Centogene N.V.

Ladies and gentlemen, thank you for standing by and welcome to Centrogeny Q3 2021 Earnings Results. At this time, all participants are in list and only mode. After the speaker presentation, there will be a question and answer session. I would now like to end the conference of your speaker today, Lennart Streibl. Please go ahead, sir.

Thanks, Roberto. Hello and welcome. Thank you for joining us to discuss our third quarter 2021 results, which were reported earlier today. You can view the presentation of the related press release on Centogene's website. For those unable to view the webcast, you'll find the corresponding slides at investors.centogene.com. Referring to slide two, before we begin, I would like to remind everyone that statements we make on this conference call will include forward-looking statements within the meaning of the US securities laws, including those regarding our strategic plans, development programs, 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, November 24th, and we undertake no obligation to update or revise any of these statements to reflect future events or developments, except as required by the law. Additional information regarding these statements appears in our SEC filings. If you turn to slide three, it is my pleasure to introduce you to today's speakers, our Chief Executive Officer, Andrin Oswald, and Rene Juist, our Chief Financial Officer. We will first begin with a general business update, followed by a summary of our financial results for the last fiscal quarter ending September 30th. We will then open up the call to Q&A session before closing remarks. We kindly request already that you ask a maximum of three questions. I would now like to turn the call over to Andrin. Please turn to slide four. Andrin.

Thank you, Leonard. And hello, everyone. Thank you for joining. As Leonard said, I will start with a business update on our core business and also some updates on the progress we're making on implementing our strategy as presented at the June investor event. As it relates to our COVID business and our plans with that one going forward, and also how we plan to restructure the company to be fitter for future growth, Those two elements Rene will address in financial review. And then we will end with outlook and, of course, the Q&A. So, Q3. Our Q3 performance reflects progress in our core business execution, making meaningful strides on our strategic priorities, which we outlined in the investor event. As mentioned, we are continuously expanding our data-driven approach to reinventing rare diseases throughout this current development. In this last quarter, we saw solid revenue performance, delivering core business growth for the second consecutive quarter. The core business, which is our diagnostic and pharma segment, together grew 13% versus two or three last year. We are very happy to see that core business is back to growth. While COVID-19 testing revenues did not continue to contribute to our overall top line, we are seeing a shift in COVID testing landscape and are acting proactively. and during our efforts are focused on our core business, informant diagnostics. This is in line with what we have communicated previously. Foremost, we are excited about the continued growth of our core diagnostic business segment observed in Q3. In that period, we added approximately 22,000 new individuals to our expenses by a data bank and continue to demonstrate our commitment to secure diagnostic offerings for rare diseases. This is a steady increase towards our goal of having one million patients in our Biobank in the next couple of years. I will now discuss a bit more in detail the different segments. Please turn to slide six. Here on the graph, you can see the mentioned 13% revenue in our core business. More specifically, on the diagnostic segment, in Q3, we reported order intake of 14,770 up 46% over the previous quarter. Within this segment, we have seen the business return to growth up 43% year over year. We have indicated this trend in the last quarters, and it is nice to see the business return. This is our fifth consecutive quarter of diagnostic segment growth. We believe we currently offer the broadest diagnostic testing portfolio for rare diseases globally, covering the widest range of genes with unique value propositions in test. Turning to our pharma segments, we are still experiencing a protracted recovery as compared to the diagnostic segment. Pharma business segment revenue is down year over year. But as we have highlighted in the past, this is mostly the result of a delay of revenues as it relates to the time it takes from signing a new contract with a pharma partner until that contract translates into revenues. However, we have now 67 active collaborations, just 16 new ones started in recent quarters, and they're all advanced towards revenue generations. So we are quite confident that the farmer business will return back to growth starting with Q4. I will share some further details on that later on. Please turn to slide seven. Here, a look at our knowledge repository. The number of sample or order index in our core business, meaning diagnostic and pharma, is up 12%. If growth was driven primarily by increasing diagnostic business, the test requests were 46% versus the same period in 2022. The pulse of pharma contributed. Overall, we're making progress on growing our bi-data bank, which includes samples as well as data and cell lines. On the graph on the right, you see the number of individuals in our data repository. Over the course of 2021, we added about 70,000 new individuals to our rare disease-centric data bank. We believe our biodata bank to be the core of our differentiation and our basis for revolutionizing the development and eventually the discovery of rare diseases. As we stated in previous quarters, we kicked off an initiative in 2021 to review and upgrade the biodata bank. It's a bi-data bank that by now has data back, I suppose, like 16 years. So you can imagine that it was the right time to look at it, clean it up, and strengthen its content in the way that you can mine the data. This improves setting up good data governance, as well as making sure our approach to growing devices is truly strategic. At our inventory event in June, our CTO and data officer, Bettina Goerner, shared with