Q3 2025 Personalis Inc Earnings Call

Speaker #4: Good afternoon , and welcome to the Third Quarter 2020 Earnings Conference . All participants will be in . Listen only mode . A question and answer session will follow the formal presentation .

Speaker #4: If anyone should require operator assistance during the conference , please key in star and then zero on telephone keypad . Please note that this event is being recorded .

Speaker #4: I will now hand you over to Caroline Corner of Investor Relations . Please go ahead .

Speaker #5: Thank you . Operator . Welcome to Personalis, Inc. Third Quarter 2025 Earnings Call . Joining today's call are Chris Hall , Chief Executive Officer and president .

Speaker #5: 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 the US securities laws .

Speaker #5: For example , any statements regarding trends and expectations for our financial performance this year and longer term cash , runway and liquidity position , revenue timing , size and booking of orders , products , services , technology expansion of clinical volume , reimbursement goals , the outcome and timing of reimbursement decisions .

Speaker #5: Expectations for 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 .

Speaker #5: We encourage you to review our recent filings , including the risk factors described in our most recent filings . Personnel undertakes no obligation to update these statements except as required by applicable law .

Speaker #5: Our press release with our third quarter 2020 results is available on our website expectations and Under the investors section and includes additional details about our financial results .

Speaker #5: Our website also has a latest SEC filings , which we encourage you to review . A recording of today's call will be available on our website by 5 p.m.

Speaker #5: Pacific Time today . With that , I would like to turn the call over to Chris .

Speaker #6: Thank you . Caroline . Good afternoon , everyone , and thank you for joining us . Q3 was another step forward in our win in MRD strategy .

Speaker #6: We delivered 4388 clinical a sequential and 364% year over year growth , and now have 700 plus physicians ordering next personal . We also submitted lung cancer for coverage , and we now have three dossiers under review by Moldex .

Speaker #6: As we continue to target two coverage decisions in 2025 . Our clinical evidence from recent phase three programs in the trial launch shows how ultra sensitivity can detect progression several months before imaging and provide greater confidence in a negative result .

Speaker #6: While biopharma project timing continues to have variability , the underlying MRD demand is strong . Clinical adoption is compounding and our cash position gives us the flexibility to execute .

Speaker #6: For those listening in for the first time, Personalis is a leading company helping partners, patients, and doctors. See more in cancer samples.

Speaker #6: Our ultra sensitive next personal test is capable of 26% detecting approximately one single fragment of tumor DNA in a million . This is not merely an improvement .

Speaker #6: It is a clinical necessity that allows us to detect recurrence months ahead of standard imaging and provides more confidence in a negative result .

Speaker #6: The market is growing rapidly for these types of tests and is expected to mature into a 20 plus billion dollar opportunity for which we are exceptionally well positioned to command a strong share .

Speaker #6: We're also a leader supporting biopharma companies with our discriminating platform , and that is used to analyze cancer , tumors and identify new biomarkers .

Speaker #6: Our platforms are used to build personalized therapies and allow physicians to personalize treatment for cancer patients . to our Q3 results . We delivered $14.5 million in revenue in the quarter , which was above the high end of our estimate .

Speaker #6: Our progress this quarter is best highlighted by our clinical volume . We reported 4388 tests this past quarter , representing a 26% growth over the previous quarter .

Speaker #6: To put that in context , it's worth pausing to note we did just 945 tests in the third quarter of last year , and our performance this quarter reflects a 364% year over year growth and cumulative to date .

Speaker #6: We've delivered more than 13,000 tests to help patients . We're providing an updated range for full year revenue in the 68 to $73 million range .

Speaker #6: The uneven biopharma spending environment we discussed last quarter has persisted , creating variability in the timing of large project based work . While the underlying demand for our strategic MRD offerings remain exceptionally strong this quarter , the biopharma volatility is compounded by logistical delays .

Speaker #6: We believe are unique to this quarter and are impacting the timing of samples for several large projects . This increases the variability of our Q4 biopharma revenue .

Speaker #6: As a result , we are prudently adjusting our full year guidance to reflect these updated project timelines . This adjustment does not reflect a change in underlying demand for our technology and offerings , but rather the lumpy and unpredictable nature of our legacy .

Speaker #6: Translational research business . And while we manage the variability with discipline , our strategic focus remains squarely on the key drivers of long term value , clinical adoption and reimbursement .

Speaker #6: On that front , we continue to execute strongly . We advanced our goals this quarter by submitting an additional indication for coverage . Lung cancer , meaning we now have three dossiers under review with Moldex .

Speaker #6: We remain confident in our data and continue to target coverage for two indications . By the end of the year , though exact timing is dependent on Moldex review .

Speaker #6: Our progress this quarter is a direct result of the execution of the key pillars of our win in MRD strategy . Now let's walk through the updates .

Speaker #6: The first pillar is accelerating clinical adoption . The oncology community is voting with their orders . We continue to see impressive sequential growth in clinical test volumes .

Speaker #6: We now have over 700 physicians ordering next personal . And this growing base of physicians understands that when it comes to residual disease , ultra sensitivity matters .

Speaker #6: Our retention is high and the growth we are seeing is a direct result of next personal providing greater confidence in a negative result and the ability to detect recurrence earlier than any alternative .

