Q2 2025 Personalis Inc Earnings Call

Operator: Ladies and gentlemen, greetings and welcome to the Personalis second quarter 2025 earnings conference call. At this time, all participants are in the listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Caroline Corner, Investor Relations. Please go ahead.

Ladies and gentlemen, greetings and welcome to the personales. Second quarter 2025 earnings conference call.

At this time, all participants are in the listen only mode, a brief question and answer session will follow the formal presentation.

If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today. Caroline Corner investor relations, please go ahead.

Caroline Corner: Thank you, operator. Welcome to Personalis's second quarter 2025 earnings call. Joining today's call are Chris Hall, Chief Executive Officer and President; 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 fact should be considered forward-looking statements within the meaning of US securities laws. For example, any statements regarding trends and expectations for our financial performance this year and longer term, cash runway and liquidity position, revenue expectations and timing, reimbursement goals, size and booking of orders, products, services, technology, expansion of clinical volume, future publication, the outcome and timing of reimbursement decisions, expectations for our existing and future collaboration activities, cost expectations, market size, and our market opportunity and business outlook.

Thank you, operator, welcome to person analysis, second quarter 2020.

5 earnings call. Do I need today's call or Chris Hall chief executive officer and President Aaron, taxi bana Chief Financial and Chief Operating Officer and Rich Chan chief medical officer and EVP R&D.

Caroline Corner: 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 filings. Personalis undertakes no obligation to update these statements except as required by applicable law. Our press release with our second quarter 2025 results is available on our website, www.personalis.com, under the Investors section, and includes additional details about our financial results. Our website also has the latest SEC filings, which we encourage you to review. A recording of today's call will be available on our website by 5:00 PM Pacific Time today. With that, I would like to turn the call over to Chris.

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 US security laws. For example, any statements regarding Trends and expectations for our financial performance this year and longer term. Cash Runway and liquidity position Revenue expectations and timing reimbursement, goals size and booking of orders products Services, technology expansion of clinical volume future, publication the outcome and timing of reimbursement, decisions, expectations for our existing and future collaboration, activities cost, expectations Market size and 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 filings personal house under cakes. No obligation to update these statements except as required by applicable law. Our press release with our second quarter of 2025 results is available on our website, www, personnel office.

Calm, under the investor section includes additional details about our financial results.

Chris Hall: Thank you, Caroline. Good afternoon, everyone, and thank you for joining us. Our second quarter was defined by outstanding execution of our winning MRD strategy. The clinical adoption of Next Personal is accelerating dramatically, with test volume growing 59% sequentially. We delivered nearly 3,500 clinical results in Q2, and today, our base of ordering physicians has expanded to over 600. Our commercial partnership with Tempus is gaining momentum, with reps now commercializing Next Personal across four major indications: breast cancer, lung cancer, and colorectal cancer, as well as immunotherapy monitoring. We believe we're on a path towards securing Medicare coverage for two indications by the end of this year. For those new to our story, Personalis is at the forefront of the minimal residual disease market, or MRD market, which is poised to exceed $20 billion annually. We believe we are transforming cancer care.

Our website also has the latest SEC filings, which we encourage you to review a recording of today's call will be available on our website by 5:00 pm Pacific time. Today with that, I would like to turn the call over to Chris.

Thank you, Caroline. Good afternoon, everyone and thank you for joining us.

Our second quarter was defined by outstanding execution of Our Winning mrd strategy.

The clinical adoption of next personal is accelerating dramatically with test, volume growing 59% sequentially.

We delivered nearly 3,500 clinical results in Q2 and today our base of ordering Physicians has expanded to over 600.

Our commercial partner with ship with Tempest is gaining momentum with reps. Now commercializing next personal across 4 major indications, breast cancer, lung, cancer, and colo's, amino therapy monitoring. We believe we're on a path towards securing Medicare coverage for 2 indicates by the end of this year.

Chris Hall: Using a simple blood draw, our Next Personal test monitors therapy and detects residual cancer with ultra-sensitivity, capable of finding just one fragment of tumor DNA in a million. This allows us to see cancer recurrence months ahead of imaging and positions Personalis to capture a significant share of this transformative market opportunity. Turning to our results, we delivered $17.2 million in revenue for the second quarter. Our performance reflects two distinct stories. First, our core clinical business is exceeding our internal plans and demonstrating momentum. Second, we're actively managing the near-term industry-wide headwinds in biofarm R&D spending. Political changes in the healthcare sector and the uncertainty of tariffs have impacted our customers' translational research projects, resulting in revenue from a few significant contracts shifting out of Q2 and an overall weakness the rest of the year.

Blood draw, our next personal test monitors therapy and detects, residual cancer with ultra sensitivity. Capable of finding just 1 fragment of tumor DNA in a Million.

This allows us to see cancer recurrence months ahead of Imaging and positions personalis to capture a significant share of this transformative Market opportunity.

Turning to our results, we delivered 17.2 million in revenue for the second quarter.

Our performance reflects 2, distinct stories first, our core clinical businesses. Exceeding, our internal plans and demonstrating momentum.

second, we're actively managing the near-term industry-wide headwinds and

Chris Hall: In light of these industry dynamics, we're updating our full-year revenue guidance to a range of $70 to $80 million. While this range reflects the current variability in the biopharma project timing, we have a concrete three-point action plan to aggressively pursue the high end of this range and expect to finish the year with maximum momentum. Here are the three key drivers that give us conviction. First, we're converting our deep biopharma pipeline, especially for MRD. While project timelines have shifted and affected translational business, demand for our MRD technology is robust, with growing adoption of Next Personal for MRD by our biopharma customers. Next Personal gives our customers a tool with ultra-sensitivity to measure therapeutic efficacy, and we remain on plan to grow this segment by 300 to 400% this year, with a meaningful revenue contribution expected in the fourth quarter.

Political changes in the health care sector sector and the uncertainty of tariffs have impacted. Our customers translational, research projects, resulting in revenue. From a few significant, contracts shifting out of Q2 and an overall weakness. The rest of the year.

In light of these industry Dynamics, we're updating our full year Revenue guidance to a range of 70 to 800 million while this range reflects the current variability in the biofarma project timing. We have a concrete 3-point action plan to aggressively pursue the high end of this range and expect to finish the gear with maximum momentum.

Here are the 3 key drivers that give us conviction.

Chris Hall: Second, we are capitalizing on our clinical momentum. Our clinical business is a growth engine as we continue to project 30 to 40% quarter-over-quarter growth, fueled by exceptional traction with our partner, Tempus, and our expanding base of ordering physicians. This is a core pillar of our growth story, and it is accelerating. Third, we are advancing towards a pivotal reimbursement catalyst. Achieving Medicare reimbursement in two indications this year remains a top priority and is on track. This is expected to be a major inflection point for the company, unlocking a significant revenue stream. So let me be direct. We own the Q2 revenue shortfall. Moving forward, we're pushing hard on the levers we can control to finish the year strong instead of passively waiting for market conditions to change. Now let's walk through the pillars of our winning MRD strategy. First is accelerating clinical adoption.

First, we're converting our deep biofarma pipeline especially for mrd. While project timelines have shifted and affected translational, business demand for our mrd. Technology is robust with growing adoption of next, personal for mrd by our biofarma customers. Next personal gives our customers a tool with ultra sensitivity to measure therapeutic efficacy and we remain on plan to grow this segment by 300 to 400% this year with a meaningful Revenue contribution expected in the fourth quarter.

Second, we are capitalizing on our clinical momentum. Our clinical business is a growth engine, as we continue to project 30% to 40% quarter-over-quarter growth fueled by exceptional traction with our partner Tempest and our expanding base of ordering physicians. This is a core pillar of our growth story, and it is accelerating.

Third, we are advancing towards a pivotal reimbursement. Catalyst achieving Medicare reimbursement. In 2 indicators remains a top priority and is on track. This is expected to be a major inflection point for the company unlocking. A significant Revenue stream.

So let me be direct, we own the Q2 Revenue shortfall. Moving forward, we're pushing hard on the levers. We can control to finish the year strong. Instead of passively waiting for market conditions to change. Now, let's walk through the pillars of our win and mrd strategy.

Chris Hall: Through our partnership with Tempus, we delivered 3,478 tests this quarter, a 59% increase from the first quarter and over 575% growth from last year. This is a direct testament to how our ultra-sensitive approach is resonating with clinicians. Our growing base of over 600 physicians confirms that Next Personal's ultra-sensitive results are a key differentiator, giving them greater confidence in their clinical decisions. This quarter, we expanded our Tempus partnership to include colorectal cancer, a major market where we believe our test ultra-sensitivity can address a significant unmet need. Initial feedback is extremely positive, and we're moving aggressively to capitalize on the opportunity. In light of this, we're also adding to our own Personalis sales force and expect to exit the year with 12 to 15 field professionals on the ground. Second is driving reimbursement through world-class evidence. The clinical data validating our approach is nothing short of outstanding.

First is accelerating clinical adoption through our partnership with Tempest. We delivered, 3,478 tests this quarter of 59% increase from the first quarter in over 575% growth from last year. This is a direct Testament to how our Ultra sensitive approach is resonating with clinicians.

Our growing base of over 600 Physicians confirms that next personals. Ultra. Sensitive results are a key differentiator, giving them greater confidence in their clinical decisions.

