next personal DX-LDT for MRD in October 2023, and we are currently selectively launching that under an Early Access Program, or EAP. We are the first ultra-sensitive test to market, and the adoption of our test has been rapid, and it's indeed exceeded our initial target. We have now characterized and are monitoring more than 250 patients referred to us by only 10 doctors enrolled in the program. Now, we've capped the number of MDs in our Early Access Program, and we have a wait list of more than 150 doctors that have indicated they want to be included. Moving to our second pillar, I believe many of you saw the compelling early stage lung cancer clinical MRD data presented by Professor Charles Swanton and Dr. James Black with Tracer X. The TRACERx study is greatly advancing the understanding of lung cancer and cancer biology, and NexPersonal is enabling the ultra-sensitive, specific detection of CT DNA before and after surgery through treatment and during surveillance for recurrent cancer, which we believe will ultimately allow clinicians to make more informed decisions about patients.

Christopher M. Hall: You might recall that we launched our next personal Dx L. D. T for MRV in October 2023, and we are currently selectively launching that and drive early access program or EAP. We earned the first ultra sensitive test the market and the adoption of our test has been rapid and indeed, it's exceeding our initial targets.

Christopher M. Hall: We now have characterized and are monitoring more than 250 patients referred to us I only 10 doctors enrolled in the program that we've kept the number of Mds in our early access program. We have a waitlist of more than 150 doctors that have indicated they wanted to be included.

Christopher M. Hall: Moving to our second pillar I believe many of you saw the compelling early stage lung cancer clinical MRI deep data presented by professor.

Christopher M. Hall: Charles Swanton and Dr. James Black with Tracer October.

Christopher M. Hall: Tracer X study is greatly advancing the understanding of lung cancer and cancer biology, and the next and next personal is enabling an ultra sensitive specific detection of C. T DNA before and after surgery through treatment and during surveillance for recurrent cancer, which we believe will ultimately announce clinicians to make more.

Christopher M. Hall: More informed decisions about patient care.

Christopher M. Hall: To put it in simple terms, the data show that our ultrasensitive approach can detect cancer up to 11 months before it is seen. We are completing the testing of the full cohort for the TRACERx study and expect our collaborators to submit it for public review in 2024. We expect that work, once published, to form the foundation of a Medicare submission for lung cancer. In breast cancer, we completed processing samples from our collaboration with the Royal Marston, one of the leading global institutions for breast cancer. Our work here is focusing on patients with early-stage disease for several subtypes, including ER-positive, HER2-positive, and triple-negative breast cancer. The Royal Marston Collaboration provides access to a well-annotated set of samples with no clinical outcomes.

Christopher M. Hall: To put it in the simplest terms the data show that our ultra sensitive approach can detect cancer up to 11 months before imaging.

Christopher M. Hall: We're completing the testing of the full cohort for the tracer X study and expect our collaborators to submit in 2024 for publication and we expect that work once published to form the foundation of our Medicare submission for lung cancer.

Christopher M. Hall: In breast cancer, we completed processing samples from our collaboration with the Royal Marsden, one of the leading global institutions in breast cancer.

Christopher M. Hall: Our work here is focusing on patients with early stage disease for several subtypes, including ER positive her two positive triple negative breast cancer.

Christopher M. Hall: The Royal Marsden collaboration provides access to a well annotated set of samples with known clinical outcomes.

Christopher M. Hall: We plan to use our work here to provide a clinical data set to support Medicare coverage of breast cancer. This data set is expected to be showcased in mid-2024. We're also working with the Dana-Farber Cancer Institute in breast cancer, which provides us with a robust set of HER2-positive prospectively gathered samples, and with the Curry Institute, which provides access to a study in triple negative breast cancer. These collaborations are extremely important because we have multiple cohorts that we can leverage to drive commercial success and underpin our reimbursement submission. Additionally, for breast cancer, our own perspective clinical trial called Be Stronger is underway.

Christopher M. Hall: We plan to use our work here to provide a clinical datasets to support Medicare coverage of breast cancer. This.

Christopher M. Hall: This data set is expected to be showcased in mid 2024. We are also working with the Dana Farber cancer Institute in breast cancer, which provides us with a robust set helps her two positive prospectively gathered samples and with the Curry Institute, which provides access to a study in triple negative breast cancer. These calls.

Christopher M. Hall: Operations are extremely important because we have multiple cohorts that we can leverage to drive commercial success and underpinned our reimbursement submission. Additionally for breast cancer, our own prospective clinical trial called be stronger is underway. We've made progress establishing committed sites and we've begun enrolling patients breast cancer is an important priority.

Christopher M. Hall: We've made progress establishing committed sites, and we've begun enrolling patients. Breast cancer is an important priority for us, and we continue to deepen our collaborations and expand our clinical. Turning to Iotherapy Monitoring, our key study is a pan-cancer data set with the VALP, the Hebron Institute of Oncology, or VHIO, designed to demonstrate and leverage the efficacy of next person.

Christopher M. Hall: For us and we continue to deepen our collaborations and expand our clinical evidence.

Christopher M. Hall: Turning to I O therapy monitoring our key study is a pan cancer dataset with about the Hebron Institute of oncology or a P. H, Idaho design to demonstrate and leverage the efficacy of next personal <unk> gives us access to a large well annotated bank of prospectively gathered samples that are the.

Christopher M. Hall: VHIO gives us access to a large, well-annotated bank of prospectively-gathered samples that are the cornerstone of our efforts to achieve reimbursement coverage for pan-cancer iotherapy monitoring. We've begun testing VHIO patient samples, and expect clinical data to be presented in the middle of 2024. This exciting collaboration joins existing work we've announced on melanoma and iotherapy with the University Medical Center of Hamburg-Eppendorf, also known as UKE, and our Duke and UC San Diego colleagues.

Christopher M. Hall: None of our efforts to achieve reimbursement coverage for Pan cancer Io therapy monitoring.

Christopher M. Hall: We began testing in ph ILD patient samples and expect clinical data to be presented in the middle of 2020 for this exciting collaboration joins existing work you've announced on melanoma and Io therapy, but the University Medical Center, our Hamburg Nerf also known as K E and our Duke and UC San Diego relationships. These datasets will.

Christopher M. Hall: These data sets will form the core of our Medicare submission for coverage for IO Therapy Monitor. Reimbursement coverage is accomplished with great products that demonstrate clinical utility and a relentless focus on execution to build and publish the data. Our team at Personalis is focused on delivering data to collaborators that spotlight the compelling performance of our approach and then submitting for reimbursement coverage for all three cancer types this year. The third pillar of our Next Personal strategy is to leverage our biopharma relationships to drive the use of Next Personal in clinical trials. We are engaged with most of the world's top biopharma customers and have received positive feedback on our platform. Customers want an ultrasensitive approach to ensure that only the most appropriate patients enter into a clinical trial. The promise of an ultrasensitive assay is that we believe patients testing negative are much less likely to. This would mean for our biopharma customers that these patients are less likely to benefit from a therapeutic intervention.

Christopher M. Hall: Form the core of our Medicare submission for coverage for I O therapy monitor.

