Centogene N.V.

Ladies and gentlemen, thank you for standing by and welcome to the Centagine First Quarter 2020 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star and 1 on your telephone. I must advise you that this conference is being recorded today, Monday the 15th of June 2020. And I'm going to turn the conference over to your speaker today. Sun Kim, please go ahead.

Thank you. Hello and welcome. Thank you for joining us to discuss our Q1 2020 results, which were issued earlier today. You can view this presentation and the related press release on Centogene's website. For those not able to view the webcast, you can find the relevant slides on www.investors.centogene.com. Our speakers today are CentoGene's Chief Executive Officer, Professor Arndt Rolfs, and Richard Stoffelin, CentoGene's Chief Financial Officer. Before we begin, please refer to slide two of our presentation, which provides information about certain statements to be made today that may be considered forward-looking statements within the meaning of the U.S. securities laws, including those regarding our strategic plans development programs, and future financial results. Statements made during this call that are not historical statements may be forward-looking statements and, as such, may be subject to risks and uncertainties, which, if they materialize, could materially affect our actual results. The forward-looking statements in this presentation speak only as of today and we undertake no obligation to update or revise any of the statements to reflect future events or developments, except as required by the law. Additional information regarding these statements appears in our SEC filings. Following our presentation, we will also open up the call to Q&A. We kindly ask that you ask only a maximum of three questions. I will now hand the presentation over to Arndt. Please turn to slide three.