This quarter, we expanded our Tempest partnership to include colorectal cancer. A major Market where we believe our tests. Ultra sensitivity can address a significant unmet need initial feedback is extremely positive and we're moving aggressively to capitalize on the opportunity.

In light of this, we're also adding to our own personality sales force and expect to exit the year with 12 to 15 field professionals on the ground.

Chris Hall: At ASCO in June, three studies underscored the power of our technology. The PREDICT and SGINDARI studies demonstrated that Next Personal can predict patient outcomes in neoadjuvant breast cancer, with nearly half of all positive detections found in the ultra-sensitive range that our assay unlocks. Furthermore, an important study from AstraZeneca showed our test detecting cervical cancer progression up to 16 months ahead of imaging. We believe this is the caliber of evidence that doesn't just support clinical practice; it transforms it. Behind the strength of our clinical evidence, we continue to target achieving coverage for at least two indications this year. We have recently submitted our IO monitoring dossier for Medicare coverage, and so we now have two indications in process for coverage, and the lung cancer dossier is on track.

Second is driving reimbursement through worldclass evidence. The clinical data validating. Our approach is nothing short of outstanding at ASCO in June.

3 studies underscored the power of our technology. The predict in scandar studies. Demonstrated that next personal can predict patient outcomes in Neo adimanti.

Furthermore, an important study from Astroica showed our tests detecting cervical cancer progression up to 16 months ahead of imaging. We believe this is the caliber of evidence that doesn't just support clinical practice; it transforms it.

Chris Hall: Some aspects of the coverage process are beyond our control, but we continue to be confident that our data meets the bar for coverage. Third is leading with biopharma partners. Our technology gives partners a powerful tool to accelerate clinical trials. While total biopharma revenue of 11.1 million reflects the project delays I mentioned, the underlying growth in our strategic focus area is exceptional. As I stated, Next Personal revenue from biopharma is on track for 3 to 400% year-over-year growth, and the new customers noted on our last call remain on track to generate over $5 million each in revenue this year. We project total biopharma revenue will rebound to between 11 and 13 million in the third quarter. Our expectations are much higher for the fourth quarter, typically the best quarter of the year. In summary, Personalis is executing with precision on our strategy to win in MRD.

Behind the clinical evidence, we continue to Target achieving coverage for at least 2 indications this year. We have recently submitted our IO monetary dossier for Medicare coverage. And so we now have 2 indications and process for coverage and the lung cancer dossier is on track.

That our data meets the bar for coverage.

Third is leading with biofarma Partners, our technology gives Partners a powerful tool to accelerate clinical trials, while total biofarma, revenue of 11.1 million reflects the project delays I mentioned.

The underlying growth in our strategic. Focus area is exceptional.

As I stated next personal revenue from biofarm is on track, for 3 to 400 cents year-over-year growth in the new customer's noted on our last call remain on track to generate over 5 million dollars each in Revenue this year.

We project total biofarma revenue will rebound to the between 11 and 13 million in the third quarter. Our expectations are much higher for the fourth quarter typically, the best quarter of the year.

Chris Hall: Our team and our partners are deploying our ultra-sensitive technology that we believe can redefine the standard of care for patients with cancer. I'm proud of the progress that our team has made so far in 2025, and I'm thrilled with the commercial momentum and partnership with Tempus. This is a transformative year for our company and, most importantly, for the patients who benefit from our technology. With that, I will now turn it over to Aaron to review our financial results.

And summary personalis is executing with Precision on our strategy to win an mrd, our team, and our partners are deploying our Ultra sensitive technology that we believe can redefine the standard of care for patients with cancer.

Aaron Tachibana: Thank you, Chris. I will discuss our second quarter 2025 result and then cover guidance for the third quarter and the full year. Total company revenue for the second quarter was $17.2 million, representing a 24% decrease compared with $22.6 million for the same period of the prior year. The decrease in revenue was primarily driven by the expected volume decline of $5.6 million from Natera and $1.3 million from Moderna. We continue to expect the Natera business to conclude by the end of the third quarter. Biopharma revenue was $11.1 million in the second quarter, representing a 16% decrease compared with $13.2 million for the same period of the prior year. Most of the biopharma revenue decline was from Moderna, as previously mentioned. In addition, Chris discussed the customer project delays that we had in the second quarter.

I'm proud of the progress that our team has made so far in 2025, and I'm thrilled with the commercial momentum and partnership with templates. This is a transformative year for our company and most importantly, for the patients who benefit from our technology with that, I will now turn it over to Aaron to review our financial results.

Thank you, Chris.

I will discuss our second quarter 2025 results, and then cover guidance for the third quarter and the full year.

total company revenue for the second quarter with 17.2 million representing a 24% decrease, compared with 22.6 million for the same period of the prior year.

The decrease in Revenue was primarily driven by the expected volume decline of 5.6 million from nitara and 1.3 million from madna.

We continue to expect the NATA business to conclude by the end of the third quarter.

Biofarma Revenue was 11.1 million in the second quarter representing a 16% decrease compared with 13.2 million for the same period of the prior year.

Most of the biofarma revenue decline was from madna as previously mentioned.

Aaron Tachibana: If these projects were not delayed, our biopharma revenue for the second quarter would have increased year over year despite the decline from Moderna. For clinical revenue, we recognized $0.5 million of revenue from our NextDx and NextPersonal molecular test compared with $0.1 million for the same period of the prior year. Gross margin was 27.6% in the second quarter compared with 35.6% for the same period of the prior year. The year-over-year decrease of 8% was primarily due to the lower revenue and unreimbursed clinical test costs. In the second quarter, we saw an impact of approximately 12% to our gross margin from the unreimbursed clinical test costs. Excluding those expenses, gross margin would have been approximately 40%. We continue to expect total company margins to expand beyond 50% once we have obtained reimbursement coverage for more than a few indications and we achieve scale.

In addition, Chris discussed the customer project delays that we had in the second quarter.

at these projects were not delayed, our biofarma revenue, for the second quarter would have increased year-over-year despite the decline from madna

For clinical Revenue, we recognized 0.5 million of revenue from our next DX. And next personal molecular tests compared with 0.1 million for the same period of the prior year.

Gross margin was 27.6% in the second quarter compared with 35.6% for the same period as the prior year.

The year-over-year decrease of 8% was primarily due to the lower revenue and unreimbursed clinical test costs.

In the second quarter, we saw an impact of approximately 12% to our gross margin from the unreimbursed clinical test cost.

Excluding those expenses. Gross margin would have been approximately 40%.

Aaron Tachibana: Operating expenses were $26.6 million in the second quarter compared with $24.9 million for the same period of the prior year. Most of the year-over-year increase was attributed to selling expenses related to our clinical test volume growth. The second quarter R&D expense was $12.4 million compared with $13 million for the same period of the prior year, and SG&A expense was $14.2 million compared with $11.9 million for the same period of the prior year. Net loss for the second quarter was $20.1 million compared with $12.8 million for the same period of the prior year. The prior year's net loss included a $3 million non-cash gain related to the warrants issued to Tempus and were outstanding as of the second quarter of the prior year. Excluding the non-cash gain, the prior year net loss would have been $15.8 million for comparative purposes. Now onto the balance sheet.

We continue to expect total company margins to expand Beyond 50%. Once we have obtained reimbursement coverage for more than a few indications and we achieve scale.

Operating expenses were 26.6 million in the second quarter compared with 24.9 million for the same period of the prior year.

Most of the year-over-year increase was attributed to selling expenses related to our clinical tests volume growth.

The second quarter R&D expense was 12.4 Million compared with 13 million for the same period of the prior year.

SG&A expenses were $14.2 million compared with $11.9 million for the same period of the prior year.

Net loss for the second quarter was 20.1 Million, compared with 12.8 million for the same period of the prior year.

The prior Year's net loss included a $3 million non-cash. Gain related to the warrant issued to Tempest and were outstanding as of the second quarter of the prior year.

Excluding the non-cash gain the prior year. Net loss would have been 15.8 million for comparative purposes.

Now, under the balance sheet,

Aaron Tachibana: We finished the second quarter with a strong balance sheet with cash and short-term investments of $173.2 million and no debt other than some small equipment loans. The cash usage from operations and capital equipment additions for the second quarter was $13.2 million. We continue to operate cost-effectively, and as mentioned during our last conference call, we expect cash usage for the full year 2025 of approximately $75 million, an increase of approximately $30 million compared with the amount used in 2024, primarily due to investment in clinical test volumes in advance of reimbursement, expansion of our clinical evidence for Next Personal by conducting new studies, and additions to our clinical sales team. We expect these investments to help drive Next Personal revenue growth post-reimbursement later this year and into 2026. Now I'd like to turn to guidance.

we finished the second quarter with a strong balance sheet with cash and short-term investments in 173.2 million and no debt other than some small equipment loans.

The cache usage from operations and Capital Equipment additions for the second quarter was 13.2 million.

During our last conference call.

We expect, cash usage for the full year 2025 of approximately 75 million an increase of approximately $30 million compared with the amount used in 2024.

primarily due to investment in clinical test volumes in advance of reimbursement,

Expansion of our clinical evidence for next Personalis by conducting new studies.

And additions to our clinical sales team.

We expect these Investments to help drive next. Personal Revenue growth post reimbursements later this year and into 2026.