Christopher M. Hall: Reimbursement coverage is accomplished with great products that demonstrate clinical utility and a relentless focus on execution to build and publish the data our team at personality is focused on delivering data to collaborators that spotlight. The compelling performance of our approach and then submitting for reimbursement coverage for all three cancer types. This year.

Christopher M. Hall: The third pillar of our next personal strategy is to leverage our biopharma relationships to drive the use of next personal clinical trials. We are engaged with most of the worlds top biopharma customers and have received positive feedback on our platform customers want an ultra sensitive approach to ensure that only the most appropriate patients enter into.

Christopher M. Hall: Clinical trial, the promise of an ultra sensitive assay is that we believe patients testing negative are much less likely to recur. This would mean for our biopharma customers that these patients are less likely to benefit from a therapeutic intervention.

Christopher M. Hall: The data that the TRACERx team analyzed on lung cancer indicated that patients testing ctDNA negative on our assay largely didn't recur and were still alive five years later. This holds out the promise that Next Personal could be an excellent approach to optimize biopharma trials. Indeed, here in the first quarter, we've already booked record new orders for Next Personal, and we believe it will be a driver of revenue moving forward and an important way for us to deepen the clinical utility of Next Personal. Now I'll move on to the fourth and final pillar, commercializing Next Personal using a partner-centric model. On our last call, we mentioned that we are seeking partnerships that help us amplify our message to the marketplace, allowing us to market and sell our test in a capital-efficient way.

Christopher M. Hall: The data that the tracer X team analyzed on lung cancer, indicating that patients testing Cte DNA negative on our assay largely didn't recur and we're still alive. Five years. Later this holds out the promise that next personal could be an excellent approach to optimize biopharma trials. Indeed here in the first quarter, we've already booked record.

Christopher M. Hall: New orders for next personal and we believe it will be a driver of revenue moving forward in an important way for us to deepen the clinical utility of next personnel now I'll move on to the fourth and final pillar commercializing next personal using a partner centric model on our last call. We mentioned that we are seeking partnerships that help us amplify our message to the market.

Christopher M. Hall: Allowing us to market and sell our test in a capital efficient manner in December.

Christopher M. Hall: We announced our key partnership with Tempus to commercialize next personal DXN clinics with oncology. We are thrilled that Tempest selected us as their MRD tumor-informed choice to offer to their customers. Under the agreement, we will leverage Tempest's sales channel, which consists of more than 200 sales professionals calling on oncologists to co-commercialize an ex-personal DX.

Christopher M. Hall: We announced our key partnership with Tempus two commercialized next personal Dx in clinics with oncologist, we are thrilled that temper selected us as their <unk> tumor informed choice to offer to their customers under the agreement we will leverage Tempest sales channel, which consists of more than 200 sales professionals, calling on oncologists to co.

Christopher M. Hall: <unk> personal accident accelerate growth personality will process samples in our lab, we will obtain reimbursement and envoys health insurance payers and patients under the arrangement, while paying campus fair market value for the commercial services they provide.

Christopher M. Hall: Personalis will process samples in our lab. We will obtain reimbursement and invoice health insurance payers and patients under the arrangement while paying Tempest fair market value for the commercial services they provide. Overall, the deal is worth approximately $30 million for Personalis should all the milestone payments be triggered and if Tempest fully exercises its worth.

Christopher M. Hall: Overall, the deal is worth approximately $30 million for personnel and all of the milestone payments be triggered and if tempus fully exercises their warrants. Most importantly, though it allows us to ramp up our commercial efforts quickly with minimal cash investments, we will work through 2024 to expand our early access program to include Tempest, and we'll learn how to.

Christopher M. Hall: Most importantly, though, it allows us to ramp up our commercial efforts quickly with minimal cash. We will work through 2024 to expand our early access program to include Tempest, and we'll learn how to work together as partners, integrating our business systems and refining our message to ecologists. This is an exciting relationship that paves the way to achieving commercial traction and capital efficiency. Now, while we made strides with our first growth engine, our win in MRD strategy to establish NextPersonal as a leading MRD test, we've also made progress with our second growth engine, leveraging our ImmunoID Next platform to deepen relationships with biopharma customers who use the offering to pioneer new therapies and enterprise customers as they develop or ramp up volume We previously told you about our partnership with Moderna and Personal Cancer Therapies, where Moderna is utilizing our platform in their mRNA cancer program.

Christopher M. Hall: To work together as partners integrating our business systems and refining our message to our colleges. This is an exciting relationship that paves the way to achieving commercial traction in a capital efficient manner.

Christopher M. Hall: Now, while we made strides with our first growth engine, our win and M. R&D strategy to establish next personal was a leading M. R. D. Tests. We've also made progress with our second growth engine, leveraging our immuno <unk> next platform to deepen our relationships with biopharma customers, who use the offering to pioneer new therapies and enterprise customers as they develop.

Christopher M. Hall: Our ramp up volume for tissue and farm products.

Christopher M. Hall: We previously told you about our partnership with modern and personal cancer therapies, where Madonna is utilizing our platform and their M. RNA cancer program. We have several other partners that work in this space as well with <unk> and its partner Merck are enrolling patients in clinical trials and we expect our collaboration with <unk> to be a driver of revenue for us at 24.

Christopher M. Hall: We have several other partners that work in the space. Moderna and its partner Merck are enrolling patients in clinical trials, and we expect our collaboration with Moderna to be a driver of revenue for us in 2024 and 2025. In November, we disclosed that Marriott is expanding its pharmaceutical service offerings by introducing our ImmunoID Next platform to its pharmaceutical partners who use Marriott's cancer tests.

Christopher M. Hall: 2025.

Christopher M. Hall: In November we disclosed that Marriott is expanding its pharma service offerings by introducing our <unk> next platform kids pharmaceutical partners, who use marriott's cancer test. This is another exciting opportunity to continue to grow our biopharma customer base myriad as a pioneer in the industry and we're excited to be collaborating with them.

Christopher M. Hall: This is another exciting opportunity to continue to grow our biopharma customer base. Myriad is a pioneer in the industry, and we're excited to be collaborating. Last month, we disclosed that we have also partnered with ClearNote Health. ClearNote has an epigenomic platform that we believe is gaining traction with biopharma customers by allowing those partners to detect cancer earlier, monitor disease progression, and understand mechanisms of resistance with the aim of identifying promising drug targets and biomarkers.

Christopher M. Hall: Last month, we disclosed that we also partnered with clearer now would help clear note has an epic genomic platform that we believe is gaining traction with biopharma customers by allowing those partners to detect cancer earlier monitoring of disease progression and understand mechanisms of resistance with the aim of identified promising drug targets and biomarkers.

Christopher M. Hall: In this relationship, Personalis' biopharma sales team will bring ClearNote's products to our customers, which provides another growth vehicle. Relationships like the Myriad and ClearNote deals are examples of how we expect our partner-centric approach to drive our revenue going forward. We are laser-focused on adding value to biopharma customers with a comprehensive suite of products and services and accelerating our growth rate. You will know when Aaron walks through guidance for the year ahead that we expect our biopharma segment to grow by more than 20% in 2024. This is a reflection of the progress we are making serving this segment. The third engine of our growth strategy is growing our people side approach as we service enterprise customers. In these relationships, partners adopt our platforms and technologies to power their solutions and provide new insights to their customers. We have two large relationships where this is the case. First, with Niterra.