Speaker #6: The clinical volume growth is the single most important leading indicator of our future high margin revenue ramp . As reimbursement comes online . This momentum is being driven by our partnership with Tempus , which continues to exceed our expectations .

Speaker #6: The collaboration has been so effective that we've already achieved the primary volume target we set for the entire year . When we set our targets at the beginning of the year , our goal was to grow 30 to 40% each quarter , ending the year with around 4800 quarterly tests .

Speaker #6: We've effectively reached that milestone a quarter early , and having achieved our goal ahead of schedule , our focus the rest of the year , now shifts to responsibly scaling our operational and commercial foundation .

Speaker #6: Additionally , we are strategically expanding our in-house sales force to complement the Tempest team to ensure we are fully prepared to capitalize on the inflection point of Medicare coverage .

Speaker #6: The second pillar is driving reimbursement and adoption through clinical evidence . We are proud of the latest next personal data from AstraZeneca . Phase three studies .

Speaker #6: First , and neoadjuvant lung cancer data from the Neo Aura Phase three trial was presented at the World Conference on Lung Cancer that demonstrated the superiority of next personal in the neoadjuvant setting .

Speaker #6: Next personal showed significantly higher baseline sensitivity for ctDNA detection compared to a leading gene mutation based test offering physicians a more accurate assessment of disease burden and the ability to monitor treatment response .

Speaker #6: The data also show that our test was prognostic for outcomes across treatment arms . Second , in the adjuvant for mutated lung cancer .

Speaker #6: Further , data from the phase three trial was presented at ESMO , which showcased the utility of next personal for treatment monitoring . Our assay demonstrated a median lead time of five months in detecting MRD progression ahead of imaging and standard expert review .

Speaker #6: Lead time is a difference maker for patients , underscoring the value of an ultra sensitive approach for earlier intervention . These studies demonstrate how our biopharma partners are utilizing ultra sensitive MRT testing with next Personal to better understanding response to therapy and their phase three studies .

Speaker #6: In addition to these results , we are excited to announce the launch of the clinical trial with the Yale Cancer Center and the Translational Breast Cancer Research Consortium .

Speaker #6: This prospective , multi-center trial is a step towards establishing clinical utility for ctDNA guided treatment and high risk HR positive , Her2 negative breast cancer .

Speaker #6: This study is designed to generate evidence that will help integrate next personal into the standard of care , empowering oncologists to move from surveillance to preemptive treatment based on our ultra sensitive detection .

Speaker #6: The third pillar is leading with biopharma partners . Our technology offers our partners a powerful way to improve their clinical trials . The use of our next personal technology allows them to de-risk their pipelines , reach critical go no go decisions sooner , and enroll the right patients for their studies .

Speaker #6: We believe this leads to improved financial performance for our customers , cementing the value of our ultra sensitive approach . As a result , the underlying demand for next personal and clinical trials has never been higher .

Speaker #6: We capitalize on this demand by signing two major prospective clinical trials this quarter . As mentioned before , our MRD biopharma revenue is set to grow approximately 300% year over year as we wind up the year Personalis is executing with precision on a winning strategy .

Speaker #6: Just two years ago , we launched Next Personal and started our journey to redefine the MRD market with an ultra sensitive approach . We made tremendous progress in this time , having built a network of over 700 physicians and numerous collaborators and biopharma partners , adopting next personal .

Speaker #6: I want to thank our shareholders , partners and employees for their dedication and commitment to the mission as we redefine the standard of care for cancer patients .

Speaker #6: With that , I will turn it over to Erin to review our financial results .

Speaker #7: Thank you . Chris . I will discuss our third quarter 2025 results and then cover guidance . Total company revenue for the third quarter was $14.5 million , representing a 44% decrease compared with $25.7 million for the same period of the prior year .

Speaker #7: The decrease in revenue was driven by the expected decline of $4.6 million from Natera . As we wind down this business , a $4.2 million decline from the Vamp due to fulfilling most of the task order received in 2024 .

Speaker #7: Within the first two quarters of this year , and a $2.5 million decline from biopharma customers . Biopharma revenue was 13.2 million in the quarter , representing a 16% decrease compared with 15.7 million for the same period of the prior year .

Speaker #7: This decline was primarily due to the prior year , including a significant amount of revenue from Moderna's phase three melanoma trial that concluded enrollment late last year .

Speaker #7: The third quarter of 2025 year over year revenue declined from Moderna was $6.1 million and was partially offset by the increase in next personal MRD revenue from several biopharma customers and accounted for more than one third of the total biopharma revenue in the quarter .

Speaker #7: We are pleased with the adoption of Next Personal that is taking place , and it highlights the solid execution of our win in MRD strategy for clinical revenue .

Speaker #7: We recognized $0.4 million of revenue from our next Rd and next personal molecular tests , compared with 0.3 million for the same period of the prior year .

Speaker #7: Gross margin was 13.2% in the third quarter , compared with 34% for the same period of the prior year . The year over year decrease of 20.8% was expected , primarily due to the 44% lower revenue volume , which reduced the amount of fixed cost absorption , and also an increase in clinical test costs in advance of reimbursement .