Aaron Tachibana: For the third quarter of 2025, we expect total company revenue in the range of $12 to $14 million, revenue from pharma tests and services and all other customers in the range of $11 to $13 million, and revenue from population sequencing and enterprise customers of approximately $1 million. And for the full year of 2025, we revised our guidance and now expect total company revenue in the range of $70 to $80 million, which is reduced from $80 to $90 million, and this lower range encompasses the timing and variability of biopharma projects and sample receipts and Medicare reimbursement coverage for Next Personal. Revenue from pharma tests and services and all other customers in the range of $52 to $58 million, which is reduced from $62 to $64 million. Population sequencing plus enterprise customers in the range of $15 to $16 million.

Now, I'd like to turn to giden.

for the third quarter of 2025,

We expect.

Total company Revenue in the range of 12 to 14 million dollars.

Revenue from Pharma tests and services and all other customers in the range of 11 to 13 million.

And revenue from population sequencing and Enterprise customers of approximately 1 million.

And for the full year of 2025, we revised our guidance and now expect

Total company Revenue in the range of 70 to 80 million.

Which is reduced from $80 million to $90 million, and this lower range encompasses the timing and variability of biofarma projects and sample receipts.

And Medicare reimbursement coverage for next personal.

Revenue from Pharma tests and services and all other customers in the range of 52 to 58 million, which is reduced from 62 to 64 million.

Aaron Tachibana: Revenue from clinical tests reimbursed in the range of $3 to $6 million, which is narrowed from $3 to $10 million. Gross margin in the range of 22 to 24%, and our gross margin guidance for the full year is expected to be lower than the 32% for the full year of 2024 due to the impact of investing in clinical test volume ahead of reimbursement. Net loss of approximately $85 million, which includes approximately $20 million of unreimbursed test costs, which has increased from $83 million due to lower revenue, and cash usage of approximately $75 million. We look forward to updating you on our progress during the next conference call in a few months. And with that, I will turn the call back over to the operator to begin the Q&A session. Operator?

Population sequencing plus Enterprise customers in the range of 15 to 16 million.

Revenue from Clinical tests reimbursed in the range of 3 to 6 million.

Which is narrowed from $3 million to $10 million.

Gross margins. In the range of 22 to 24%.

And our gross margin guidance. For the full year is expected to be lower than the 32%, for the full year of 2024 due to the impact of investing in clinical tests, volume ahead of reimbursement,

Net loss of approximately $85 million.

which includes approximately 20 million dollars of unreimbursed test costs

Which is increased from 83 million due to lower Revenue.

And cash usage of approximately 75 million.

We look forward to updating you on our progress, during the next conference call in a few months.

And with that, I will turn the call back over to the operator. To begin the Q&A session.

Operator.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Dan Brennan with TD Cowan. Please go ahead.

Thank you.

Ladies and gentlemen, we will now begin the question and answer session.

If you would like to ask a question, please press star and 1 on your telephone keypad.

A confirmation tone. Will indicate your line is in the question queue?

you may press star and 2 if you would like to remove your question from the queue,

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Ladies and gentlemen, we will wait for a moment while we pull for questions.

The first question.

Comes from Dan Brennan.

With TD Cowen, please go ahead.

Dan Brennan: Great. Thank you. Thanks for the questions. Maybe the first one just on clinical. So I know you said Medicare is on track. You did lower the top end of the guide from 3 to 10, 3 to 6. So maybe can you just walk through a little bit of like what was the rationale for that? Are you hearing anything back from Medicare? And then B, as we think about the back half of the year for clinical, like what's kind of assumed for Q3 and Q4 at this point?

Great, thank you. Uh thanks for the um, maybe the first 1 just on clinical.

So I know you said Medicare is on track, you did lower the top end of the guide from 3 to 10 to 3 to 6. So maybe can you just walk through a little bit of like, what was the rationale for that? Um, are you hearing anything back from Medicare?

And then b, as we think about the back half of the year for clinical like what's what's kind of assumed for Q3 and Q4 at this point?

Aaron Tachibana: So Dan, in terms of the guide, the prior guide, for our prior guide, we had a pretty wide range of $3 to $10 million on the clinical side, primarily due to the number of months we saw before we got to reimbursement. Now that we're in the month of August, for early August here, we thought it'd be prudent to tighten the range or narrow the range, right? And that's how we come up with the $3 to $6 million estimate. And what we've modeled in the prior guide is we had a lot of different models that we ran or scenarios that we ran in terms of when reimbursement could occur, right? And so that's how we came up with the wider range.

So Dan, in terms of the guide to Prior guide, so our prior guides we had a pretty wide range of 3 to 10 million dollars on the clinical side primarily due to the number of months we saw before we got to reimbursement. Now that we're in the month of August, for early August here,

We thought it'd be prudent to tighten the range or narrow the range. I mean, that's how we come up with the 3 to 6 million dollar, uh, estimate

And what we've modeled in the prior guide is we had a lot of different uh models that we ran or scenarios that we ran in terms of when reimbursement could occur, right? And so that's how we came up with the wider range.

Aaron Tachibana: And net-net, you know, you could assume that, you know, we did have reimbursement for one indication in the latter part of Q3 and then the second one in Q4. We're still targeting the two cancer types after the full year, but in terms of the guide now, you know, it looks more reasonable that we'll get two cancer types in the fourth quarter.

Um,

and net, net. You know, you could assume that, you know, we did have reimbursement for 1 indication

The full year.

Chris Hall: Yeah. So Dan, it's Chris, and we still feel confident about that. We've had good engagement. You know, Palmetto always does a great job evaluating these tests and these technologies, and we've been engaged with them. And we feel like, you know, even after all that engagement, that our evidence meets the bar that they've established. We've, you know, got the IO submitted, which is new news, and we feel like we have a good line of sight to the Tracer X data being published in lung cancer. So it's our expectations we're going to have three shots on goal to get two of them done by the end of the year and have enough time to go through a back and forth. So we feel like we're in a good position.

But in terms of the guide now, you know, it looks more reasonable that we'll get 2 cancer types in the fourth quarter.

Chris Hall: You know, it's always tough to nail down the exact final timelines on this stuff, but you know, we feel like we're in a good position.

Dan Brennan: Okay. And could you speak a little bit to some of the early use cases? You know, you talked about, yeah, I know you gave some numbers out in terms of the number of doctors that are using it to speak to like how is that going? I know it's early. You don't have coverage yet, but how is the, you know, the number of doctors using it, and kind of where do you find doctors who are using it specifically? Like what types of areas do you think your ultra-sensitive test plays, you know, a differentiated role?

Yeah, so Dan. It's um it's Chris and we still feel confident about that. We've had good engagement. You know, Palmetto always does, a does a great job, evaluating these tests and these Technologies and we've we've been engaged with them and, uh, we feel like, you know, even after all that engagement that our evidence will meet meets, the bar, that they've established. Uh, We've you know, got the io submitted, uh, which is new news. And we, uh, feel like we have a good line of sight to the Tracer X data being published in lung cancer. So it's our expectations. We're going to have 3 shots on goal to get 2 of them done by the end of the year and have enough time to to go through uh ah, ah, back and forth. So we feel like we're in a good position, you know. It's always tough to to nail down the exact final timelines on this this stuff but you know, we feel like we're in a good position.

Okay. And could you speak a little bit to some of the early use cases? Uh, you know, you talked about

Um, I know you gave some numbers out in terms of the number of doctors that are using it to speak to like, how, how is that going? I know it's early. You don't have coverage yet.

Chris Hall: Yeah. I mean, we focus our clinical storytelling into breast cancer, lung cancer, and therapy and IO therapy monitoring. You know, we've got some great I didn't walk through an example on this call of a case study, but we've had doctors using it to find recurrence and, you know, found it months ahead, sometimes a metastasis, which really reinforces the value of the technology. We've had doctors using it after, you know, neoadjuvant to determine what to do next. We've certainly had doctors using it as a part of therapy and sometimes switching therapy and, you know, because they haven't been able to get a longitudinal response and and then getting the patient on another drug and seeing a response. And so that's been great. The key value here is that almost 40% of our results, of our positive results, continue to be in the ultra-sensitive range.

But how is the, you know, the number of doctors using it and kind of, where do you, where do you find? Doctors are using it. Specifically, like what types of areas do you think your ultrasensitive test plays uh, you know, a differentiated role?

Yeah, I mean, we, we focus our clinical storytelling and to breast cancer, lung, cancer, and therapy, and Ajo therapy. Monitoring, you know, we've got some great. I didn't walk through a an example on this call of a, of a

Chris Hall: And when doctors see that and they, you know, and they, and they, they, they, that sells them over time. And our retention has been phenomenally high. You know, it's probably one of the best products I've ever worked on bringing to market in terms of high early retention. And that ramp has been great. What's happened, though, recently, and I think, you know, this last quarter, we added CRC to the call cycle. And so that's been a whole new evolving use case with higher landmark sensitivity. And we expanded the Tempus arrangement, and we're starting to see some CRC usage and really positive feedback. So across all four of those indications, we think the ultra-sensitivity is shining.