you insights in how we plan to upgrade our data bank, and I want to give you, based on that here, some first updates or insights into the data bank. In the past, we have communicated the number of patients at the summary matrix. With the newly defined data bank, we will share some deeper insights going forward. As of today, November 24th, we have about 650,000 patients, active patients, and samples in our repository. At the end of Q3, we speak about approximately 630,000. Some of you will remember that we had already communicated the number of about 650,000 previously. However, after the recent review and reclassification, the cleanup of the biodata bank, we have now improved the more robust number, ensuring that what is in there is really of the quality that we needed to have the ability to mine it and come up with other insights. Additionally, we are now also going to provide you with some more metrics as it relates to the content and the growth of the biobank. Turn to slide eight. Here you can see some of the metrics we developed that we believe show in more detail what's in the data bank and how it's progressing going forward. We have total number of individuals, of course, as previously discussed. We have the dried blood spots, and that's why it's much of a data, but a biodata bank. so the dry blood samples that are stored in our databanks that allow us also to go back to the sample and do further analysis. And we have the number of full genome and exome sequence versus data where we just have done a gene panel, for example. And we also have the percentage of research content that allows us not to use the samples and the data just for diagnostics, but also for full research on the discovery pharma side with the potential, of course, to commercialize that. Then we have our cell line. I think this is an important addition. Cell lines are critical for our future discovery efforts. And, of course, all this is built on an active network of physicians that we engage in and that work with us for getting access to past but also future patients. You can see the numbers here on the slide and also how which developed in the recent quarter. With this, we are now also providing more details, and we plan to do that going forward. We believe, and this is a way by which we better appreciate the relevance of the value of our data banks going forward. Please turn to slide nine. Here you can see a closer look and in terms of where we have particularly strong data and samples as it relates to disease areas. And this is in metabolic and neurological diseases. This is also reflected in the increasing number of pharma partners that we have established in that area. As shown by the revenue contribution, most of our collaborations are relatively small in nature, and however, we believe it's something that will grow in the future. the partners may start with a rather small specific research question or a research collaboration that we have, which may be low in initial revenues. Those partnerships, while the research and the underlying draft discovery progresses, we believe these partnerships will expand and so will our revenue. Please turn to slide 10. We've shown that slide at our June event, but I would like to highlight again why we think here uniquely positioned in the rare disease space. Here are some companies that are also in the data-driven insight space, and we believe we clearly differentiate from them and have unique competitive advantages. On one side, we are a rare disease company. We have been 16 years ago in rare diseases and have started collecting samples and insights and have built a brand and a network over 16 years. Some of those other companies have also more recently expressed interest in rare diseases, but they do not have the bandwidth, the brand, nor the repository that we do. Technically, I also want to highlight our geographic footprint that makes us unique. Of course, it is highly valuable to have a good, strong presence in the U.S., especially if it relates to commercial revenues from a diagnostic business. However, overall, we believe our geographic global footprint is absolutely critical for rare diseases. Rare diseases are by nature a global challenge, and to collect patient data and generate sufficient patient data for the right insight and a global footprint in our minds is required, and that's what we have. Let's go to slide 11. This is to remind you of our business model and our patient-centric business model with the BioData Bank at our core and using the BioData Bank and our omics and AI tools to generate insights for superior clinical diagnostics, for pharma services, for patient identification and clinical trial support, and last but not least, to develop a discovery platform to enable drug discovery, orphan drug discovery in the residency space. So let's go to slide 12. I just want to highlight a few updates along those pieces continuum that we have done in the recent quarter. Scientific progress, our diagnostic footprint, impact we have in pharma, and what we plan to do in discovery. So let's start with slide 13. As you know, and I'm sure you've seen over the recent quarter, we have quite a leading presence, a number of scientific publications in the rare disease space. I just want to highlight here a recent one in the Journal of Medicine. We view our contribution to better understanding rare diseases at the core of our commitment to rare disease patients around the world. Not all of those, of course, as you for sure know, will immediately translate into revenues, but I do believe that they highlight our scientific expertise, the depth of our biodatabank, and of course, our attractiveness as a partner in universities is covered. Taking a closer look at this effort here. The study here utilized data percentages by a databank, There are an international team, including the Ready Children's Institute of Genomic Medicine and ASTAR, that have analyzed data on a range of families to create a deeper understanding of syndromic structural birth defects and pave the way to advance pharmacological treatment for that unique medical condition. Now, if this method and what has been demonstrated translates into robustness It offers a unique opportunity for drug developers to capitalize on the insights and with clinical programs, potentially create new approaches