Speaker #7: The third quarter impact from our investments in Unreimbursed clinical test costs was approximately 18% , and excluding those expenses , gross margin would have been approximately 31% .

Speaker #7: We are being prudent by balancing test volume and margin dilution and looking a bit further out in time . We expect the investments in test volume to put us in position to achieve a higher level of revenue .

Speaker #7: Once reimbursement is obtained , longer term , we expect total company margins to expand beyond 50% . Once we have obtained reimbursement coverage for more than a few indications , and we also achieved greater revenue scale operating expenses were 25.2 million in the third quarter , compared with 23.1 million for the same period of the prior year .

Speaker #7: Most of the year over year increase was attributed to selling expenses related to our clinical test volume growth . The third quarter R&D expense was 12.2 million , compared with 11.7 million for the same period of the prior year and a was 13 million , compared with 11.4 million for the same period .

Speaker #7: Of the prior year . Net loss for the third quarter was $21.7 million , compared with 39.1 million for the same period of the prior year .

Speaker #7: The prior year's net loss included a 26 million non-cash expense related to the warrants issued to Tempus that were exercised in the third quarter of last year .

Speaker #7: Now , on to the balance sheet . We finished the third quarter with a strong balance sheet with cash and short term investments of $150.5 million and no debt other than some small equipment loans .

Speaker #7: The cash usage from operations and capital equipment additions for the third quarter was $23.4 million . We expect to use approximately 75 million for the full year of 2025 , and in the year with more than $130 million of cash on our balance sheet .

Speaker #7: The cash usage estimate has remained the same throughout the year . While our revenue estimate at the midpoint has declined by approximately 17% from the original range .

Speaker #7: This is a critical proof point of our financial and operational discipline . It demonstrates that as market conditions have shifted , we have proactively managed over $14 million in spending to fully offset the revenue variance , ensuring we continue to fund our most important strategic investments while holding our bottom line cash commitments to our investors .

Speaker #7: Now , I'd like to turn to guidance for the full year of 2025 . We revised our guidance and now expect total company revenue in the range of 68 to $73 million .

Speaker #7: As we reduced the range from the prior guidance of 70 to 80 million , revenue from pharma tests and services and all other customers in the range of 50 to 54 million .

Speaker #7: For which the range was reduced from the prior guidance of 52 to 58 million . Population sequencing plus enterprise customers in the range of 16.5 to 17 million , an increase from the prior guidance of 15 to 16 million .

Speaker #7: Revenue from clinical tests reimbursed in the range of 1.5 to 2 million , which is reduced from the prior guidance of 3 to 6 million , reflecting that the company has not yet received reimbursement approvals .

Speaker #7: Underpinning the previously higher estimate range, gross margin is expected to be in the range of 22% to 24%. There is no change from the prior guidance, and this reflects investments in clinical test volume in advance of reimbursement.

Speaker #7: Net loss of approximately $85 million, with no change from the prior guidance, and cash usage of approximately $75 million, with no change from the prior guidance.

Speaker #7: 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 .

Speaker #7: Operator .

Speaker #8: Thank you . At this time , we will be conducting a question and answer session . If you have a question , please press star one on your telephone keypad .

Speaker #8: A confirmation tone will indicate your line is in the question queue . If you would like to remove your question from the queue , please press star two .

Speaker #8: For participants using speaker equipment , it may be necessary to pick up your handset before pressing the star keys . One moment while we pull for questions .

Speaker #8: Our first question is from Thomas Slayton with Lake Street . Please go ahead with your question .

Speaker #9: Thank you . Hey , Chris , you mentioned in the last quarter call there were a couple of very large customers kind of on the cusp of coming .

Speaker #9: Coming online with you . Could you give us an update on those ?

Speaker #10: Yeah , they they both come online . One of them was a big driver of our Q3 numbers . You know , I don't know if if you noted that , you know , almost a third of our revenue now came from MRD .

Speaker #10: This last quarter . That was directly driven by one of those customers . And the other one had some revenue in this quarter .

Speaker #10: And then it'll bleed into Q4 . So those are still on track . And we are still , you know , growing MRD revenue three times this year .

Speaker #10: And the demand for our MRD technology has been super high . And it's been a really , really good quarter . One of the things we also noted , and we can't announce the names of them yet , but we've we've we've signed two large prospective clinical trials that will start to kick in and be serviced over the next 2 to 3 years with biopharma customers .

Speaker #10: So , you know , we continue this year to make really , really promising progress with biopharma customers in terms of MRD adoption .

Speaker #9: That's great . And Christine , you're prepared . Comments . Today you said something about a logistical delay specific to this sector . Could you clarify what you meant by that ?

Speaker #10: Yeah . So we you know , we we we've had some samples run into problems at customs . I mean , one of the , one of the challenges with the business is it's constructed now is that it's almost all revenue from biopharma customers .

Speaker #10: And those are based on large cohorts . And so in larger million dollar plus studies . So 1 or 2 things , you know , having some hiccups or some challenges along the way can cause us some a lot of variability .

Speaker #10: And we've had some challenges getting samples across the border . We don't know whether that is due to the government shutdown . Honestly , Thomas , or whether that's something else .

Speaker #10: We know there's been some other challenges with with with getting things over . We've one sample cohort be turned around . We're going to try to get it back in .