Case study but we've had doctors using it to find recurrence. Um, and you know, founded months ahead, sometimes a metastasis, which really reinforces the value of the technology. We've had doctors using it after, you know, Neo Edge events to determine what to do next. We've certainly had doctors using it as a part of therapy and sometimes switching therapy and you know, because they haven't been able to get a longitudinal response and and then getting the patient on another drug and seeing seeing a response. And so that's been great. The the value here is that almost 40% of our results of our positive results continue to be in the ultra sensitive range and when doctors see that and they you know, and they and they they they they they that sells them over time and our retention has been phenomenally High. Um, you know, it's probably 1 of the best products I've ever worked on bringing to market in terms of high early retention and uh and that ramp has been great. What's happened though recently and I think, you know this last quarter

We added CRC to the call cycle. And so that's been a whole new evolving.

Chris Hall: And then the last piece is obviously gives more confidence to the negative, which is always a good thing when you're sitting across from a patient and you're telling them that it's a good day for them. They don't have any minimal residual disease in their blood that they can measure and having confidence, and that's powerful. So we feel like it's spiraling across them.

Uh use case, um with higher Landmark, sensitivity and we expanded The Tempest Arrangement and we're starting to see some CRC usage and really positive feedback. So across all 4 of those indications. We think the ultra sensitivity is, is shining. And then the last piece is obviously gives more confidence

negative, which

is always a good thing when you're sitting across.

And you're telling them that it's it's a good day for them. They don't have any minimal residual disease and their blood that they can measure and having confidence in that. That's that's powerful. So we feel like it's firing across all spots of the clinical

Dan Brennan: I know there'll be lots of surfaces. I know there'll be a bunch of questions on pharma. Just kind of one more on the balance sheet. So you have $173 million in cash. I think you burned $13 million. What's what's Can you just remind us of the pathway forward? Like how long does that cash last? I know Aaron talked about the gross margin expansion you expect, but you also have to deal with Tempus, which just kind of walk us through a little bit of how we might contemplate, you know, your kind of cash flow and, you know, any any kind of cash flow need you can have going forward. Thank you.

Close. I know there'll be lots of because I I know there'll be a bunch of questions on form on just kind of 1 more on the balance sheet. So you have 173 million in cash. I think you burned 13 million

What what's, what's can you just remind us of the pathway forward? Like how long does that cash last?

Aaron Tachibana: Sure, Dan. So we ended the quarter with $173 million in cash. We were we have a strong balance sheet. We believe we have plenty of cash to get us not only to the other side of reimbursement, but to get us to cash flow break-even. In terms of, you know, having to go raise money, we're not in that position like, you know, we were in the past. So there's no plans contemplated to having to raise money. We still have plenty of cash to be able to invest in studies, invest in growth of volume here in advance of reimbursement and post-reimbursement. And then once we get to the other side of reimbursement, then we're really ramping our test volume. Then we can sit back and look at other investments that may be required to grow even faster and further into the future.

Uh, I know I haven't talked about the gross margin expansion, you expect. But you also have the deal with Tempest, which just kind of walk us through a little bit of how we might contemplate, you know, your kind of cash flow and um you know, any any kind of cash flow needs them to have going forward. Thank you.

Sure, Dan so we need the quarter with 173 million in cash. We were, we have a strong balance sheet. We believe we have plenty of cash to get us not only to the other side of reimbursement but to give us the cash flow break even

in terms of,

You know, having to go raise money. We're not in that position like, you know, we were in the past so there's no plans contemplated to having to raise money. We still have plenty of cash to be able to invest in studies.

Invest in growth of volume here in advance of reimbursement and post reimbursement. And then, once we get to the other side of reimbursement, then we're really ramping our test point, then we can sit back and look at, um, other Investments that may be required to grow, even faster, and further into the future.

Dan Brennan: Terrific. Thank you.

Terrific. Thank you.

Operator: Thank you. The next question comes from Mark Massaro from BTIG. Please go ahead.

Thanks, Dan.

Thank you.

Comes from Mark masaro from btig. Please go ahead.

Jody (for Mark Massaro): Yes. This is Jody and on for Mark. Thanks for taking the questions. So just more on biopharma, is it fair to think about the $10 million reduction as a push-out of revenue rather than being canceled outright? So is it fair to think about that being reflected in 2026? And is it correct that the, yes, go ahead.

Chris Hall: Go ahead. And what was the second part of the question?

Is it fair to think about the 10 million, um, reduction, um, as a push out of Revenue, um, rather than being canceled outright. Um, so is it fair to think about that being reflected in 2026? Um, and is it correct that the, uh, yes, go ahead.

Go ahead. What was the second part of the question?

Jody (for Mark Massaro): Yeah. And then just to clarify, was that push-out related to the personalized cancer vaccine deal that you have with Moderna? And if so, just how do you feel like that value prop is resonating more generally?

Chris Hall: Yeah. No, great. So let's start with the PCV or the or the INT, individualized neoantigen therapy programs with Moderna. That is on pace and has been, you know, sort of a bedrock relationship, and we couldn't be happier with how that's progressed. We had expected that revenue to be down this year because they had enrolled a significant number of patients in their melanoma trial last year, which fueled the revenue, and this year's lower. But that's what we expected, and we didn't see anything there. What we've seen in the Q2 was that some of the projects got pushed into Q3 and 4, and some of the Q3 started to get pushed back, and we started to see some softness. That's been in the translational sector.

Yeah. Um and then um just to clarify um with that, push out related to the personalized cancer vaccine um deal that you have with madna. And if so um just how do you feel like that value prop um is resonating more generally?

No great. Uh, so let's let's start with the with the PCV or the or the int individualized, Neo antigen therapy programs with with madna that is on Pace and has been, you know, sort of a Bedrock relationship and we couldn't be happier with how that's progressed. We had expected that Revenue to be down this year because they had enrolled a significant number of patients in their melanoma trial last year, which which fueled the revenue in this year's lower. But that's what we expected. And we didn't see anything there what we've seen in the Q2 and was that some of the the projects got pushed into Q3 and 4 and some of the Q3 starting to get pushed back. And we

Chris Hall: You know, and I think what's happened is these biopharma companies have done layoffs, as they've, you know, pulled a little tighter on their purse strings. You know, we've seen a slowdown and we've seen a general softness, and we thought it was prudent to take the guide down given what we're seeing and what we're starting to see, you know, appear inside the sector. And it's not surprising to us that it kind of happens in this biopharma segment. But we're still on fire with the MRD product. I mean, you know, I note in the prepared remarks that we're still seeing 3 to 400% growth. We've talked about that, and we're right at that spot. And we don't see any of the MRD projects slipping out of the year.

Started to see some softness that's been in the translational sector.

Um, you know, and I think it was happened, is these biofarma companies have done layoffs.

Is they, you know, put pulled a little tighter on their purse strings.

Chris Hall: Secondly, we still, you know, have the two bigger customers that we've landed this year, north of 5 million in revenue, and they're tracking to do that. And so, you know, the MRD product continues to be exactly where we are, and that's been a real shining light in what we're doing. We haven't, you know, some of the projects that we expect to go into Q and into next year, we don't, we haven't seen any losses. There's, you know, always maybe a clinical trial that doesn't work out that we're doing some, you know, some tumor profiling work that might get the plug might get pulled on that. But we haven't seen any significant losses. It's certainly not in any meaningful way. So it's always, it's been push-outs and, you know, a sort of a slowness that I think we're seeing.

You know, we we um, you know, we've seen this, we've seen a Slowdown and we've seen a general softness and we thought it was prudent to take the guy down, given what we're seeing and what what what we're starting to see, you know, appear inside the sector and it's not surprising to us that it kind of happens in this biofarma segment, but we're still on fire with the mrd product. I mean, you know, I I, I note in the, in the prepared remarks that we've still seen 3 to 400% growth. We've talked about that and we're right at that spot and we don't see any of the mrd projects slipping out of the Year. Secondly. Uh, we still, you know, have the 2, big customers that we've landed this year, north of 5 million in revenue and they're tracking to do that. And so, you know, um, the MRT product continues to be exactly where we are. And that's been a real, a real Shining Light. In what we're doing we haven't, you know, some of the projects that we expect to go into Q into next year. We don't we haven't seen any losses. Uh, there's, you know, always maybe a clinical trial that doesn't work out.

that we're doing some, you know, some bio some

Chris Hall: And I think some of the other companies operating in this space have seen too, and that's where we are. So, you know, but the core assets here with the MRD is performing phenomenally well with that customer, and certainly the clinical customer where we see the nearly 60% quarter-over-quarter growth.

Tumor profiling work that might get the plug might get pulled on that but we haven't seen any significant losses and certainly not in any meaningful way. So it's always it's been push outs and you know as sort of a slowness that I think we're seeing and I think some of the other companies

operating in the space.

And that's where we are.

So, you know, but the core asset here with the mrd is performing phenomenally well with that customer and certainly the clinical customer where where we see the nearly 60% quarter over quarter proof

Jody (for Mark Massaro): Okay. Perfect. That was great color. Thanks so much. And then just to follow up on the MRD front, just on the 3,500 Next Personal tests, could you guys just discuss if you're seeing maybe an increased number of test time points per patient, or is it more so lift in new physician adds? And then just any attachment to call out a Next Personal to your NextDx CGP test as well. Thanks.