Christopher M. Hall: And this relationship personalities Biopharma sales team will bring clear nodes products to our customers, which provide another growth vehicle.

Christopher M. Hall: <unk> shifts like the myriad and clear no deals are examples of how we expect our partner centric approach to drive our revenue going forward. We are laser focused on adding value to biopharma customers, a comprehensive suite of products and services and accelerating our growth rate you will know when Aaron walks through guidance for the year ahead, we expect our biopharma segment to grow.

Christopher M. Hall: So in 2024 by more than 20%. This is a reflection of the progress we are making serving this segment.

Christopher M. Hall: The third engine of our growth strategy is growing our personnel side approach as we service enterprise customers and these relationships partners adopt our platforms the technology to power their solutions and provide new insights to their customers. We have two large relationships through this is the case first men's knit Kara we partnered with the tariff for a few years.

Christopher M. Hall: We've partnered with Niterra for a few years, and they've leveraged our sequencing platform to analyze the exome as a part of their Cigniterra product. At the end of the year, we extended our agreement with Niterra through the end of the year. We will work this year with Niterra to evolve our platforms so we can reduce our price to them while growing our margins. To those ends, we expect our revenue to decline this year from last, but we expect our margins to improve, and we are optimistic we have put in place the foundation to continue the relationship. Our second key enterprise relationship is with the VA. The VA utilizes our whole genome sequencing capabilities to power the Million Veterans Program, a national research program looking at how genes, lifestyle, military experience, and exposure affect health and wellness in veterans.

Christopher M. Hall: <unk> leveraged our sequencing platform to analyze the exome as part of their Cigna tariff product at the end of the year, we extended our agreement with <unk> through the end of 2024, we work this year with new Terra to all of our platforms. So we can reduce our price to them while growing our margins to those ends we expect our revenue to decline this year from the terror and expect our margins to improve in our optima.

Christopher M. Hall: Mystic, we put in place the foundation to continue the relationship over time, our second key enterprise relationship is with the VA. The VA utilizes our whole genome sequencing capabilities to power the million Veterans program, a national research program looking at how teams lifestyle military experience and exposure affects health and wellness and better.

Christopher M. Hall: We have helped power this program with the VA for years, and we're excited to continue the work. Both of these relationships are examples of how our platforms drive value for partners. We're focused on expanding our efforts with additional partners this year, and we've made significant progress across multiple fronts. And we appreciate our collaborators, partners, and investors being part of the journey to establish an ultra sensitive test at the forefront of the emergency. I want to especially thank my colleagues and our team at Personalis for their extraordinary efforts in 2023 to navigate through a challenging climate as we reduced headcount, grew our revenue, launched new products, achieved coverage, and showcased truly transformative clinical data. 2024 is an exciting year, and we look forward to updating you on our progress towards our $100 million in 2025 initiative and our win in the MRD strategy. With that, I will now turn it over to Aaron to review our finale. Thank you, Chris.

Christopher M. Hall: We have helped power this program with the VA for years and we're excited to continue the work in 2020 for both of these relationships are example of how our platforms drive value for the partners are focused on expanding our efforts with additional partners. This year, we've made significant progress across multiple fronts and we appreciate our collaborators.

Christopher M. Hall: Partners and investors being part of the journey to establish an ultra sensitive test at the forefront of the emerging markets I'm wondering, especially thank my colleagues and our team at personality for their extraordinary efforts in 2023 to navigate through a challenging climate as we reduced head count grew our revenue launched new products chief coverage showcase truly <unk>.

Christopher M. Hall: From formative clinical data 2024 is an exciting year and we look forward to updating you on our progress towards our $100 million in 2025 initiative and our women MRV strategy with that I will now turn it over to Aaron to review our financial results.

Aaron L. Tachibana: Thank you Chris.

Aaron L. Tachibana: Our fourth quarter and full year 2023 financial results and milestone achievements demonstrate our ability to execute crisply.

Aaron L. Tachibana: Our fourth quarter and full year 2023 financial results and milestone achievements demonstrate our ability to execute crisply. And importantly, we continue to meet our financial commitments. I will be providing details about the fourth quarter and full year 2023 financial results and guidance for the first quarter and full year of 2024. Total company revenue for the fourth quarter of 2023 was $19.7 million and increased 18% compared to $16.7 million for the same period of the prior year. The increase in revenue was due to higher volume for biopharma customers and the BAMBP. For the full year of 2023, total company revenue was $73.5 million, an increase of 13% compared with $65 million for the full year of 2022. The full-year revenue increase was due to higher volume for Biopharma customers, Natera, and BAMBP. Gross margin was 26.5% for the fourth quarter compared with 13.8% for the same period of the prior year.

Aaron L. Tachibana: And importantly, we continued to meet our financial commitments.

Aaron L. Tachibana: I will be providing details up fourth quarter and full year 2023 financial results.

Aaron L. Tachibana: Guidance for the first quarter and full year of 2024.

Aaron L. Tachibana: Total company revenue for the fourth quarter of 2023 was $19 7 million and increased 18% compared to $16 7 million for the same period prior year.

Aaron L. Tachibana: The increase in revenue was due to higher volume for Biopharma customers and the VA MVP.

Aaron L. Tachibana: For the full year of 2023 total company revenue was $73 5 million and increased 13% compared to $65 million for the full year 2022.

Aaron L. Tachibana: The full year revenue increase was due to higher volume biopharma customers, the terror and the VA MVP.

Aaron L. Tachibana: Gross margin was 26, 5% for the fourth quarter compared with 13, 8% for the same period of the prior year.

Aaron L. Tachibana: The year over year increase of 12, seven percentage points was primarily due to operating leverage from 18% higher revenue volume and also an increase in work performed for product development and clinical evidence generation. It is classified as R&D expense.

Aaron L. Tachibana: The year-over-year increase of 12.7 percentage points was primarily due to operating leverage from the 18% higher revenue volume and also an increase in work performed for product development and clinical evidence generation, which is classified as R&D expense. For the full year of 2023, gross margin was 24.8% compared with 20.5% for the full year of 2022. The 4.3 percentage points of margin expansion was primarily due to favorable operating leverage from the 13% increase in revenue volume. Operating expenses were $29.2 million in the fourth quarter and included a one-time expense of $4 million for employee severance costs from the reduction in the workforce, compared with $34.4 million for the same period of the prior year. Excluding employee severance costs, operating expenses were $25.1 million and decreased $9.3 million from the same period last year.

Aaron L. Tachibana: For the full year of 2023 gross margin was 24, 8% compared with 25% for the full year 2022.

Aaron L. Tachibana: Four three percentage points of margin expansion was primarily due to favorable operating leverage from the 13% increase in revenue volume.

Aaron L. Tachibana: Yeah.