Speaker #10: So we thought it was really prudent to had just make the range wider on the bottom end in case those samples don't end up making it in here in time to run them in Q4 .

Speaker #10: And in that case , they'll slip into Q1 . And that's that . That's what accounts for the challenge . We said it was unique to this quarter .

Speaker #10: We always have some challenges getting samples , but we haven't run into problems before at customs like this . And so , you know , that's we think that's probably related to what's happening with the shutdown , where there's probably a bit less staffing .

Speaker #10: And , you know , some paperwork isn't done properly . It may get turned back . And so we're still working on it .

Speaker #10: We're still optimistic everything will flow in here . But we just wanted to be prudent and create a wider range .

Speaker #9: Excellent . Thanks for taking the questions .

Speaker #8: Thank you . Our next question is from Mark Mazzaro with Btig .

Speaker #11: Hey guys . Thank you for taking the questions . Yeah , great to see the progress . I just wanted to start and I apologize if this is nitpicky .

Speaker #11: The the next personal growth was just a hair shy of your previously communicated 30 to 40% a quarter growth coming in at plus 26 .

Speaker #11: I'm just curious if that is largely due to you metering or tempering demand ahead of reimbursement . Or did you see anything in the field that might have surprised you ?

Speaker #11: Obviously , this is a competitive space , so I was just curious . Or if there are some other timing elements , any clarity there would be helpful ?

Speaker #10: No , I appreciate it . Thanks for thanks for flagging it . Mark . You know , we we when we said 30 to 40% at the beginning of the year , the goal was , you know , to end the year in that 4800 .

Speaker #10: Mark . And you know , we're largely there . So I wouldn't say we metered per se , but we definitely were very careful and are being very careful to manage the investment here .

Speaker #10: I mean , we're investing a lot of money ahead of reimbursement and building demand , building usage , building , building Colls . So , you know , kind of rolled into where we want it to be .

Speaker #10: And so , yeah , we were we were thoughtful this quarter , I think , you know , Tempest has said something similar ahead of reimbursement being being careful .

Speaker #10: And we we also did that and did that in conjunction with them . Third quarter is always a tougher quarter mark in terms of volume being , you know , flat Q2 and Q4 are always the big the big quarters in a clinical business .

Speaker #10: And so we didn't, we didn't really roll into it. So that's sort of the seasonality that we typically see. But we didn't respond by throwing more resources at it.

Speaker #10: I will say that , you know , we we will continue to be thoughtful about managing it in the context of the demand .

Speaker #10: You know , but , you know , that's that's so we felt like it was we're in a really good spot . We'll be where we want it to be in the year .

Speaker #11: Okay . And I think you , you know , you lowered the guidance on the clinical revenue contribution here in Q4 . And I just want , want to ask what gives you confidence that maybe if you could characterize your conversations with Moldex just a little bit at a high level , is this still an active review ?

Speaker #11: Because I think you talked about still expecting two by year end ?

Speaker #10: It is it is . I mean , we still have we have three . And now we've had productive conversations with Moldex , you know , those are always a combination of some voice , but also there's a back and forth process with written questions and we we find that to be we're in a very encouraging spot .

Speaker #10: But we have and we are expecting , you know , we have all three moving along and they're all moving along really well .

Speaker #10: And so we continue to feel like we're on track . Mark , to get two of those done this year . You know , there can always be some variability because the , you know , the the we don't we don't control Moldex final clock .

Speaker #10: And one of the things that I think we all admire about what they do and the work they do , is the seriousness for which they do it .

Speaker #10: And really understanding all the details of the clinical , you know , studies . And so there could be more questions that cause more back and forth .

Speaker #10: But we think where we are right now and based on where we are , we think we're in a really good spot . And that's why we still feel like we're on track to get to done .

Speaker #10: You know , I would note that when we threw this out there a couple years ago was a really ambitious target . And , you know , as we've come down into this spot , we've tremendous progress and we really de-risked it .

Speaker #10: And it was a really big deal this quarter to have the lung paper basically accepted . Now , to have all three accepted .

Speaker #10: And through the peer review process and be able to have the dossiers and be able to be in that journey , is exactly is exactly where where we want it to be .

Speaker #10: So we feel like we're in a good spot in this . Conversations have been positive and productive , and we're optimistic about where we are .

Speaker #10: .

Speaker #11: Great . And if I could ask one last one , maybe as it relates to MRD Biopharma , would love appreciate some of the metrics you provided .

Speaker #11: Obviously , there's a lot of demand . You know , admittedly , it's off of a low base , but can you just talk about what feedback you're hearing from biopharma with respect to going down to one part per million and how you think that's resonating on some of these lower shedding cancers ?

Speaker #11: And just give us a sense for how you're thinking about 2026 and 2027 . If you can .

Speaker #10: Yeah . No , no , thanks for asking . It's I mean , I think it's more than just the lower shedding cancers .

Speaker #10: Honestly , Mark , what we hear from biopharma companies is there's really three things they want , but there's a focus on two .

Speaker #10: First of all , they want to fail faster on earlier stage trials . And the key to that is being able to see quickly whether or not there is a signal because of the drug .