Thank you, San, and hello, everyone. Thank you for joining our call today, especially during these unprecedented times. We have everyone staying healthy and safe, and our thoughts are with those affected by the COVID-19 pandemic. Before we dive into our Q1 2020 performance, Let me quickly update you on the current situation regarding COVID-19 for St. Eugene. As we publicly announced in April, we have reopened our offices in a carefully measured manner. Providing all of our employees with viral testing twice per week gives us the confidence that we have better management over the situation as our employees have begun to return to the office. We also strengthened some safety protocols to be extra careful and for the most part, CenturGene is fully operational. Now, let us tell you about our Q1 2020 performance and also provide you with a broader update on our business. I'll start by touching upon key aspects of our business, and then Richard will take you through the financials. Let's turn to slide four. Before we get into the performance of the business, let me take this opportunity to remind you of CenturGene's goal. I think it is always good to put things into context, and for me, that means looking at recent achievements with our long-term goal in mind. Our ultimate goal is to provide precise medical diagnosis of inherited diseases at the earliest possible moment by transforming medical expertise and analytical information into actionable results for physicians, patients, and pharmaceutical partners. As you are aware, we accomplished this by using a multi-dimensional approach to analyze patient data and by harnessing our knowledge of rare diseases to help physicians more easily diagnose patients and support biotech and pharma companies to develop new treatment options. Everyone at CentiGene remains passionate about achieving this goal and this is why it is so rewarding to be a part of this company. Now let's dive into today's presentation starting on slide five. During the first quarter, we continue to deliver on multiple fronts while making important adjustments in the face of a global pandemic that has affected our industry and many others. First, we have demonstrated strong financial operational performance. We grew our top line by approximately 13% in Q1 2020. Both segments, pharma and diagnostics, exhibited double-digit growth. This is despite facing some headwinds in late March caused by COVID-19. Second, we are proud of how CentiGene has responded to the COVID-19 crisis. Internally, we have reacted quickly to keep everyone safe while driving our operations with minimal disruption. In addition, we have quickly rewarded resources to develop COVID-19 testing capabilities. Finally, I would like to make a few comments on the impact COVID-19 began to have on our business at the end of the first quarter and as we entered the second quarter. Let me first say that the fundamentals of our business remain strong, and we are increasingly being looked at by partners as a leader in providing molecular insights in order to accelerate drug development for rare diseases and guide patient stratification, identification, and monitoring. With that said, similar to our peers in the broader business community, we began to observe a slowdown in our business toward the end of March that became more pronounced in April as a result of COVID-19. More specifically, we began to see a decrease in sample volume and pharma business tied to clinical trials. Richard will provide additional details when he takes you through the financial review portion of the presentation. While our business continues to react accordingly to the COVID-19 situation, I also wanted to highlight that we began commercial COVID-19 testing in the second quarter and we expect this may help offset some of the lost revenue as a result of the pandemic. Let us now discuss these points in more detail. In Q1 2020, we grew our revenue by approximately 13% compared to Q1 2019 to approximately 12.1 million euros. This was driven by approximately 10% growth in the pharma segment and 15% growth in the diagnostic segment. I will let Richard walk through this in further detail in the financial review section. I think it is particularly noteworthy to mention that the 13% growth was despite the headwinds we started to see at the end of the first quarter resulting from the COVID-19 situation. I would now like to discuss the operating metrics that drove our strong financial performance. Please turn to slide seven. Let me first focus on our pharma segment. The first metric is the number of pharma collaboration, which increased by 11 over the last 12 months. I did want to note that while we were pleased that we were able to form new pharma collaborations as compared to the same time period last year, we would not expect this figure to always increase. as some collaborations will end when key milestones are completed. The second metric is the number of disease areas under partnership. As I have mentioned in the past, only 5% of rare diseases have an approved therapy, and we need to accelerate our knowledge into new disease areas in order to help improve the development of therapies for patients. As of March 31st, 2020, we were pleased to expand into eight new rare disease indications compared to 12 months ago. The third metric I would like to present in the number of the biomarker partnerships. Compared to 12 months ago, the number of biomarker partnerships increased by five to 33 as of the end of Q1 2020. Biomarkers remain a crucial element of how we can help pharma partners because they generate the molecular insights that can be used to inform the development of targeted treatment options. At Centutine, We continue to work on the discovery of numerous biomarkers. Please turn to slide eight, where we'll speak about the progress made in our diagnostic segment. Now shifting gears to our diagnostic segment, which is a critical part of our business, that is fundamental in enabling us to access data from which we then gain extremely valuable knowledge. That is why volume growth is so meaningful for us. As you can see from the chart on the left, we have added 135,000 patients to what we already believe is the largest database of rare disease patients. Some of this growth comes from the pharma segment, but we are also expanding our reach with the traditional diagnostics business in order to keep expanding the breadth of our database. The acceleration of our volume growth is better depicted on the right-hand side. We true our volume by 10% in Q1 2020, compared to Q1 2019, but I also want to add that this 10% growth is mildly tempered given the reduction in our noninvasive prenatal testing volume as we shift focus to our core genetic testing business. I believe it was and still is a good reference point to think about in terms of testing volume. Now please turn to slide nine for a closer look at our response to the COVID-19 pandemic. As the COVID-19 situation began to impact companies around the world toward the end of the first quarter, we moved quickly to ensure business continuity for Centogene. First, we took the necessary steps so that approximately 75% of our employees could work from home, with the exception of those needed to keep laboratory operations running, in order to support customers that are critical to the healthcare ecosystem. This required various adjustments ranging from IT systems to facility operation policies. Simultaneously, we modified our LOB operation to be able to provide testing for COVID-19. We initially provided testing to our employees and we later expanded to provide testing for essential workers in the local area as well. As the economy has begun to reopen, this testing capability has proven to be a vital asset. Not only can we manage our operation more safely by providing testing to employees twice a week, but we have also started to support local schools and nursing homes by providing testing services. Please turn to slide 10 to see what we have done to provide COVID-19 testing. There were several critical steps we had to take to be able to provide COVID-19 testing. The first example is the laboratory space in Hamburg, which we acquired from Provex Medical. While our testing capability was developed in-house, this laboratory allowed us to expand our testing capability without taking resources from our core business and research efforts. We now have the capacity to perform several thousand COVID-19 tests a day. Securing necessary reagents and supplies was another critical step. For instance, testing swabs were one of the key supplies that needed to be secured. We were able to secure a stable supply of a new product called CentoSwap, which is our validated CE-labeled solution for COVID-19 testing, and we now have the ability to source over 100,000 swaps a week. It is also worth noting that converting our COVID-19 testing capability into commercial testing was not an easy task. It involves diverting a portion of our commercial resources to a different customer base and completely reinventing our way of working. I'm extremely proud of the sales team's achievements in such a short period of time. Let me now hand it over to Richard, who will discuss our financials in more detail.