Aaron L. Tachibana: Operating expenses were $29 2 million in the fourth quarter and included a onetime expense of $4 million for employee severance costs from the reduction in workforce compared with $34 4 million for the same period of the prior year.

Aaron L. Tachibana: Excluding the employee severance costs operating expenses were $25 1 million and decreased $9 3 million from the same period last year.

Aaron L. Tachibana: R&D expense was $13.6 million in the fourth quarter, compared with $16.6 million for the same period last year. And SG&A expense was $11.5 million, compared with $17.8 million for the same period last year. For the full year of 2023, operating expenses were $128.1 million and included severance and lease impairment costs of $13.6 million compared with $128.9 million for the full year of 2022. In 2023, we made significant progress in reducing our expense base by approximately $35 million annually. The net loss for the fourth quarter was $26.6 million, compared with $31.1 million for the same period of the prior year.

Aaron L. Tachibana: R&D expense was $13 6 million in the fourth quarter compared with $16 6 million for the same period last year and SG&A expense was $11 5 million compared with $17 8 million for the same period last year.

Aaron L. Tachibana: For the full year of 2023.

Aaron L. Tachibana: Operating expenses were $128 1 million.

Aaron L. Tachibana: And included severance and lease impairment costs of $13 6 million compared with $128 9 million for the full year of 2022.

Aaron L. Tachibana: In 2023, we've made significant progress in reducing our expense base by approximately $35 million annually.

Aaron L. Tachibana: Net loss for the fourth quarter was $26 6 million compared to $31 1 million for the same period of the prior year.

Aaron L. Tachibana: The fourth-quarter net loss included $4 million from employee severance costs and also an additional $4 million of non-cash expense related to the fair value accounting of the outstanding warrants issued to Tempe. This non-standard expense was a result of the increase in the fair value of the warrants at December 31st, 2023, compared with the fair market value when the warrants were issued. The net loss per share for the fourth quarter was $0.54, and the weighted average basic and diluted share count was $49.6 million, compared with $0.67 and the weighted average basic and diluted share count of $46.3 million for the same period of For the full year of 2023, the net loss was $108.3 million compared with $113.3 million for the full year of 2022. Portfolio net losses included $8.1 million of employee severance costs, $5.6 million of a lease impairment write-down for the Menlo Park facility previously vacated, and a $4 million expense related to the fair value accounting of the outstanding warrants issued to.

Aaron L. Tachibana: The fourth quarter net loss included $4 million from employee severance costs and also an additional $4 million of noncash expense.

Aaron L. Tachibana: Related to the fair value accounting.

Aaron L. Tachibana: Outstanding warrants issued to Tempus.

Aaron L. Tachibana: This non standard expense was the result of the increase in fair value of the warrants at December 31, 2023, compared with a fair value the fair market value when the warrants were issued.

Aaron L. Tachibana: The net loss per share for the fourth quarter was 54 and.

Aaron L. Tachibana: And the weighted average basic and diluted share count was $49 6 million compared with 67.

Aaron L. Tachibana: And the weighted average basic and diluted share count of $46 3 million for the same period of the prior year.

Aaron L. Tachibana: For the full year of 2023 net loss was $108 3 million compared with $113 3 million for the full year of 2022.

Aaron L. Tachibana: The full year net loss included $8 1 million as employee severance costs $5 6 million of the lease impairment breakdown for the Midland Park facility previously vacated.

Aaron L. Tachibana: A $4 million of expense related to the fair value accounting of the outstanding warrants issued to FX.

Aaron L. Tachibana: The net loss per share for the full year of 2023 was $2.25, and the weighted average basic and diluted share count was $48.2 million, compared with $2.48 and a weighted average basic and diluted share count of $45.7 million for the full year of 2022. Now under the balance sheet. We finished the fourth quarter with a strong balance sheet with cash and short-term investments of $114.2 million. During the quarter, we used $6.5 million. And for the full year of 2023, we used $53.5 million of cash primarily to fund operations.

Aaron L. Tachibana: The net loss per share for the full year of 2023 was $2 25.

Aaron L. Tachibana: And the weighted average basic and diluted share count was $48 2 million compared with $2 48, and a weighted average basic and diluted share count to $45 7 million for the full year of 2022.

Speaker Change: Now onto the balance sheet.

Speaker Change: We finished the fourth quarter with a strong balance sheet with cash and short term investments of $114 $2 million during the quarter, we used $6 5 million and for the full year of 2023, we used $53 5 million of cash primarily to fund operations.

Aaron L. Tachibana: In the fourth quarter, we received $6 million from Tempest related to the first two milestone payments, and we estimate the remaining $6 million of payments to be received equally in 2024 and 2025. We have approximately two years of cash on the balance sheet, which is expected to last through the first quarter of 2026. Now I'd like to turn to guidance. For the first quarter of 2024, we expect total company revenue in the range of $18 to $19 million, revenue from pharmaceutical tests, enterprise sales, and other customers in the range of 16 to 17 million, and revenue from Population Sequencing of approximately $2 million. And for the full year of 2024, we expect total company revenue in the range of $73 to $75 million, with Oncology Revenue from PharmaTest, Enterprise Sales, and other customers in the range of 65 to 67 million, and Population Sequencing revenue to be approximately $8 million. Our full year revenue guidance of $73 to $75 million includes an estimated revenue decline of approximately 25% from the tariff, which reduces our total revenue by 10 to 12%.

Aaron L. Tachibana: In the fourth quarter, we received $6 million from Tempus related to the first two milestone payments and we estimate the remaining $6 million of payments to be received equally in 2024 and 2025.

Aaron L. Tachibana: We have approximately two years of cash on the balance sheet, which is expected to last through the first quarter of 2026.

Speaker Change: Now I'd like to turn to guidance.

Aaron L. Tachibana: For the first quarter of 2024, we expect total company revenue in the range of $18 million to $19 million.

Aaron L. Tachibana: Revenue from pharma test enterprise sales and other customers in the range of $16 million to $17 million and.

Aaron L. Tachibana: And revenue from population sequencing of approximately $2 million.

Aaron L. Tachibana: And for the full year.

Aaron L. Tachibana: 2024, we expect total company revenue in the range of <unk> $73 million to $75 million with oncology revenue from pharma tests enterprise sales and other customers in the range of $65 million to $67 million.

Aaron L. Tachibana: Population sequencing revenue approximately $8 million.

Aaron L. Tachibana: Our full year revenue guidance of $73 million to $75 million includes an estimated revenue decline of approximately 25% from the terror, which reduces our total revenue by 10% to 12%.

Aaron L. Tachibana: In late 2023, we amended our volume supply agreement with them. This amendment extends the minimum quarterly volumes out through the end of 2024 compared with Q1 in the prior agreement. In addition, we have modified selling prices to Nutera in this amendment, along with the ability to convert to a cost-optimized product so that the amended terms are beneficial for both companies.

Aaron L. Tachibana: In late 2023, we amended our volume supply agreement with them.

Aaron L. Tachibana: This amendment extends the minimum quarterly volumes out through the end of 2024 compared with Q1 in the prior agreement.