Speaker #10: And , you know , getting down and being able to see something to one parts per million , you know , the 40% of our , of our positive results are inside that range .

Speaker #10: So they can just see it faster , fail faster , and pull out of an early stage trial . That's key right now for them and where they can use it later .

Speaker #10: Stage projects . Getting to success faster means we can get the get the drugs in the hands of patients quicker , and again , when you can see the recurrence months ahead of imaging or any other approach , that's really powerful .

Speaker #10: In order to get to the answer quicker and be able to yield more revenue on it , the last clinical use , quite frankly , is being able to enroll the right patients in the clinical trial where they use an MRD assay to be able to decide whether to put a patient in a treatment arm or not .

Speaker #10: A treatment arm . And you really want to have confidence that when you call a patient negative , they're likely negative because that is enriching for success .

Speaker #10: And you really want to get that metric . Well , and there's been some challenges in the past around doing that really well for them .

Speaker #10: And so we get really positive feedback with that . So those are the things one , two , three I will say they are the most discriminating buyers .

Speaker #10: They put us through all kinds of checklists every time we do something we run a lot of pilots , a lot of bake offs , and we wouldn't be having the kind of success we were having if we weren't performing and if we weren't building a global presence to be able to service these companies needs .

Speaker #10: And so , you know , if you back up , it was just two years ago we launched this test . The ability to go from that to starting to run large prospective clinical trials with some big biopharma companies is a big leap forward .

Speaker #10: And I think this is going to pay dividends in 26 and 27 . And beyond . You know , it's a really nice way to get paid for all the test .

Speaker #10: It really helps us build the clinical evidence . And you saw the data we talked about the data at SFO this year and world , along with , you know , with , with with AstraZeneca , where they talked about the use of ultra sensitive testing in situ clinical trials and that really helps underline and cement the approach that we're pioneering .

Speaker #10: And so , you know , it's it's we feel like it'll be it'll be a continued clinical evidence pipeline and revenue growth over the next couple of years .

Speaker #11: Fantastic. Thanks very much.

Speaker #10: Thanks , Mark .

Speaker #8: Our next question comes from Dan Brennan with TV Cowan . Great .

Speaker #12: Thank you . Thanks for the questions . Sorry , I joined a few seconds , a few minutes late . So is the government shutdown having any impact on Moldex ?

Speaker #12: Like are they are they short staffed ? Is that a factor ? I don't know if you mentioned that .

Speaker #10: We haven't seen it yet . Honestly , we've been we've been able to have the back and forth and we don't see anything .

Speaker #10: I think all of us , you know , just honestly , I've always surprised a little nooks and crannies of things that pop up with this government shutdown .

Speaker #10: So you never know what the future holds . But but right now , we haven't seen it . They seem to be working well .

Speaker #10: Remember, it's a private company that's been given the contract to both pay claims in the territory they have, but also make decisions about molecular genetic testing.

Speaker #10: These types of tests that many of the Macs in the country that many but not all , defer to . So because it's a private company with a contract , we we're not surprised that we don't see any impact from it .

Speaker #12: Got it ? No , thanks . Chris . And then can you just remind us I know we met with another company that also has some filings with Moldex , and they were referring to like standard cycles .

Speaker #12: So there's a you know , there's a cadence to how many turns this could occur . I mean , can you just remind us when we had you in New York not long ago , just in terms I think you filed breast in April .

Speaker #12: Is there a certain normal cadence that occurs like a you in the midst of a second turn or third turn , a fourth turn , just kind of walk us through , like what the normal sequence of back and forth is ?

Speaker #12: If there's like a routine to that and kind of where you guys sit .

Speaker #10: Yeah , Rich is going to jump in , hey , Dan . Yeah , thanks for your question . Yeah . There is .

Speaker #10: And the back and forth that goes on with Moldex .

Speaker #13: Usually it kind of goes in two month cycles . And so , you know , and that usually results in a set of questions and response .

Speaker #13: And it's usually a great dialogue . Good questions and , and so we're kind of going down that journey both on the breast cancer side .

Speaker #13: But now also on IO . And so lung cancer .

Speaker #12: Got it . And sorry did I miss it . Like is there typically like you start it and then it goes two months .

Speaker #12: And then either it gets approved or they go back and then it goes another two months . Is there like a certain finite end to each cycle .

Speaker #12: Or it can kind of persist . That would give us a sense of where you guys actually sit .

Speaker #10: Yeah . No , I mean , you typically you do the you send a , you send the submission in Dan and then there's a 60 days , they have to get you the answer back .

Speaker #10: You may turn then . Those are phrased as questions . Back to you typically about the data about the test , about the assay , about its use , about your intended use , etc.

Speaker #10: . You're answering those questions . You can take as long as you want to answer those questions . You can do it overnight , or you can do it in a month .

Speaker #10: And then when you submit those , the clock starts again for , for for 60 days .

Speaker #12: Got it . Right .

Speaker #10: So and there could be two of those that could be new . Yeah . There could be new questions that they could come up with as they continue to , to , to pour into the data and find new questions .

Speaker #10: Or there could be questions upon the questions . Right . And I think about , you know , it's very much like a process where you go through a , you know , to get a permit on a city , you know , a planning department where there's there's questions on what you've done and there can be questions , you know , to your response , etc.