Chris Hall: Yeah. Yeah. So we're seeing growth both in the number of physicians, and I think we talked about we've crossed over 600 networking, which is just phenomenal given where we are. And we are seeing us go, we're going deeper into those accounts, meaning we're getting more samples per physician, and then we're starting to pull through the subsequents. And that's all been on the bedrock of what's been a phenomenal relationship with Tempus. I mean, we work so well with them, and we couldn't be more happy with how that relationship has unfolded. And you know, you're starting to see the success of that really, you know, deeply starting to power the numbers and the performance. And so it's happening across all the metrics. On NextDx, the CGP test, I think we had our highest quarterly revenue this quarter. You know, that's been the CGP NextDx.

Okay, perfect. That was great color, thanks so much. Um, and then just to follow up um, on the mrd front, um, just on the 3500 next personal tests. Um, could you guys just discuss if you're seeing, um, maybe an increase number of tests time points per patient or is it more? So uh, lift and new physician ads and then just any attachment to call out. Um, a next personal to your next DX, uh cgp test as well. Thanks.

Yeah, yeah. So um

We are seeing growth both in the number of Physicians, and I think we talked about we've crossed over 600. Now we're in, which is just phenomenal.

Chris Hall: It's appended onto many of the tests that we do without Tempus. Tempus sells their CGP when it comes through their channel, but when we have our reps, we get this, we'll often get the CGP associated with it, and it's been a nice revenue driver, an extra revenue driver on those samples. But the core MRD metrics, you know, it's increasing tests per per per doctor, increasing number of doctors, phenomenal retention, and then starting to pull through the subsequents. Is that helpful? I think I covered everything.

extra Revenue driver on those samples, but, uh, but the core mrd metrics, you know, it's increasing desperate per per per doctor and

Increasing, um um number of doctors phenomenal retention and then um and then starting to pull through the subsequence.

Is that helpful?

Jody (for Mark Massaro): Yes, perfect. Thank you for taking the questions.

I think I covered everything.

Yes, perfect. Thank you for taking the questions.

Operator: Thank you. The next question comes from Thomas Flatten with Lake Street Capital. Please go ahead.

Thank you.

Dan Brennan: Hey, good afternoon. I appreciate you guys taking the questions. You know, since now that you've run a few thousand samples through the system, I'm curious what you guys have seen in terms of turnaround time for the test, you know, from tissue and blood receipt, you know, from the patient's first visit and then to turnaround to results. Have you seen any improvement in that? Has it been helpful to have this early access program to work out kinks, etc.?

The next question comes from Thomas. Flatten with Lake Street Capital. Please go ahead.

Chris Hall: Oh, absolutely. You know, what we've done is we've had a good chunk of our R&D staff really focus this last 18 months on how do we start to scale this. And our lead times now have fallen dramatically. We think we're at a spot where, you know, we're providing, you know, whatever they can get in the marketplace from any other vendor, both on the subsequent and the baseline. And we feel like we're in a really good position. We've invested a lot of money and time and effort in scaling this and starting to do it at scale and haven't missed a beat along the way.

Hey, good afternoon. I appreciate you guys taking the questions. Um you know, since not now that you've run a a few thousand samples through the system, I'm curious what you guys have seen in terms of turnaround time for the test, you know, from from tissue and blood. Uh, receipt, you know at from the patient's first visit and then to to turn around to to results. Have you seen any Improvement in that? Has it been helpful to have this Early Access program to work out Kinks, Etc?

Oh, absolutely. You know what? What we've done is we've we've had a good chunk of our R&D staff really focus. This last 18 months on how do we start to scale this and our lead times. Now have fallen dramatically, we think we're we're at a spot where you know, we're providing, you know what, whatever they can get in the marketplace from any other vendor both on the subsequent and the Baseline. And we feel like we're in a really good position. We've we've invested

Chris Hall: So that's been, I mean, it's sort of hard to to quantify that, but I will just note that, you know, the market physicians really expect a high level of customer service, and the growth that we are seeing quarter over quarter over quarter is a tribute to our ability to execute on the operational front. Because if we were messing this up and we were, you know, going weeks and weeks and weeks and days and days and days and losing samples along the way, we would not see the retention and we would not see the quarterly growth because you can't solve that problem by growing out of it. So we've been rock solid there and, you know, have improved as we've gone, and you see that in the numbers.

Dan Brennan: Got it. Helpful. And I'm not sure how many Ns you have to use to answer this question, but have you detected what kind of cadence physicians are using with repeat testing with patients that might have been kind of early on in the early access program?

A lot of money and time and effort in scaling, this and starting to do it at scale, and haven't missed a beat along the way. So that's been, I mean, it's sort of hard to to quantify that. But I will just note that, you know, the market Physicians really expect, a high level of customer service. And the growth that we are seeing quarter over quarter, over quarter is attributed to our ability to execute on the operational front. Because if we were messing this up and we were, you know, going weeks and weeks and weeks and days and days and days and losing samples along the way, we would not see the retention. And we would not see the quarterly growth because you can't solve that problem by growing out of it. So we've been Rock Solid there and you know, have improved as we've gone and you see that in the numbers.

Got it, helpful. Um, and I'm not sure how many ends you have to use for the day to answer this question. But have you detected what kind of cadence physicians are using with repeat testing with patients? That might have been kind of early on in the Early Access program?

Chris Hall: I mean, I think we're seeing, you know, I think it's a little early to answer that definitively. I mean, we see that the recurrence monitoring is less than the therapy monitoring. The IO therapy, we see more than the recurrence monitoring. You know, that's what we see. But you know, I think it's been, I think it's what we expected, but I think it's a little early to the different use cases and where they are in the clinical flow. And I think we'll have a lot more as the numbers start to get bigger to delve into there.

Um I mean I think we're seeing, you know, I I think it's a little early to answer that definitively. Um I mean we see that the um recurrence monitoring is less than the therapy monitoring. Uh the iio therapy. We see we see more than the recurrence monitoring. Um

Dan Brennan: And then one quick final one. As you guys look to expand your sales team here in the second half of the year, remind us again how you and Tempus are going to kind of co-manage customers. You know, is there exclusivity depending on who the rep is? Can you just explain a little bit more how that works?

You know that's that's what that's, that's what we see. But you know, I think it's been, I think it's what we expected. But I think it's a little early into the different use cases and where they are in the clinical flow and I think we'll have a lot more. Is the numbers start to get bigger to delve into their

and then 1 quick final 1, as you guys look to expand your sales team here in the second half of the year, how you remind us again, how you and Tempest of are going to kind of co-manage, uh,

Chris Hall: Yeah. So I mean, the relationship, I mean, we're depending on Tempus, and you know, they've powered us, and you know, that's awesome. It really depends on what the doctor and how they want it. And usually, it's honestly probably best for the physicians to drive through the Tempus infrastructure. They're set up in EMRs, and that's really important to clinicians. The logistics are often worked out within those institutions by Tempus, and so that allows us to move quicker in a really seamless way and in a way that meets customer needs. And it was one of the driving forces internally here at Personalis to do the Tempus arrangement. And so I think by and large, you know, physicians would, because that infrastructure is in place, be happy to roll it through Tempus, and we do whatever is best for the doctor and for their patients.

Customers, you know is their exclusivity depending on who the ref is, can you just explain a little bit more how that works?

Chris Hall: And so that's where it sorts out. As we scale the group, you know, we've always said we'll be scaling it. And that group does a couple of things. It supports the relationship where needed, and particularly in big academic medical centers with KOLs. I mean, one of the things that I think it made Personalis unique is that we've worked with many of the top people in the world, and we have access to some of the leading sample biobanks to build data, and that sort of really starts to drive clinical usage. And so we put a focus of our sales infrastructure working with those people and those relationships. And so we're investing and continue to invest there. And then secondarily, as as as strong as Tempus is, they're not the only, you know, cancer company. And so doctors, you know, have other implementations set up.

Yeah. So, I mean the relationship. I mean, we're we're depending on Tempest and you know, they've, they've powered us and, you know, that's, that's awesome. We really depends on what the doctor and how they want it. And usually, it's honestly probably best for the Physicians to drive through the Tempest infrastructure. They're set up in emrs, um, and that's really important to, to, to clinicians. Uh, the logistics are often worked out within those institutions by Tempest and so that allows us to move quicker, and it really seamless way and, and, in a way that meets customer needs and it was 1 of the driving forces internally here at personalis to do the Tempest Arrangement. And so I think by and large, you know, Physicians would would because that infrastructure is in place be happy to roll it through Tempest and we're we, we do whatever is best for the doctor and for their patients. And so that's where it sorts out as we scale the group, you know, we've always said, we'll be scaling it and that group does a couple.

Chris Hall: And so our reps will will try to make sure that we close any market gaps and provide coverage to every physician in the community, even if they're not doing business with Tempus. But if it's a Tempus account, you know, it probably will go through the Tempus architecture.

You know, cancer company and so doctors, you know, have other implementations set up. And so our reps will will try to make sure that we close any Market gaps and provide coverage to every position in a community even if they're not doing business with Tempest. But uh, if it's a tempest account, you know, it probably will go through the Tempest.

Dan Brennan: Got it. Appreciate the call. Thank you.

Got it. Appreciate the call. Thank you.

Chris Hall: But yeah, we've been really happy with how it's worked, Thomas.

But yeah, it's it's it's we've been really happy with how it's worked.

Dan Brennan: Got it. Thanks again.

Got it. Thanks again.