Aaron L. Tachibana: In addition, we have modified selling prices tuna Terra industries in this amendment along with the ability to convert to a cost optimized products. So that the amended terms are beneficial for both companies.

Aaron L. Tachibana: We expect revenue growth from biopharma customers to offset the decline from the tariff. In addition, we expect a net loss of approximately $80 million, which is $28 million lower than the loss of $108 million in 2023. And this estimate does not include any income or expense related to the outstanding warrants issued to Temple.

Aaron L. Tachibana: We expect revenue growth from Biopharma customers to offset the decline from the tariff.

Aaron L. Tachibana: In addition, we expect net loss of approximately $80 million, which is $28 million lower than the loss of $108 million in 2023.

Aaron L. Tachibana: This estimate does not include any income or expense related to the outstanding warrants issued to tempus.

Operator: Cash usage is expected to be approximately $62 million and includes employee severance payments of approximately $3 million from the Q4-23 reduction in headcount. We look forward to updating you on our progress during the next conference call in a few months. Operator.

Aaron L. Tachibana: Cash usage is expected to be approximately $62 million and includes employee severance payments of approximately $3 million from the Q4 'twenty three reduction in head count.

Aaron L. Tachibana: We look forward to updating you on our progress during the next conference call in a few months and.

Speaker Change: And with that I will turn the call back over to the operator to begin the Q&A session.

Speaker Change: Operators.

Operator: Thank you. Now we conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. Our formation tone will indicate your line is in the question queue. Press starr, too, if you would like to remove your question from the queue. For participants using speaker equipment, it will be necessary to pick up your handset before pressing the star keys.

Speaker Change: Thank you.

Speaker Change: We'll now conduct a question and answer session.

Speaker Change: To ask a question. Please press star one on your telephone keypad.

Speaker Change: Formation tone will indicate your line is in the question queue.

Speaker Change: You start to if you would like to remove your question from the queue.

Speaker Change: Participants using speaker equipment.

Speaker Change: So sorry to pick up your handset before pressing the star keys once again Thats star one at this time.

Operator: Once again, that's Star 1 at this time, moment while we post our first question. First question from Tejas Savant, your line is open. Hi, this is Madison Patricia. I come on for Tejas.

Aaron L. Tachibana: While we profile first question.

Aaron L. Tachibana: First question is from Joseph <unk>. Your line is open.

Speaker Change: Hi, This is Madison Pasha Kumar in for T. J.

Madison Patricia: Thanks for taking the question. I think I just had two for you. One starting out. Within BioPharma, I was just wondering, like some other peers are seeing, if you're seeing any headwinds from the tightening of customers' budgeting, or if you're seeing just stabilization on that front? And as we look at 2024, do you have any headwinds facing the guide, or do you see any headwinds facing the guide? to Recovery and Nibb Bio. Yeah, hi, Madison.

Speaker Change: Thanks for taking my question.

Speaker Change: I think I just had two for you one starting out.

Speaker Change: Within Biopharma I was just wondering could you comment on some.

Speaker Change: Some other peers are seeing if you're seeing any headwinds from the tightening of customers' budgeting or Christine just stabilization on that Brian and as we look at 'twenty 'twenty four or do you have any headwinds baked into the guide or do you expect to see is a recovery in the biopharma spend.

Speaker Change: Yes, Hi, Madison. This is Erin. Thank you for the question in terms of the Biopharma landscape over the past couple of years, there had been some slowdowns in trials and things of that nature.

Aaron L. Tachibana: This is Aaron. Thank you for the question. In terms of the biopharma landscape, so in the past couple of years, there have been some slowdowns and trials and things of that nature. We're not seeing a lot of that sitting in front of us today.

Erin: We're not seeing a lot of that sitting in front of us today. Our funnel is building as Chris went through the prepared remarks, we talked about our win in their market strategy. So we're seeing a lot of good take up for our next personal products and Biopharma.

Aaron L. Tachibana: Our funnel is building, and as Chris went through the prepared remarks, we talked about our win in the MRT strategy. So we're seeing a lot of good take-up for our next personal product in biopharma. In addition, as part of the biopharma revenue, we also have our PCV business with Moderna ramping up, you know, their phase three clinical trial. They've been going through enrollment, and we're starting to see those patient samples start to come in to us now. Okay, I got it. That's good to hear. And then, maybe just one more.

Speaker Change: In addition, as part of the Biopharma revenue. We also have our PCB business with Madonna ramping up their phase III clinical trial.

Speaker Change: Going through enrollment and we're starting to see those patient samples started starting to coming to us now.

Speaker Change: Okay got it that's good to hear.

Speaker Change: And then maybe just one more I know you've talked about Mcdonald's being an important contributor to your top line in 2024 and 2025.

Aaron L. Tachibana: I know you've talked about Moderna being an important contributor to your top line in 2024 and 2025. I was wondering if you could comment on how much is embedded into the 2024 guide and how you see that ramping throughout the year and into 2025.

Speaker Change: Maybe if you could comment on how much isn't.

Speaker Change: Got it into the 2024 guide and how you see that ramping throughout the year and into 2025.

Aaron L. Tachibana: Yeah. We haven't said publicly what those specific numbers are from Moderna. So we probably, you know, should stay away from that. But what we can say, and what we have said in the past, is that our biopharma, in total, biopharma plus PCV, will more than offset any of the decline we're going to see from the Nitero business in 2024. All right, so the guide we have for our total oncology business in 2024 is $65 to $67 million, which is up a tiny bit from 2020. Got it.

Speaker Change: Yes.

Speaker Change: We haven't said publicly what those specific numbers are from <unk>. So we probably should stay away from that but what we can say what we have said in the past is that our biopharma and total biopharma plus PCV well.

Speaker Change: We will more than offset any of the decline we're going to see from them to taro business in 2024.

Speaker Change: So the guide we have for our total oncology business in 2024 is 65% to $6 million to $7 million.

Speaker Change: Which is up a tiny bit from 2023.

Speaker Change: Yeah.

Aaron L. Tachibana: Thanks so much. Thank you. The next question comes from Mark Massaro with BTIG. Please proceed. Hey guys, this is Vivian on behalf of Mark.

Speaker Change: Got it thanks, so much.

Speaker Change: Thank you.

Speaker Change: Next question comes from Mark Massaro with <unk>. Please proceed.

Speaker Change: Okay.

Vivian: Thanks for taking the questions. I apologize; I might have missed some parts jumping around on calls here. But could you just walk me through how we should be thinking about the next personal launch with Tempest? I guess what steps you need to take before the launch? And then I just kind of wanted to circle back to if we should still be expecting the next Tracer X readout, maybe in the middle of this year. Yeah, awesome. Thanks. We will start with Tempest.

Mark Anthony Massaro: Sitting on for Mark Thanks for taking my questions.

Speaker Change: Apologize I might have missed from price jumping around on calls here.

Speaker Change: Could you just walk me through how we should be thinking about the Max personal lines with campus.

Speaker Change: I guess, what steps you need to take before the line Hasnt fully marketed.

Speaker Change: And then I just kind of wanted to circle back to if we should still be expecting the next tracer accident.

Speaker Change: Maybe in the middle of this year.