Speaker #10: , and that back and forth is usually gated by by time periods of how long they have to respond to you . So yeah , so we started it earlier in the year and we thought that one would take a little longer .

Speaker #10: So we were really optimistic to get that going because that's really their first way to engage with the test . And the AV data analytic validity data , which is sort of key to underpinning it all .

Speaker #10: And then and then and then we've got the IO going , and then we've gotten the , the , the lung cancer ones going .

Speaker #10: And so we expect we've had back and forth on all those . And we expect to get an answer back on all three of them by the end of the year .

Speaker #10: And the process will go as it goes . But we feel optimistic that we're on track to get get a couple of them done this year .

Speaker #10: .

Speaker #12: And then , sorry , one more . And and in terms of the confidence this year , obviously it was based upon , I guess , historical precedent .

Speaker #12: I mean , I guess , you know , you've got a handful of companies have gotten approvals . Was there like an expectation it would be two cycles of three cycles or those 60 days or you guys just kind of looked at the predicates and said , you know , if we count forward , I'm just wondering , since it's , you know , it's November 4th and it's always hard to predict , like timing of the government .

Speaker #12: Right ? Or even if Moldex is a private entity , it's always hard to predict the timing variability .

Speaker #10: I mean , you remember we put this go out a year and a half ago and , you know , we've come a long way to de-risk it .

Speaker #10: And , you know , as we've continued to , to to stick with it , it's also based on the strength of the evidence .

Speaker #10: This is really, really good data. The Tracer X data is probably one of the largest, most comprehensive data sets in MRD.

Speaker #10: Certainly in lung cancer . The data is just phenomenal . The IO study is 200 plus patients , 18 different types of cancer .

Speaker #10: Really nice signal . There . And and the breast cancer data has been has been has been really great . Also . And so we you know we did it based on the strength of the evidence .

Speaker #10: What we would expect and the others . But you know , just to back up like the goal of whether it leads a little bit into next year happens this year .

Speaker #10: Like none of this is , is , you is is make or break for the for the trajectory of where we are or what we're trying , what we're trying to do .

Speaker #10: And we feel like we've made tremendous progress over the last 3 to 4 months on this and de-risking it . And we feel really optimistic sitting here in November .

Speaker #12: And maybe a final one , like assuming when you guys do get approval . I know you've been asked this a lot , but now as you get closer to that and you've had more time and more experience in the field with clinical customers and some pharma customers , how would you think about , you know , like that year one or year two ramp now , like what ?

Speaker #12: What would you point us to to look at ? It would be just to give us a sense . I mean , obviously you have Tempest , which is a huge commercial engine , but just any , any , any updates on how we might think about , you know , breast , for instance , since , you know , ideally it could be the first one since that's when you file the first .

Speaker #12: Like how that might launch , you know , how you might try to , you kind of help investors think about that piece of that launch .

Speaker #12: Thank you .

Speaker #10: I mean , I mean , I we think that we're we're early stages here . And , you know , we think it'll be a really , really great year on the backside of reimbursement .

Speaker #10: And , you know , we haven't guided the years and year and provided numbers . But you're right . We'll turn Tempest fully loose and we'll continue to augment their approach with some sales reps that really sort of augment and really cover the market .

Speaker #10: And nuanced ways to help accelerate what they're doing . And , you know , we really learned how to do that over the last few months .

Speaker #10: And so it'll it'll continue to , to , to take hold . But what's happening at a high level in this market . And you can see this in all the energy and excitement is that the data is really starting to come together .

Speaker #10: In so many different ways that MRD testing provides incremental value . And to patients to doctors , to patients , doctors , clinicians .

Speaker #10: The data is looking great across multiple vendors or multiple people that are providing things . And I think the market's acceleration is starting to pick up .

Speaker #10: I think you all are different . Analysts have said that we're probably 5% penetrated somewhere around that . So you can imagine if we double , triple the market , you know , and we can get a toehold on that .

Speaker #10: I think it's a I think we're in a real we'll be in a really good position .

Speaker #12: Great . Thank you .

Speaker #8: Our next question comes from Subdue Nandi with Guggenheim .

Speaker #14: Hey , guys , this is Thomas on for Cebu . Thanks for taking our questions . Maybe a follow up on the question earlier about the two large pharma customers and then just relating that to pipeline .

Speaker #14: I think those were around $5 million each . Is that roughly the size you'd expect for customer going forward or in the future ?

Speaker #14: Do you expect that account size to increase alongside your scaling of the business ? Any color on the pipeline would be helpful .

Speaker #10: I think . Yeah , I think the the the I mean , I think as you penetrate these accounts , there's more than $5 million of potential inside these large inside these large customers .

Speaker #10: So we expect that number to that number to grow . You know , capturing and of large biopharma with multiple oncology trials prospectively being able to capture 100% of that share in a world where they're really using MRD , I think will be worth , will be worth , will be worth more than that .

Speaker #10: So I think we're early stages in penetrating that . But that's a journey in and of itself , too , right ? I mean , just don't go there overnight making progress with it .

Speaker #14: Okay , great . Thanks . And then maybe just a follow up on , you know , within pharma , a newer account versus those more mature accounts .