to find treatments for what to date are almost 4 million infants every year that are born with such birth defects. We think that research highlights why Sympathy and Inspire Data Bank can be a unique partner, not just for the academic institutions, but also for pharmaceutical organizations collaborate to actually translate, find the findings, and translate them into drug development. Slide 14. In our clinical diagnostic business, we have signed an exciting partnership with Twist Bioscience that we had recently announced. Together, we will develop and commercialize custom assay kits for rare disease genetic diagnostics. The product offering will combine our expertise powered by our data bank with the manufacturing adeptness and cost and sequencing kicks of Twist BioScience to deliver multiple assays. We are excited to have kicked off this collaboration and the next major milestone will be progress on assay key development followed by a commercial launch together with Twist that we plan for next year. This collaboration enables us to address the ongoing trends of decentralization in the testing era. It is our belief that offering decentralized solutions will play a pivotal role in making genetic testing more accessible and with the help of partner laboratories to deliver rapid and reliable top quality genetic diagnostics for rare disease patients. We expect some announcements around our efforts there related also on the progress of our central cloud product offering in the coming months. Now let's look at our pharma progress on slide 15. I have mentioned that the pharma revenue recovery is clearly taking more time than on the agnostic side, but that we are confident that with recent partnerships, we are on track to get there. So one I want to highlight here is the partnership we have with Alexcor. We signed the deal early in 2021, and we have announced that. We have now started patient enrollment just a couple of weeks ago for that large-scale 3,000 to 4,000 patient study. And it's an exciting study that I think highlights a few things from our side. First of all, of course, that it takes time from signing a contract to actually start seeing the enrollment of patients and mostly the revenues that are associated then with that. but it also highlights that finding ready these patients in the right red these patients the key competitive advantage that central gene has that the customers have a high interest in and also highlights that our business model and while we do such collaborations actually allows us to accelerate our bio data band and this partnership here for example will help us to build up a a unique cohort of front-to-tempo dementia patients in our biodatabank, similar to what we had on ROADPAD with Denali, that can be further mined and further insights can be generated for future customers who are working with us in the neurological disease space. Overall, we have signed quite a number of new contracts to date in the year. And actually, when you look at the cumulative value of this contract, it is a multiple of what the company was able to sign in 2022. So that large volume of new contracts that we had signed, not just the electorate, to give you some confidence, for sure, it gives us that starting from Q4, we think that the pharma business will also be back on the growth track. Please return to slide 16. Here's just a short update on our discovery efforts and how we plan to use our Biobeta bank for discovery partnerships going forward. I would like to focus on the development of our resumes and avatars. We have mentioned to you this effort in our June event. And I think our aspiration for us to be able to enable the cure of a hundred rare diseases in the coming years. So with Patrice, we have made quite some progress to accelerate that work and make sure that the team is fully developed and on board to accelerate the work we do in that regard. Well, what exactly is a disease avatar? You may have heard of the term digital twin. which is essentially a virtual copy of a physical body structure that physicians can use, for example, to train surgery or to model how a certain treatment would impact the anatomy of a patient. So the disease avatar is the digital platform on a whole disease by which we have an aspiration to actually virtually model the whole disease such that it can be used by researchers to mine that data, to come up with hypotheses on how the disease can be better diagnosed or potentially treated, and then test those hypotheses in the actual model. We believe that we need at least 100 rare disease patients to be able to develop such an avatar. We, of course, won't stop when we have 100, but we think that once we are above 100, we have enough diversity and data to start for these avatars to really generate And as you know, on some diseases, we have already clearly exceeded that milestone. And the disease avatar also is linked to cell models. And we think at least 10 up to maybe 20 patient-derived cell models will be part of the avatar to actually make the digital model complete. At the forefront of this initiative is Patrice Deneville, our chief scientific officer, who you were introduced to on our last earnings call. And I would like to pass on his excitement around our disease avatars and how we enable and recapitulate human disease in a dish. Generating insights from hypotheses and validating these via real patient-derived cell models ultimately leads to better understanding of disease practice physiology and enables us to take hands-on approach on testing drug candidates in red with these human models the way we could never have done before. With these initiatives in place, Patris has further strengthened the focus on our three first key priority avatars, Gaucher and Nieman-Peake, and genetic Parkinson's, to accelerate progress we make on those three in the coming quarters. All of these three will be significant opportunities for sentencing to drive a shortened value and potentially partner those avatars with pharmaceutical partners. We will of course not stop there. And on the success of those three, we have a range of prioritized diseases that we plan then to work on and to accelerate in the next few years to come. With that overall update on our core business and the progress we make on our strategy, I would like to hand over to Bernie.