Speaker Change: Yes. Thanks.

Speaker Change: <unk>.

Speaker Change: I will start with tempus.

Christopher M. Hall: Tempus, we've launched the test as an early access program, so it's commercially available. And I talked on the call that we are now, you know, baselined and created the unique molecular fingerprint for more than 250 patients and are now monitoring those patients with our liquid biopsy approach. And so that's super exciting. The uptake has been phenomenal. You know, I've worked on many launches of products, but I think this is one of the ones that I was really taken aback by the strong demand that there is for an ultrasensitive approach.

Speaker Change: With Tempus, we when we've launched the test is an early access program is commercially available and I talked on the call that we are now.

Speaker Change: We baseline and created.

Speaker Change: <unk> unique molecular fingerprint for more than 250 patients and are now monitoring those patients, but with our liquid biopsy approach and so that's super exciting the uptake has been phenomenal.

Speaker Change: Hi, Ben.

Speaker Change: Worked on many launches of products I think thats one of the ones that I have been really taken aback by the strong demand that.

Speaker Change: <unk> there is for an ultra sensitive approach. So we're super excited with Tempus, we'll be working with them through the entire year two with starting with a few of the reps and then just growing as the year goes on and our goal. This year, because we're not getting reimbursed for the test this year. So.

Christopher M. Hall: So we're super excited. With Tempus, we'll be working with them through the entire year, starting with a few reps and then just growing as the year goes on. And our goal this year is, you know, because we're not getting reimbursed for the test this year.

Christopher M. Hall: So, you know, we're, we'll be running in a relatively low volume situation until we get reimbursement. So the goal as we go through the year is, first of all, learn how to work together. Secondly, you know, integrate systems and, you know, make sure that we can, we can, we can, you know, take samples from them appropriately, get them back results, deliver them to their customers, et cetera. And then thirdly, to make sure we get the messaging right, et cetera, about how we talk about the test with the community to hit the right points.

Speaker Change: <unk> will be running in a relatively low volume situation and we've been pretty clear about that until we get reimbursement. So the goal as we go through the year is to first of all learn how to work together secondly, integrated systems and make sure that we can we can we.

Speaker Change: We can take samples from them appropriately get them back to deliver to their customers et cetera, and then thirdly too.

Speaker Change: To make sure we get messaging right et cetera about how we talk about the task.

Speaker Change: The community and hit the right points since we started that journey and we're working together and we feel like.

Christopher M. Hall: And so we've started that journey, and we're working together. And we feel like, you know, the time that we've worked with them is only being highlighted. And we feel like it's a great partnership. And it's built for the long term. So we're super excited about where we are. And we're off to a great start. So that gives us confidence in talking about our $100 million in 2025 plan, which we're excited about. On Tracer X data, I've got Rich in the room with me.

Speaker Change: It's the time that we've worked with them is on the underlying if you feel like it's it's a great partnership and it's in it's social long term. So we're super excited about where we are and we're off to a great start so thats.

Speaker Change: And Youll see that that gave us confidence in talking about our $100 million in 2025 plan, which we're excited about on the trace Rx data.

Speaker Change: I've got rich in the room with me and he can sort of walk you through kind of how to think about that this year is the data set gets large and.

Christopher M. Hall: And he can sort of walk you through kind of how to think about that this year as the data set gets enlarged, and we work to make it. Yeah, the Tracer X expansion is on track. We're actively working on it, and we expect that, you know, that data should find its way to publication sometime this year. Unknown Speaker, Okay, perfect. Thanks, guys. Go ahead, Vivian.

Speaker Change: We work to make it public.

Speaker Change: The <unk> expansion.

Speaker Change: On track.

Speaker Change: We are working on it and we expect that.

Speaker Change: That data should find its way to publication sometime this year.

Speaker Change: Okay perfect. Thanks, guys.

Speaker Change: Awesome.

Speaker Change: Okay.

Damian: Go ahead Damian.

Speaker Change: Okay.

Speaker Change: Okay.

Christopher M. Hall: How should we think about reimbursement for next DX? And just how are you thinking about the impact of the test in 2024? Yeah, so if we achieve reimbursement, if you remember, like what we talked about, I mean, I, you know, if we use the reimbursement process for the test to establish relationships with payers, that was really our goal for moving forward with the test and bringing it to market. So we were excited that we started the dialogue with Palmetto and Moldax. They now know who we are, and we've managed through the first test, and I think that helps de-risk NexPersonal for investors. As we go through the year, we'll keep working on enlarging the number of payers that reimburse the test, so we'll be engaging with some of the big payers to try to enlarge the number of payers. And again, it's a way for them to see the quality of the product that we have with NexTX, the quality organization, and our systems and our processes, so that when we come to Nex, Medicare reimbursement was in the $3,200 range.

Speaker Change: How should we think about reimbursement for next Dx.

Damian: How are you thinking about the impact of the tax in 2024.

Damian: Yes, so if we achieve reimbursement if you remember what we talked about.

Damian: Is that if we use the reimbursement process for the test to establish relationships with payers that was really our R.

Damian: Our goal with moving forward with the test and bring it to market. So we were excited that we've started the dialogue with Palmetto and bold action.

Damian: No. We are managed through the first test and I think that helps Derisk next personal inferred for investors as we go through the year, we'll keep working on enlarging the number of payers that reimburse the test so we'll be engaging with some of the big payers to try to.

Damian: A large number of payers and again, it's a way for them to see the quality of product that we have with next Dx the quality organization and our systems and our processes. So that when we come to next with them with next personal we're a known entity.

Christopher M. Hall: And I, Aaron, we had a, how much did we, did we disclose guidance? Yeah, so our guidance for oncology revenue is $65 to $67 million. So inside of that number is a couple million dollars for next GX. Okay, I understood.

Damian: Medicare reimbursement was in the $3200 range.

Damian: We had.

Damian: Did we disclose guidance so our guidance for the oncology revenue was $65 to $67 million. So inside of that number Vivian as a couple of million dollars next Dx yep.

Vivian: Okay understood. Thanks for taking my questions.

Christopher M. Hall: Thanks for taking the question. Thank you. Awesome. The next question comes from Daniel Simarco with TD Cowen. Please proceed. Hey Chris and Aaron, on tonight for Dan Brennan.

Speaker Change: Thank you awesome. Thanks.

Speaker Change: The next question comes from Daniel <unk> with TD Cowen. Please proceed.

Daniel: Hey, Chris and therein.

Daniel: On Tonight for Dan Brennan.

Christopher M. Hall: Thank you for taking the question. So in the first one, in the Production Enforced Press Release, you noted that you plan to develop clinical evidence across 10 different Clinical Studies. Did you just go into a little bit about how much R&D dollars you expect to invest in order to publish evidence in MRD? Yeah, I mean, one of the reasons why we spend a lot of money on R&D is that we have invested heavily in this test. We think it's a significant opportunity. The 10 studies that you mentioned, there's the TRACERx collaboration on running those samples and getting that submitted. We're well on track, and most of that work has already been done is in the rear view mirror and the P&L.

Daniel: Taking the questions.

Daniel: So the first one.