Speaker #14: What's the difference in kind of order growth rate you're seeing ? Are you still seeing acceleration among those mature accounts . And then maybe what's the typical run rate for some of those mature accounts ?

Speaker #10: Biopharma and and biopharma .

Speaker #14: Yeah . And biopharma .

Speaker #10: Yeah . We I mean it's you know , there's there's most of our energy is focused on the top biopharma companies where they're spending large amounts of money on clinical trials .

Speaker #10: So you can imagine that set of that set of customers . And that's that's where we're focused . And so it's a penetration drill because we're in most of those places right now .

Speaker #10: Some of the smaller bio biotech companies are opportunities . But we're really probably focusing on on going deeper and winning more of the business inside these customers .

Speaker #10: And partly I think , ultra sensitivity opens up more opportunities for them to be able to do more with MRD technology . And so I think we're also expanding probably the market by by a result of of what we're doing as we pioneer this , this approach , we're really optimistic about where biopharma .

Speaker #7: Is . going to .

Speaker #10: Go as well .

Speaker #7: Over the last .

Speaker #10: Two quarters , the .

Speaker #7: Pipeline and funnel for MRD has grown rapidly . In addition , the orders that have come in for MRD .

Speaker #10: Projects have continued to grow . The challenges we've .

Speaker #7: Seen near term have been on the translational research side . And as Chris mentioned in the prepared remarks , we have been seeing , you know , some delays on the sample receipt side , which has been .

Speaker #7: a headwind to the biopharma revenue. But, you know, overall.

Speaker #10: We're optimistic about where this is headed.

Speaker #7: Is going .

Speaker #10: I mean , I will note that , you know , we had two large customers , Natera and Moderna , that had declines this year .

Speaker #10: We expected obviously , both of those Moderna because they it ended their it ended in rolling their phase three melanoma trial , which really drove our numbers last year .

Speaker #10: And then Natera , you know , we we were winding that down this year . And so when you subtract , you just , you know , look at that .

Speaker #10: The loss of that business, and then where we'll end up this year, we're still going to grow by 40% this year.

Speaker #10: I mean , it's still really nice growth in the business is shifting and the mix is shifting . And that opens up a set of challenges .

Speaker #10: But there's a , you know , that that's really , really healthy growth . And that's been driven off the back of the progress that we're having with fit .

Speaker #10: I would just I just know one thing for for folks listening , that we really , you know , when when we hunker down in this new world , we were really focused on managing the cash burn and making sure we were really prudent .

Speaker #10: And so , you know , our cash usage guidance has not changed this year . We've really focused on making sure we were really smart with our our , our , our spending and what we're investing this year in the midst of what's been a challenging year because of some of the biopharma slowdown .

Speaker #10: And , you know , and managing through it . So we have been really focused on the financial discipline here of , you know , of hitting the cash burn number and being really prudent with with investors , with investors , money .

Speaker #14: Thank you guys very much .

Speaker #8: Our next question is from Mike Matson with Needham and Company .

Speaker #15: Yeah , thanks for taking my questions . So just with regard to Natera , you know , so there was a big decline this quarter .

Speaker #15: I think it was expected . But is there any revenue expected from them in the fourth quarter , or is it are they completely out of your numbers beyond this quarter ?

Speaker #15: And then I assume it's not. You're not expecting any next year either.

Speaker #10: No . It's very , very small in the fourth quarter . It's pretty small in the second quarter . You know , we really started to bleed down in Q1 , Q2 with the idea that Q2 would be sunsetting .

Speaker #10: And then at the end of Q2 and and then we've just been doing cleanup , helping on some studies that we had been , you know , helping them with because they probably want the same technology .

Speaker #10: Right ? Your platform or whatever . So it's been but it's been very , very , very small . So it's bleeding down .

Speaker #10: And you see that in the numbers . We're almost all of our revenue this quarter was was biopharma revenue . Right . And so you know , and which and we've made and most of that revenue is just a diversity of clients .

Speaker #10: And so actually when you really look at the numbers I mean we've come a long way building a diverse set of biopharma customers .

Speaker #10: And really what's now mostly of pharmaceutical based revenue base . And of course , that'll start to change as we get Medicare reimbursement and we start to layer in the clinical and it starts to grow rapidly alongside that .

Speaker #10: But , you know , we've really transitioned the revenue profile in a really I think I think overall really positive way for the company .

Speaker #10: And you're seeing that right now in those numbers . So Natera is pretty much pretty much out of it .

Speaker #15: Okay, got it. And then just to trace the trial, any expectations on when that would be published? And then where do things stand on colorectal with getting a dossier put together for that in terms of the data, trials, etc.

Speaker #15: , you would need there?

Speaker #10: Sure. Which is going to jump in? Mike. Yeah.

Speaker #13: So the tracer tracer study should be published in the next quarter sometime . So that's going to be great to to have that come out really strong .

Speaker #13: Study over 400 patients , non-small cell lung cancer . So really we'll be a great summary of how strong the performance with next personal is in non-small cell lung cancer .

Speaker #10: And in CRC . You know , we're just starting the journey there . It'll be one of our things that we'll work on this next year .

Speaker #10: But the investigators still has to decide that that particular study , you know , is time to wind that down and submit that data for publication .

