Fulgent Genetics, Inc.

Greetings and welcome to the Fulgent Genetics fourth quarter and full year 2023 conference call and webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Melanie Solomon, Investor Relations for Fulgent Genetics. Please go ahead.

Thank you. Good morning, and welcome to the Fulgent Fourth Quarter and Full Year 2023 Financial Results Conference Call. On the call are Ming Hsieh, Chief Executive Officer, Paul Kim, Chief Financial Officer, and Brandon Perthews, Chief Commercial Officer. The company's press release discussing the financial results is available on the Investor Relations section of the company's website, www.FulgentGenetics.com. A replay of this call will be available shortly after the call concludes on the Investor Relations section of the company website. Management's prepared remarks and answers to your questions on today's call contain forward-looking statements. These forward-looking statements represent management's estimates based on current views and assumptions, which may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ from those described in the forward-looking statements. The company assumes no obligation to update any of the forward-looking statements it may make today to reflect actual results or changes in expectations. Listeners should not rely on any forward-looking statements as predictions of future events and should listen to management's remarks today with the understanding that actual events, including the company's actual future results, may be materially different in what is described in or implied by these forward-looking statements. Please review the more detailed discussions related to these forward-looking statements, including the discussions of some of the risk factors that may cause results to differ from those described in the forward-looking statements contained in the company's filings with the Securities Exchange Commission including the previously filed 10-K for the year ended December 31st, 2022, and subsequently filed reports, which are available on the company's investor relations website. Management's prepared remarks, including discussions of earnings and earnings per share, contain financial measures not prepared in accordance with accounting principles generally accepted in the United States or GAAP. Management has presented these non-GAAP financial measures because it believes they may be useful to investors for various reasons. But these measures should not be viewed as a substitute for or superior to the company's financial results prepared in accordance with GAAP. Please see the company's press release discussing its financial results for the fourth quarter and full year 2023 for more information, including the description of how the company calculates non-GAAP income or loss, earnings or loss per share, and adjusted EBITDA, and a reconciliation of these financial measures to income or loss and earnings per share or loss per share, the most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Ming.

Thank you, Melanie. Good morning. And thank you for joining our call today. I will start with some comments on the fourth quarter and the year ended December 31st, 2023. Then Brandon will review our product and go to market updates from the fourth quarter. And Paul will conclude with the financials and the 2024 outlook before we take your questions. We are pleased with our results in the fourth quarter, with $70 million of total revenue. Due to our successful collection efforts, we recognize $4 million of revenue on previously billed COVID-19 tests. As you will see in our 10-K We are now reporting our business in two segments. One, our laboratory service business, which we will previously refer as our clinical diagnosis business. And second, our therapeutic development business. We have renamed our clinical diagnosis business to better represent the inclusion of technical laboratory services and professional interpretation of laboratory results by licensed physicians. This will now be called laboratory service. As a reminder, core revenue is the total laboratory service revenue from the company without COVID-19 test revenue. Fourth quarter core revenue of $66 million was driven by the momentum in precision diagnostics, and better than expected revenue from anatomic pathology and the biopharma services. After raising full year guidance twice in 2023, we outperformed the full year by $2 million in the core revenue from the latest raise in guidance with a positive impact on margins and earnings. Moving on our therapeutic development business, we are continuing to make good progress with 4GEN Pharma. Our non-anemone encapsulation technology includes over 40 issued or active patents and active patent applications and the targeted therapeutic platform designed to improve therapeutic window and the pharmacokinetic profile both new and existing cancer drugs. Our lead drug candidate, FID07, has shown promising results in clinical trials today for the treatment of numerous cancers including head and neck, ampullary, pancreatic, with a manageable safety profile observed in trial performed to date. An abstract on preliminary head and neck cancer clinical trial results from our Phase 1B study has been submitted for the 2024 ESCO Annual Meetings, which will be held in the second quarter. Our Phase 2 clinical protocol for the second-line treatment of head and neck cancer has been accepted by the FDA and we expect to enroll the first patient early in the second quarter of this year. We are excited about reaching these next milestones for the farmer and bring the FID-007 to more patients in the clinical setting. In addition, using the same nanodrug delivery platform, we are also advancing our second drug candidate, FID-002, a nanoencapsulated SN38 very rapidly and expect to file an IND, or Investigational New Drug, application by the end of the year, while arantekin, a prodrug for SN38, has been approved by the FDA for colon cancer treatment. Formulations using its active components, FN38, have not been successfully developed so far, primarily due to poor drug solubility and toxicity safety issues. We believe our nano drug delivery platform has the potential to address these challenges. On the R&D front, building upon our clinically proven nanoparticle technology while also developing a next generation antibody drug conjugate technology platform that could potentially prove even broader killing towards heterogeneous cancer cells than those ADC with the bystander killing effects. Our ADC platform is not target dependent and that could potentially be applied to many different targeted ADCs, particularly for new targets with low antigen expression, where existing ADC platform have failed to show effectiveness. Overall, we believe we have been good storage of cash and maintain a strong balance sheet with which to execute our strategy. I'd like to thank our employees, partners, and stakeholders for your loyalty during the past year. We look forward a strong year in 2024, and capitalizing on the momentum we see ahead. I'll now turn the call over to Brandon Perthews, our Chief Commercial Officer, to talk about our laboratory service business results during the fourth quarter. Brandon?