Daniel: In the reduction enforced press release, you noted that you plan to develop clinical evidence across 10 different.

Daniel: Clinical studies could.

Daniel: Could you just go into a little bit about how much R&D dollars you expect to invest in order to publish evidence.

Daniel: Evidenced in emerging.

Daniel: Yes.

Daniel: I mean, it's one of the reasons why we spent a lot of money on R&D is that we have invested heavily in this test we think it's a significant opportunity.

Daniel: 10 studies that you did you mentioned the <unk> collaboration on running those samples and getting that submitted we're well on track and most of that work has already been done is in the rearview mirror in the P&L.

Christopher M. Hall: We have lung and breast cancer, we're working with Royal Marston, we're working with Dana Farber, we're working with the Curry Institute, a chunk of those samples have already been run, and you'll start to see that data come out in mid-2024. We have a prospective clinical trial with the Be Stronger collaboration, and we're, you know, we've got our first sites, we're enrolling our first set of patients, but we're probably still in the early days there in terms of spending. We think it's really important to have a prospective, you know, clinical trial to establish the evidence and the clinical utility of the product in triple negative breast cancer.

Daniel: In the lung cancer and breast cancer, we have working with oil.

Daniel: Oil Marston.

Daniel: We're working with.

Daniel: Dana Farber or working with the Korean Institute, a chunk of those samples have already been run and you'll start to see that data come out in mid 2024.

Daniel: We have a prospective clinical trial would be stronger the stronger cala.

Daniel: Collaboration.

Daniel: We've got our first sites, we're enrolling our first set of patients, but we're probably still early days there in terms of the spending but we think it's really important to have.

Daniel: A perspective and a clinical trial there.

Daniel: To establish the evidence and the clinical utility of the product to triple negative breast cancer, and we're really excited about that indication because the opportunity to deescalate patients really is really exciting with an ultra since approach and I O therapy with <unk>, Brian most of the samples for Ehi O.

Christopher M. Hall: And we're really excited about that indication because the opportunity to deescalate patients is really, really exciting with an ultrasensitive approach. In IO therapy, we have run most of the samples for VHIO, and, you know, you should start to see that data in mid-2024. And we've, and we've, and we've run many of the samples with our Duke and UK collaborations, and then the University of San Diego collaboration continues onward. So I don't know that we have a fixed percentage, but we've, you know, significantly spent a good chunk of the dollars that we need on those 10 studies, but I think, as you know, in this space, you know, I mean, we're not done with just the 10.

Daniel: And you should start to see that data in mid 2024.

Daniel: And we've.

Daniel: And we've.

Daniel: And we've run many of these samples with our Duke.

Daniel: And.

Daniel: And UK collaborations and then the University of San Diego collaboration use onwards, so I don't know that we have.

Daniel: In a fixed percentage, but we've we've.

Daniel: <unk>, we've spent a good chunk of the dollars that we need on those 10 studies, but I think as you know in this space.

Daniel: We're not done with just the 10, we think that can give us the good cornerstone.

Christopher M. Hall: We think the 10 give us a good cornerstone to, you know, drive the right kinds of submissions that will get us Medicare coverage because we think these data sets are strong, robust, and comprehensive. But, you know, we'll be deepening the work in these three indications as we go forward, and it's a journey to build the evidence and show the clinical utility that's ultimately going to make a product like this, you know, standard Thanks, Chris. Just digging a little bit deeper into gross margins for the guys. Apologies if you mentioned it earlier, but would you mind going through a little bit of your assumptions for 24 and then possibly how they develop into 25?

Daniel: To drive the right kinds of of of submissions that will get us Medicare coverage. Because we think these datasets are strong and robust and comprehensive but will be deepening of the work in these three indications as we go forward.

Daniel: It's a journey to two it's a journey to build the evidence to show the clinical utility that's ultimately going to make a product like this standard of care.

Speaker Change: Great. Thanks, Chris.

Daniel: Taking all of the deeper into gross margins for the guide.

Speaker Change: You mentioned it earlier, but.

Speaker Change: Would you mind going through a little bit of your assumptions for 'twenty, four and then possibly how they develop into 'twenty five.

Aaron L. Tachibana: Sure. So in terms of gross margin, that's embedded in our guide, so we're assuming somewhere between, you know, somewhere around 25%, plus or minus a point here and there for the full year.

Christopher M. Hall: Sure. So in terms of gross margin thats embedded in our guide so we're assuming somewhere between.

Speaker Change: Somewhere around 25%.

Speaker Change: Plus or minus a.

Speaker Change: Point carry there for the full year.

Aaron L. Tachibana: And then in terms of 2025, gross margins will, Creighton, Daniel Brennan, Aaron Tachibana, Joseph Flanagan, Christopher Hall, Aaron Tachibana, because we're not going to be adding a lot of fixed costs. Most of the footprint for the lab operation has been invested in. We will need to add variable costs as Boeing grows, but for the most part, we're going to leverage the fixed cost footprint. Thank you. Have a good night, guys.

Speaker Change: And then in terms of 2025 gross margins will increase it will accrete.

Speaker Change: We haven't guided for 25, yet so.

Speaker Change: I'd be hesitant to give you a specific number but we should be in the low thirties and 2025, especially if we can get to this $100 million number that we're targeting right, we're not going to be adding a lot of fixed cost most of the footprint for the lab operation has been invested in.

Speaker Change: We will need to add variable costs as volume grows but for the most part we're going to leverage the fixed cost footprint.

Speaker Change: Awesome. Thank you have a good night guys.

Aaron L. Tachibana: Thank you. Once again, to ask a question at star one at this time, our next question comes from Mike Matson with Needham. Please proceed. Hey, guys, this is Joseph on for Mike, and maybe just touching on that 2025 revenue number. I guess maybe what are the main assumptions in getting to that number, more broadly?

Speaker Change: Thanks.

Speaker Change: Once again to ask a question Thats Star one at this time. Our next question comes from Mike Matson with Needham. Please proceed.

Speaker Change: Hey, guys. This is Joseph on for Mike.

Joseph: And maybe just touching on that 2025.

Joseph: The revenue number.

Joseph: I guess maybe.

Joseph: What are the.

Speaker Change: The main assumptions in getting to that number I guess more broadly.

Christopher M. Hall: You know, do you need VA MVP revenue to, you know, remain stable, or increase? Do you expect a lot of this to be driven by biopharma mainly? ZAMVP Upside, just given the uncertainty around future task orders. Yeah, no, I mean, I think we, so I mean, you know, we walked through these three drivers. But right in the heart of that is our when an MRD strategy. We, you know, we're sitting here in 24.

Joseph: Do you need.

Joseph: The MVP revenue to remain stable increase do you expect a lot of this to be driven by by Biopharma mainly in.

Joseph: VA MVP upside just given the uncertainty around future task orders yet.

Speaker Change: Yes no.

Speaker Change: I think we so I mean, we walked through the three drivers.

Joseph: But right in the heart of that is our win in MRV strategy.

Joseph: We are sitting here in 'twenty, four we're well along the way and evidenced development across key indications.