Speaker #10: And we are we're we're not there yet . So and when that happens , then that'll be submitted . And obviously we can't submit for coverage until it's accepted .

Speaker #10: And so we're still we're still on that . We're still , you know , early in the journey on CRC .

Speaker #15: Yeah okay . Got it . Thank you .

Speaker #8: As a reminder to ask a question press star one . Our next question is from John Wilkin with Craig-hallum .

Speaker #8: As a reminder to ask a question please guys .

Speaker #16: So I wanted to just press a little bit more on the on the molecular volume growth in the quarter . I know you guys had guided earlier in the year to expecting 30 to 40% sequential growth .

Speaker #16: And you kind of talked through some of the reasons that came in short of that . But I'm just given the stock reaction .

Speaker #16: I think there might be some concerns out there that, with a couple of other players launching MRD tests in the market, there could be other factors driving that kind of performance below the target range.

Speaker #16: And given you had also mentioned that before you had reimbursement, maybe if you could just drill down a little bit more on that and talk through anything that was impacting the volume growth.

Speaker #10: On the clinical side , no , I mean , we're we're we're you know , I think we've said and said that we want to be really smart with where we are , and we have not .

Speaker #10: We've certainly not seen any slowdown. The retention has been high, and we've continued to add some new clients, but not at a torrid rate, as we've pulled back a bit.

Speaker #10: But the retention has been super high and I think , you know , nearly 30% quarter over quarter growth in what's traditionally a pretty flat quarter is actually really , really strong quarter .

Speaker #10: The numbers are starting to get bigger, quite frankly, to, yeah. So we were thoughtful.

Speaker #7: So with revenue only $14.5 million in Q3 .

Speaker #10: John, you know, we did pump the brakes a little bit on.

Speaker #7: Volume , primarily .

Speaker #10: Because , you know .

Speaker #7: We have .

Speaker #10: To balance .

Speaker #7: Margin dilution and cash .

Speaker #10: Usage as well .

Speaker #7: And then the other point that Chris mentioned earlier was in the third quarter , typically you .

Speaker #10: Do have some .

Speaker #7: Seasonality , right ? And the goals that we've set set out , you know , over a year ago were 30 to 40% quarter over quarter growth .

Speaker #7: And , you know , like Chris had said previously , we've already achieved the . level that we had targeted to be at at the end of the year , a quarter early .

Speaker #7: And so , you know , we didn't see a need to go overboard and , you know , push forward more volume in the third quarter and then drive margins even lower .

Speaker #7: Right . So so you have to kind of appreciate what we were trying to do in terms of balancing cash burn and the margin dilution as well .

Speaker #10: Yep .

Speaker #16: That makes sense . Appreciate the clarification . And then wonder if you could talk through just any anything you've been hearing from from the field through your conversations with Tempest and what they're they're what sort of feedback their sales team is getting ?

Speaker #16: I know they haven't been talking too much about MRD yet , just in advance of reimbursement , but any any early feedback you are giving us and talk about any like ordering patterns with the with the 700 ordering physicians you're at now .

Speaker #10: Yeah , I mean , I think one of the one of the learnings is , I mean , we were collectively we were really the first set of companies to really pioneer this notion of the one stop shop , along with the ultra sensitive and combining that together to stitch it together .

Speaker #10: And I think that's been a really compelling value proposition . I think physicians want to get the get all this together . You know , their case by the hereditary tests .

Speaker #10: Certainly the CGP , you know , and and the MRD and we we've gotten really positive feedback about the approach that they've taken .

Speaker #10: And , you know , we've in the customers , when they start ordering , have largely stayed with us . It's great to have a test where 40% of the positive results are unique .

Speaker #10: And differentiated , and that that allows us to underline the value that we're that we're delivering every day with these doctors . So the feedback has been super positive , and we've been able to , you know , keep keep the growth going .

Speaker #10: And we really focused this last , you know , couple quarters . We said really learning the logistics of the business and and how to and how to win more business within within accounts .

Speaker #10: Because ultimately it's going to be it's going to be depth of penetration . It's going to make a difference within an account .

Speaker #16: Perfect . Thanks a lot , guys .

Speaker #8: Our next question is from Arthur with H.C. Wainwright.

Speaker #17: Hey good afternoon guys . This is also on for K . So just a quick follow up regarding the the clinical test growth .

Speaker #17: Could you give us more color on how these growth be driven by . It's more from the increase of the physician numbers or new physician numbers .

Speaker #17: Or it's more from the the test number per physician getting increased to push the test number .

Speaker #10: Yeah I mean we we a little bit of both . But I mean we've been really focusing in on not so much trying to grow top line , but getting more out of the accounts .

Speaker #10: So because I think we've learned how to sell to physicians, and, you know, that's one way to, quote, manage the investment that we're spending.

Speaker #10: We're spending is not focused on driving deeper and faster and quicker growth within within within the within the within the physician community . But rather really focusing in on going deeper .

Speaker #10: And so that's been the crux of a lot of the growth: getting more from these accounts.

Speaker #17: All right . Thanks for taking my question .

Speaker #8: Ladies and gentlemen , with no further questions in the question queue , it brings us to the end of this event . Thank you for attending .

Speaker #8: And you may now disconnect your lines .