Operator: Thank you. The next question comes from Yuko Oku with Morgan Stanley. Please go ahead. Yuko, please go ahead with your question and unmute yourself in case if you're on mute.

Thank you.

The next question comes from Yuko, oku with Morgan Stanley. Please go ahead.

Dan Brennan: Hi. This is Devin Anand for Yuko. Can you guys hear me? Hey, I just wanted to start up in the biopharma end market. I was wondering if you guys provide an update to what you estimate the impact of all of these policy headwinds are going to be on your biopharma customers. I think you previously pointed to 3 to 5 million impact with your pipeline offsetting that. I was wondering if you have an updated estimate.

You go, please. Go ahead with your question and unmute yourself in case if you are on mute.

Hi. This is a non for Yuko. Can you guys hear me?

Yeah, thanks.

Hey, um, just wanted to start off in the, uh, bio for my end market. Um, I was wondering if you guys provide an update to what you estimate the impact of all these policy headwinds are going to be on your bio for customers. I think you previously pointed to a $3 million to $5 million impact, with your, uh, pipeline offsetting that. I was wondering if you have an updated estimate.

Aaron Tachibana: So hi, Edmund. This is Aaron. So in terms of your question about the biopharma landscape, what's going on in the government front, so in our prepared remarks, we did talk about revising our guidance from biopharma down from the 62 to 64 million down to 52 to 58. In terms of what we're seeing is on the translational research side of the business, where ImmunoID Next is our offering, we are seeing delays of projects, and we've seen that, you know, occurring from Q2 and Q3. Some projects in Q2 and Q3 have shifted to the right. It's our assumption that these projects are not lost. They're just delayed a little bit. So it's going to take two to four quarters before those, you know, get completed and convert to revenue. What's really strong for us right now is the MRD offering Next Personal with biopharma.

Alright, so, hi. Hi. Edmond this is Aaron. So in terms of your question about the biofarma landscape, it's for the, what's going on? Uh, in the government front. So,

Aaron Tachibana: Our funnel continues to grow and expand. And as Chris said in the prepared remarks, we have two customers that are $5 million each, and we believe we're going to fulfill those this year.

Dan Brennan: Gotcha. And then on the competitive landscape, following the recent announcement of the coverage determination for Saga's Pathlight, could you elaborate on how Next Personal is differentiated? And how are you thinking about balancing your MRD investments between near-term margin pressures versus immediate top-line benefits upon receiving reimbursement?

In a prepared remarks, we did talk about revising, our guidance from biofarma down from 62, to 64 million down to um, 52 to 58 in terms of what we're seeing is on the translational. Research side of the business. We're imuno ID next is our offering, we are seeing the delays of projects that we've seen that, you know, are current from Q2, and Q3 so projects in Q2 and Q3 have shifted to the right. It's our assumption that these projects are not lost. They're just delayed a little bit. So it's going to take 2 to 4 quarters. Before those, you know, get completed and convert to revenue. What's really strong for us right now is the mrd offering next personal with biofarma, our final continues to grow and expand. And as Chris said, in the prepared remarks, we have 2 customers that are 5 million dollars each and we believe we're going to fulfill those this year.

Gotcha. And then um, on the competitive landscape uh following the recent announcement of uh the coverage determination for saga's. Pathlight could you elaborate on how next personal is differentiated and how are you thinking about balancing your mrd Investments between Newton and margin? Pressures versus immediate Topline benefits upon receiving reimbursement.

Chris Hall: I didn't catch the last part of that.

I didn't catch the last part of that.

Dan Brennan: Just how are you thinking about balancing your MRD investments between suffering from near-term margin pressures versus seeing more of a top-line impact upon reimbursement?

Sorry, just how are you balancing, uh, thinking about balancing your MRD investments between, uh, suffering from the near-term margin pressures versus, uh, seeing more of a topline impact upon reimbursement?

Chris Hall: Yeah. No, we, I mean, firstly, as Saga got reimbursement in breast cancer, and you know, I think that's great. I think that's great that another player has gotten it. They were published several months ahead of us, and so our assumption has been always that they had submitted well ahead of us. So, you know, they proceeded on probably a similar timeframe. You know, and their data was good, and we feel like we cleared the bar, and you know, we feel like we're in a good position. And I, you know, when we saw that that they had gotten coverage and reimbursement, it just gave us confidence that, you know, the data that we have is on the right track.

Chris Hall: You know, we continue to invest deeply in evidence development, increasingly working with some prospective clinical trials of biopharma or within the breast cancer space with some of the top thought leaders, and we'll be announcing things along the way. We've had that prospective BE STRONGER trial in triple-negative breast cancer where we've been enrolling patients in a prospective way, but we're working with a lot of other top medical institutions. You know, we didn't really focus on it in this call, but you know, the ASCO data was particularly powerful, you know, with PREDICT and with SGINDARI, and it gives us an opportunity to expand, ultimately, the coverage there into the neoadjuvant setting. So, you know, those data sets were particularly great. And the PREDICT trial was, you know, a multi-center trial, and you know, the data was, again, another oral presentation at ASCO.

Got it. Uh, yeah. No we, I mean, first thing, I was just Saga. Got reimbursement in breast cancer. And, yeah, I think that's great. I think that's great to that. Another player has gotten it. They were published, um, several months ahead of us and so our assumption has been always that they had submitted well ahead of us so, you know, they proceeded on probably a similar time frame. Um, you know, and their data their data was good and we feel like we clear the bar and, you know, we feel like we're in a good position. And I you know, when we saw that that that they had gotten a ridge and reimbursement, it just gave us confidence that, you know, the data that we have is on the right right track. Um, you know, we continue to invest deeply in evidence development, uh, increasingly working with some prospective clinical trials of biofarma or with, um, within the breast cancer space with some of the top thought leaders. And we'll be announcing things along. The way we've had that prospective be stronger trial and triple negative breast cancer where we've been enrolling patients in a prospective way. But we're working with a lot of other

Top medical institutions, you know, we didn't really focus on it in this call, but, you know, the ASCO data was particularly powerful. Uh, you know, with predict and with uh, with with kandari and gives us an opportunity to expand ultimately the coverage there into the Neo a setting. So you know, those data sets were particularly great in the predict trial was, you know, multi-center um trial and you know, the data was again, another another

Chris Hall: And, you know, so we continue to invest aggressively there, and we think that that's, you know, that's the right spot to be investing. I would remind you that the economics of the Tempus arrangement, you know, means that we can really get a lot of sales and marketing leverage without having to invest a ton because we're leveraging their channel and then paying them for market value for the services as as we go along.So

Rich Chen: it allows us to scale without as much short-term investment in a sales and marketing infrastructure to get to the same spot.

Aaron Tachibana: I think the other question that Edwin, you had was balancing the volume with margins. And what we can say there is Chris said in his prepared remarks that our growth targets are 30 to 40%. We've been growing at a rate of 50% plus sequentially every quarter. Right? So if you look at the run rate from Q2, what, 3,500 tests or so? Now, that's basically a $6 million revenue run rate, assuming full reimbursement and assuming an average price of, let's say, $7,000 over four tests, including the first time point, which is more expensive, so $1,750 per test or so. We don't, we're not saying exactly what our reimbursed price is going to be, but we're just providing an estimate based upon what the incumbent has today. Right? So if you look at that, that's a $24 million annual revenue run rate in the second quarter.

For market value for the services as as we go along. So it allows us to scale without as much short-term investment in a sales marketing infrastructure, to get to the same spot.

I think the other question that Edmund you had was balancing the volume with margins.

So what we can say there is Chris said this prepared remarks that our growth targets are 30 to 40%. We've been growing at a rate of 50% plus sequentially every quarter, right? So, if you look at the

The run rate from Q2 with approximately 3,500 tests or so.

No, that's basically a 600 run rate, assuming full reimbursement.

Aaron Tachibana: We're going to continue to grow at a rate of 30 to 40% as we go forward at a minimum. We are balancing the cash burn with this growth trajectory. We're trying to be prudent on the cash side, but we're seeing phenomenal takeup from a volume standpoint. And we want to continue to go as fast as we can, primarily because once reimbursement coverage does come in the fourth quarter, it's going to flip to revenue. And we want as high a revenue run rate as we can because we believe that that's going to give the greatest value back to our shareholders. And so that's kind of how the way we're thinking about it. Our margin guide of 22 to 24% does contemplate these unreimbursed test costs in advance of reimbursement.

And assuming an average price of, let's say $7,000 over 4 tests. Including the first time point, which is more expensive. So 1750 per test or so, we don't, we're not saying exactly what our reimburse price is going to be. But we're just providing an estimate based upon what the incumbent has today, right? So if you look at that, that's a 24 million annual revenue. Run rate in the second quarter, we're going to continue to grow at a rate of 30 to 40%, you know, as we go forward at a minimum um we we are balancing the cash burn.

With, uh, this growth trajectory, we're trying to be prudent on the cash side, but we're seeing phenomenal take up from a volume standpoint. And we want to continue to go as fast as we can primarily. Because once reimbursement, coverage does come in the fourth quarter, it's going to flip to revenue.

And we want as high a revenue run rate as we can, because we believe that that's going to give the greatest value back to our shareholders. Okay, and so that's kind of how the way we're thinking about it. Our margin guide of 2022 to 24% does contemplate, these uh, unreimbursed test costs in advance of reimbursement,

Devin Anand: Got it. Thank you for the time and the color, Aaron and Chris.