Christopher M. Hall: We're well along the way in evidence development across key indications, and we, you know, intend to submit for Medicare reimbursement across these three large indications this year. And we're on pace to do that.

Joseph: And we intend to submit for Medicare reimbursement across.

Joseph: These three large indications this year and we're on pace to do that.

Christopher M. Hall: And we expect that to, you know, yield efforts and significant revenue because we're also growing commercial traction with our partner Tempest. So as that starts to come together, we expect the revenue for NexPersonal in the clinical market to really start to grow and get traction, and that's a big driver. But secondarily, we're seeing a lot of interest and excitement among the biopharma customers for NexPersonal, and then that's starting to move the needle in terms of our growth rate, and you see that embedded in the guide with the traction in 2024 and the growth rate starting to pick up, and that's just going to, we expect that to pick up steam as we go through the year and into 2025. That'll be a big year.

Joseph: And we expect that to yield efforts.

Joseph: Significant revenue because we're also growing the commercial traction with our partner Tempus. So as that starts to come together, we expect our revenue.

Joseph: For next personal in the clinical markets really start to grow and get traction and that's a big driver.

Joseph: But then secondarily, we're seeing a lot of interest and excitement among the biopharma customers with <unk> personnel and Thats starting to move the needle in terms of our growth rate and you see that embedded in the guide with the with that.

Joseph: With the traction in 2024, and the growth rates starting to pick up.

Joseph: And that's that's that's just going to we expect that to pick up steam as we come through the year and come into 25 that will be a big year.

Christopher M. Hall: You know, we do have a five-year, sort of, you know, renewable set of agreements with the VA for the Million Veterans Program, but we don't expect that. It would be nice if that grew, and there's certainly the possibility because there's a lot of untapped opportunity there that they have not sequenced yet, and so it's possible that that would pick up steam. We have not assumed in any way that that's going to be a driver of us getting. We've assumed that it'll be. Okay, yeah, thank you very much, super clear. And then I guess just to understand the Tempest relationship a little bit more clearly, you know, in terms of like samples, cancer type samples, are you guys going at this as kind of agnostic to cancer type?

Joseph: Do have we'd have a five year sort of renewable set of agreements with VA for the million veterans program, but we don't expect that that would be nice if that grew and there is certainly the possibility because theres a lot of untapped opportunity there that they have not sequence yet and so it's possible that that would pick up steam we have not assumed.

Joseph: And any way that that's going to be a driver of us getting there.

Joseph: We've assumed that that will be pretty stable to be honest.

Speaker Change: Okay, Yes, thank you very much.

Joseph: Clear.

Joseph: And then I guess just to understand the tempus relationship a little bit more clearly.

Joseph: In terms of like samples cancer types samples are you guys going out there.

Joseph: It's kind of agnostic to cancer type or.

Christopher M. Hall: Or, you know, is this a little bit more targeted towards the submissions you expect to do in 2024? You know, I know you guys said you're kind of just feeling it out and, you know, learning how to work together, integrate systems. No, but we want to be clear, like, we're focused on our own commercial energy and traction. And then, with them, we're focused on, you know, breast cancer, we're focused on IO therapy monitoring, and we're focused on lung cancer. And as part of the agreement, they have exclusivity on those three areas.

Joseph: Is this a little bit more targeted towards the submission do you expect to do in 2024.

Joseph: I know you guys said youre kind of just like ceiling it out.

Joseph: Learning how to work together integrate systems.

Speaker Change: No but to be clear, Mike we're focused on our own commercial energy and traction in that with them we're focused on.

Joseph: <unk> cancer, we're focused on I O therapy monitoring and we're focused on lung cancer and as part of the agreement they have exclusivity on those three those three areas.

Christopher M. Hall: And that that's what we're focused on now, you know, and so and so that's the messaging; that's the type of doctor that we call on. And that's, that's what we're focusing on; we're seeing a good chunk of our samples there. Now, you know, I'd be kidding if I said everything was in those three indications, because, you know, we get other stuff coming through the system. And we got to manage through that the best we could, but we're staying laser focused on these indications. And we'll and will as we go through the next several months and a few years. Remember that, you know, the strategy here was to focus on the indications where we thought we could gain significant traction with an ultrasensitive approach and add really tremendous value by finding cancer earlier, allowing us to escalate patients to therapy quicker that actually could yield big results. And secondarily, because if you're flying blind, you do therapies, and you do invasive procedures that a patient may not benefit from, but because you don't know who does and who doesn't, then you do them.

Joseph: And that's.

Joseph: That's what we're focused on now.

Joseph: And so that's the messaging that's the type of Doctor that we call on and that's that's what we're focusing on and we're seeing a good chunk of our samples are now I'd be kidding, if I said everything within those three indications because.

Joseph: There are we get other stuff coming through the system and we got to manage that the best we can but we're staying laser focused on these indications and will and well as we go through that as you go through the next several several months and few years I'll remember that.

Joseph: This strategy here was to focus on the indications, where we thought we could gain significant traction with an ultra sensitive approach at really tremendous value by finding cancer earlier, allowing us to escalate patients to therapy quicker that actually can yield big results and secondarily.

Joseph: Because if you're flying blind you do therapies and you do invasive procedures that a patient may not get benefit from but because you don't know who does it doesn't then you do it and so we have the opportunity to deescalate patients, so thats, especially true in breast cancer. So that's where we're focused.

Christopher M. Hall: And so we have the opportunity to deescalate patients. And that's especially true in breast cancer. So that's where we're focused and building that. We think that from an investor standpoint, that covers a good chunk of the market, to be quite frank. I mean, it's not like these are esoteric parts of the MRD market.

Joseph: And.

Joseph: And building and building that we think that from an investor standpoint that covers a good chunk of the market to be quite Frank.

Joseph: It's not like these are esoteric parts of the MLP market since we're a good chunk of the patients are.

Joseph: This is where a good chunk of the patients are. There are several hundred thousand patients a year that are on IO therapy and that are being monitored. And then breast cancer is one of the biggest cancers, and lung cancer is one of the biggest cancers. And so those three together, those three indications together, we think cover a good, significant portion of the $20 billion expected market. And we feel like we are. I think we're positioned to hit it well with this approach and in a cost-effective manner, rather than building evidence across every single clinical indication simultaneously.

Joseph: There's several hundred thousand patients a year that are on Io therapy and that are being monitored in that breast cancers are the biggest one of the biggest cancers and among cancer is one of the biggest cancers and so those three together was three indications together, we think cover a good significant portion of the $20 billion.

Joseph: Dollar expected market and we feel like we are.

Joseph: Like we are positioned to hit it well that puts us approach it in a cost effective manner, rather than building evidence across every single clinical application simultaneously.

Joe: Gotcha. Makes sense. Well, thanks for taking our questions. Much appreciated. Thanks, Joe. Thank you, ladies and gentlemen. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day. Goodbye.

Speaker Change: Got you makes sense.

Speaker Change: For taking our questions much appreciated.

Speaker Change: Thanks, Joe.

Speaker Change: Thank you ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.

Speaker Change: Goodbye.

Speaker Change:

Speaker Change: Uh-huh.

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