Aaron Tachibana: Thanks, Edwin.

Got it. Thank you for the time. And the caller Aaron and Chris

Thanks. Thanks.

Operator: Thank you. The next question comes from Subhu Nambi from Guggenheim. Please go ahead.

Thank you.

The next question comes from subu nambi.

From Goen, please go ahead.

Caroline Corner: Hey, guys. Thank you for taking my questions. Can you talk through some of your conversations at ASCO? You touched on this a little in the previous question Q&A. How did that reinforce the approach you guys are taking right now? And what are some of the things you learned to implement in the second half of this year and beyond?

Hey guys, thank you for taking my questions. Uh, can you talk to some of your conversations that ask for you touched on this a little bit or in the previous question Q&A, how did that reinforce the approach? You guys are taking right now? And what are some of the things you've learned to implement in the second half of this year and Beyond?

Rich Chen: Yeah. Hi. Thanks for your question. This is Rich. Yeah. So we had a really great ASCO, as Chris alluded to. And most notably at ASCO, we introduced our first new adjuvant breast cancer data, triple-negative breast cancer, with two studies: PROJECT and SkanDara. And what was really terrific about that was that they showed very similar findings, that our test was highly, highly predictive of relapse for patients that have gotten new adjuvants. And so patients that were positive on our test were highly likely to relapse versus those who were negative. And it actually compared very favorably with the industry standard approach called PATH-CR. So that was really an important step because that's sort of the way people have done it before. And what they showed was our test was highly predictive, independent of PATH-CR.

Yeah. Hi. Thanks for your question. This is Rich. Yeah. So we had a really great ASCO as as Chris alluded to, um, and most notably at Oscar. We introduced our first new adant breast cancer, uh, data um, in triple negative breast cancer. Um, with 2 studies predictive scandar. Uh, and what was really uh, terrific about. That was the that they showed very similar findings that our test was highly highly predictive of relapse. Um,

You know, for patients that have gotten a new agent and so, patients that were positive on our test.

Were highly likely to relapse versus those who were negative.

Um, and it actually compared very favorably with the industry standard approach called PCR. Um, so that was really, um, you know, an important step because that's sort of the, the way people have done it before and what they showed was our test.

Rich Chen: So what that kind of sets us up to do is really expand our MULTIX coverage approach to, you know, you can expect that we'll be submitting for reimbursement for new adjuvant breast cancer once these studies get published, much in the same way we've been pursuing the other indications. So the way to think about it is that, yeah, this year we go for, you know, the breast along, and IO, we're working on that. Next year, you know, we'll be bringing CRC along and expanding breast cancer as those papers get published.

Was highly predictive independent of past Crescent. So what that kind of sets us up to do, is, is really, um, expand our, our our, our, our our, our moldy X, um, uh coverage approach um to

you know, you can expect that we'll be um,

Submitting for reimbursement for any other breast cancer. Once these studies get published, much of the same way we've been pursuing the other medications.

So, the way to think about it is that

this year, we go from where, you know, the breast along and Ajo work on that next year. You know, we'll be bringing CRC along and expanding breast cancer as this paper papers get get, get published

Caroline Corner: Got it, Chris. And Chris, I know it's still early, and you guys are still waiting for Medicare reimbursement, but any conversation with pricing at all, or all that will only happen once you have the coverage?

Rich Chen: Yeah. It does only happen after we get the coverage. But you know, we've told people to put in their models similar to what's being reimbursed now for the 16-variant exome-based testing approach because we think that that's sort of the floor. You know, and we think that Medicare reimburses ultimately based on the resources supplied. And a whole genome approach is a more, you know, more cost-intensive approach along with 1,800 variants. And so we think there are shots on goal that go higher, but we've encouraged, you know, people to build the models where that's upside. And when we talk about our gross margins being 60% and, you know, the tempus sales and marketing percentages being in the 20, 25 percent range, etc., and the ability to have transformational economics around those kinds of numbers, we do that assuming the current reimbursement in the marketplace.

Um, bothered Chris and, uh, Chris. I know it's, I had, it's still early and you guys are still waiting for Medicare reimbursement. But any conversation with pricing at all, or all that will only happen once you have the coverage,

Approach along with 1,800 variants. And so we think there's shots on goal that go higher but we've encouraged, you know, people to build the models where that's upside and uh, and we that when we talk about our gross margins being 60% and, you know, the Tempest sales and marketing, you know, percentage is being in the 20, 25% range Etc, and the ability to have transfer transformation economics around those kinds of numbers. We do that assuming the uh, the current reimbursement in the marketplace.

Caroline Corner: Got it. And then more of a high-level question. For the longer reimbursement takes, have you seen any erosion in interest from docs who currently cannot serve due to getting volumes, and they choose other competitors who are available? Or is it too early for any of these things to be a factor?

On it and then more of a high level question.

Rich Chen: No, we haven't seen we haven't seen any any of that. And we've been expanding out the number of doctors and been able to, you know, continue to expand. And I think at this point, it's a rate of how fast we push the gas rather than just gating people. You know, we still have some physicians on the waitlist, but you know, we've been growing out pretty significantly and making sure we take care of people that really, really want access. But we spend a lot of our time, both with ourselves and our partner, going deeper into accounts and really reinforcing the power of the ultra-sensitive range because that's what's cementing the relationships, and that's what's starting to power the long-term success as you go deeper into accounts because they see the value of our approach.

Investment dates. Have you seen any erosion in interest from doctors who currently cannot serve due to getting volumes, and are they choosing other competitors who are available, or is it too early for any of these things to be effective?

No, we haven't seen. We haven't seen any any of that. And we've been expanding out the number of doctors and been able to, you know, continue to expand. And I think at this point it's a rate of how fast we push the gas rather than just gaining people. You know, we still have some positions on the weight list but you know we we've been growing out pretty significantly and making sure we take care of people that really really want access but we spend a lot of our time, both with with our ourselves and our, our partner going deeper into accounts and really reinforcing the power of the ultra sensitive range because that's what cementing the relationships and that's what's starting the power of the long.

Caroline Corner: Makes sense. Thank you so much, Chris.

Term success as you go deeper into accounts because they see the value of our approach.

Rich Chen: Absolutely. Thanks for being on the call.

Makes sense. Thank you so much, Chris.

Absolutely, thanks for being on the call.

Operator: Thank you. The next question comes from Mike Matson with Needham & Company. Please go ahead.

Thank you. The next question comes from Mike Matson with nidam and Company. Please go ahead.

Aaron Tachibana: Yeah. Thanks. You know, so just had a question kind of on the tempus arrangement. So you know, let's say that in the third quarter, you were to get the reimbursement for, say, lung cancer. You know, my understanding is that, you know, they've just been kind of selling this or, you know, I guess, pitching it to doctors to use with, you know, any kind of cancer, essentially. So is there a way that you can sort of incentivize them or Tempus can incentivize those reps to, you know, focus more on the cancer types where you will initially have, you know, coverage? Or in other words, to try to, you know, ramp the revenue more quickly and reduce the cash burn, I guess, while you're working on the other, you know, cancer indication coverage?

Yeah, thanks. Um, you know so just had a question kind of on the The Tempest Arrangement. So, you know, let's say that in the third quarter, you were to get the reimbursement for say lung cancer. Um, you know, is I my understanding is that, you know, they've just been kind of selling this or, you know, I guess pitching it to doctors to use with

You know, any kind of cancer essentially. Um, so is there a way that...

Rich Chen: Yeah. No, thanks. That's a great way to, you know, great question. So they focus in on the lung cancer, the breast cancer, and immunotherapy monitoring, increasingly CRC. Almost all of our samples hit within those indications, both that we're getting ourselves and that they're getting. So they're used, they're all sort of tied, most of them are tied to those core indications. And we don't receive a lot of samples all over the map, to be quite honest. They're kind of fit the core the core thing. And I do think there's an opportunity. Let's say we got lung cancer or breast cancer first. I do think there's an opportunity to preferentially, you know, focus in on physicians that just treat those types of things.

You can sort of incentivize them or Tempest. Can incentivize those reps to, you know, focus more on the cancer types where you will initially have uh, you know, coverage or in other words to try to you know ramp the revenue more quickly and reduce the cash burn I guess while you're working on the other you know cancer indication uh coverage. Yeah.

uh, thanks, that's a great way to, you know,

Rich Chen: But it's hard to go to physicians and tell them, you know, only send us these types of patients per se because, you know, physicians want to be able to offer the technology in a universal way or a sort of consistent way based on what they think is best for their patients. So I don't think we have complete control to pull those levers, but we do have some control to sort of push in the direction of wherever coverage is if there are physicians that have certain spikes. But you know, the way we're looking at it.

Great question. We so they they focus in on the lung cancer, the breast cancer, and the Amun theapy Monitor and increasingly a CRC. Almost all of our samples hit within those indications. Both that we're getting ourselves and that they're getting. So they're used. They're all sort of tied. Most of them are tied to those core indications, and we don't receive a lot of samples, all over the map to be quite honest. They're kind of fit the core, the core thing. Um, you know, I do think there's an opportunity. Let's say we got lung cancer or breast cancer, first, I do think there's an opportunity to preferentially, you know, focus in on Physicians that. Just treat those types of things but it's hard to go to Physicians and tell them. You know, only send us these types of patients per se because you know, Physicians want to be able to offer the technology in a universal way or a sort of consistent way, based on what they think is best for their patients. So I don't think we have complete control to pull those levers. Uh, but we do have some control to sort of push in the direction of of where our coverage.

Is there a possibility that there are physicians who have certain spikes? Um, but you know,

Aaron Tachibana: I understand. And then just, you know, you announced you're going to pursue the colorectal cancer if reimbursement eventually. So where do things stand with the data? I mean, the press release cited the victory data, but I mean, is that sufficient? And then what are the milestones, I guess? Does it need to be, I assume it needs to be published or something? And do you need any other studies or data there?

The way we're looking at it.

Rich Chen: No, absolutely. So that data was, you know, phenomenal. We've got great feedback from it, but it's preliminary. You know, it's a prospective study, which is different than some of the studies that we worked on, which are retrospectively analyzed, prospectively gathered samples. A little bit different because you get it all when you do it. This one, you know, it's going forward. And the investigator hasn't decided to quit the study yet. At some point, we will do that. And then, you know, the team will investigate or will publish it, and then we'll submit that for reimbursement. And that's still TBD in terms of timing.

I understand and then just um you know you announced the you're going to pursue the colorectal uh cancer why it's reimbursement eventually. So um where do things stand with the data? And the the pressure side of the victory data. But I mean is that sufficient? And then you know, what are the Milestones I guess does it need to be? I think it needs to be published or something and do you need any other studies or data there?

Publish it, and then we'll submit that for reimbursement. Um, and that's still TBD in terms of timing.

Aaron Tachibana: Okay. Got it. Thanks.

Okay, got it. Thanks.

Operator: Thank you. A reminder to all participants, you may press star and one on your keypad to ask a question. The next question comes from Swayam Pakula with HC Wainwright. Please go ahead.

Thank you. A reminder, to all participants. You may press star and 1 on your keypad to ask a question.

The next question comes from swam, pakula with 8C winright, please go ahead.

Chris Hall: Thank you. This is RK from HC Wainwright. Good afternoon, Chris and Aaron. I got on the call a little bit late, so I apologize if you kind of addressed some of these issues, you know, in opening your mouth. Just looking at the pharma tests and services revenue and seeing, you know, how they did not perform to the level that you were expecting going into the second quarter. And also thinking about the full year, you know, after completing one half, you know, it looks like, you know, you're not going to, at least in your current thing, you're not really thinking about much of a growth from here onwards for the second half compared to the first half. What has changed in the pharma business side of things that's not progressing as well as you thought you would?

Thank you. This is our care from health and right. Uh, good afternoon Chris and Aaron, um, just I I got on the call a little bit late, so I apologize if you're, um, kind of address some of these issues, um, you know, in your opening remarks

um,

Just looking at the form of tests and services um Revenue. Um and seeing you know how, um,

Uh, they did not perform to the level that you were expecting going into the second quarter and also thinking about the full year, you know, after completing 1 half, um, you know, it looks like um, you know, they're not going to at least in your current. Then you're not really thinking about much of a growth from here, onwards, for the second half compared to first half. Um, what has changed in the form of business? Um, the side of things and that's

Chris Hall: Is this their clinical programs, or is this more than that? You know, if you can just give us a little bit of color. Yeah. And you know, is this just for this year? And once, hopefully, the market turns around and the funding is better for everybody, you know, should we see that growth?

Rich Chen: No, I think that's great. I think we're seeing, so a couple of snapshots here to think about. We're seeing phenomenal growth on the MRD side, inside biopharma customers. And that's all on track. And every time we've talked about it, every one of the internal numbers, the 3 to 400 percent annual growth, the couple of new customers that are generating north of $5 million, that's all on plan. And we feel like we're performing really well. That's really where we're investing. The other part of the business, which is the translational research phase, where we'll receive a large sample of a large group of samples, and we will run it through our tumor profiling engine. And the biopharma company will use that data to potentially find new biomarkers to fuel their drug development. That's like more futuristic type of research. That one, we felt the slowness.

Um, that's not progressing as well as you thought you were, um, is, is this their clinical programs or is this more than that? Um, you know, if you can just give us a little bit of color. Yeah. And you know, is this is this just for this year and once hopefully the market turns around and the funding is better for everybody. Um you know, should should we see that growth?

Rich Chen: And you know, we expect it to pick up as things settle down. That's probably driven, you know, by, you know, a lot of the questions around how drug development processes go, drug pricing in the current system, and certainly tariffs. And you know, you're seeing layoffs within some of these companies and just a general slowness relative to some of the earlier-stage R&D. And that's what we're feeling. We think that that's temporary, and we think it'll sort itself out. But I would say that, you know, we're still expecting that product to be, you know, flattish to a little bit of growth this year. I mean, we're still, you know, it's not that the product's in a tailspin at all. It's just that we had pipelines earlier in the year that showed that product performing much better than how it's ultimately performing.

No, I think that's great. I think we're seeing so a couple snapshots here to think about. We, we're seeing phenomenal growth on the mrd side, when side biofarma customers, and that's all on track. And every time we've talked about it. Um, every 1 of the internal numbers, the 3 to 4 hundred percent annual growth, the couple of new customers that are generating north of 5 million dollars, that's all on plan. And we feel like we're performing really well, that's really where we're investing. The other part of the business, which is the translational research phase, where we receive a large sample of a large group of samples and we will run it through our tumor profiling engine, and the biofarma company will use that data to potentially find new biorez to fuel their drug development. That's like, more futuristic type of research that 1. We felt the the slowness, um, and you know, we expected to pick up as things settled down, that's probably driven, you know.

Rich Chen: But, you know, year over year, I expect it to still be flat, even eight-pounds of growth. But the explosive growth of an MRD is on track. And that's what we're seeing. I don't think it's a terribly bit different than, you know, what other companies have seen. We thought we would grow through it earlier in the year, but it sort of deepened as the quarter went on, and we felt like it was prudent to adjust the guidance given where we are.

Buy, you know, a lot of the questions around how drug development processes, go drug pricing and the current system, and certainly tariffs. And you know, you're seeing layoffs within some of these companies and just to General slowness relative to some of the uh, earlier stage R&D. And that's what we're feeling, we think that that's temporarily. And we think it'll sort itself out, but I would say that, you know, we're still expecting that product to be, you know, flattish to a little bit of growth this year. I mean we're still, you know, it's not that the products in a tail spin at all. It's just that we had pipelines earlier in the year that showed that product performing uh, much better than how it's ultimately performing. But you know, year-over-year, I, I expect it to still be flat, even he can out some growth, but the explosive growth in the mrd is on is on track and that's what we're seeing. I don't think it's a terribly bit different than you know what other companies have seen. We thought we would grow through it earlier in the year or but the it's sort of deepened as the quarter.

Went on and we felt like it was prudent to adjust the guidance Where We Are.

Chris Hall: Okay. Thanks for that. And the next question is on trying to understand, you know, in terms of the Tempus relationship and also how the reimbursement can provide a boost to the sales in Q4 if you get at least one, if not two, both of the reimbursements in place. So let's say you get the reimbursement earlier in the quarter, in the fourth quarter. So by the end of the quarter, would you be able to recognize the reimbursement amount, or is there some additional paperwork and all that logistics that need to happen that this thing could drag into the first quarter where you can actually really see the benefit of that reimbursement? I'm just trying to understand how the logistics work in terms of really recognizing, you know, the revenue based on the reimbursement.

Okay, thanks for that. And the next question is on, um, trying to understand, um,

You know, in terms of, um, the, the Temple's relationship and also how the reimbursement can, um, provide um, you know, um, a boost to the sales. Um, in, in Q4 if you get um, at least 1, if not 2, both of the reimbursements in place. So,

How do the logistics work in terms of really recognizing, you know, the revenue based on the reimbursement?

Aaron Tachibana: Yeah. So, hi, RK. This is Aaron. In terms of some of the mechanics of it, we won't go into a lot of depth or detail here, but what's the most important fact here is that we do get a favorable coverage decision from Medicare, right? That's what we're after. Assuming we get a favorable coverage from Medicare, right, for two cancer types, our guide is 3 to 6 million dollars, right? So depending upon the timing, the number of samples, the price, right, there is some variability between the 3 and 6 million dollars. And that's why we do have a range. But the key here is getting the favorable coverage from Medicare.

Yeah. So

I can we won't go into a lot of depth or detail here. But what's the most important fact here?

Is that we do get a favorable coverage decision from Medicare, right? That's what we're after.

Assuming we get favorable coverage from Medicare.

Right for two cancer types. Our guide is $3 million to $6 million, right? So, depending upon the timing, the number of samples, and the price, right, there is some variability between the $3 million and $6 million, and that's why we do have a range.

But the key here is getting the favorable coverage from Medicare.

Chris Hall: Okay. Thank you. Thanks for taking my questions.

Okay, thank you. Thanks for taking my questions.

Thanks.

Operator: Thank you. Ladies and gentlemen, this concludes the question and answer session and the conference of Personalis. Thank you for your participation. You may now disconnect your lines. Thanks, Aaron.

Thank you, ladies and gentlemen. This concludes the question and answer session and the conference of personalis. Thank you for your participation. You may now disconnect your lines.