Fulgent Genetics, Inc.

Hello, and welcome to the Folger Genetics Q2 2024 conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may press star one at any time to be placed in the question queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the conference over to Melanie Solomon, Investor Relations. Please go ahead, Melanie.

Thank you, Kevin. Good morning, and welcome to the Fulgent Second Quarter 2024 Financial Results Conference Call. On the call today 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's website. Management's prepared remarks and answers to your questions on today's call will 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 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 than 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 a company's filing with the Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31st 2023, 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 prepared 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 second quarter, 2024, for more information, including the description of how the company calculates non-GAAP income or loss, earnings or loss per share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating profit or loss, and margin and adjusted EBITDA, and a reconciliation of these financial measures to income or loss, earnings or loss per share, and operating margin, 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 second quarter and our two business lines. Then Brandon will review our product and go-to-market updates for our laboratory service business in the second quarter. And Paul will conclude with the financial and outlook before we take your questions. We are pleased with our results in second quarter. With $71 million of total revenue, we recognized $841,000 of revenue on previously billed COVID-19 tests. Excluding COVID-19 revenue, second quarter core revenue of $70.2 million was driven by momentum in precision diagnosis, particularly reproductive health and oncology. We were pleased with the growth in all three areas of our laboratory service business this quarter, and we've seen good momentum ahead as we continue to invest in reproductive health testing and seeing the benefit of those investments. We have reached a very important milestone in consolidating the labs acquired as a part of informed diagnostic transaction. With our new 96,000 square foot lab facility in Coppell, Texas. We believe we'll have an opportunity to triple capacity, fueling the potential future growth and expansion. Brandon will talk more about this. In our therapeutic development business, we presented phase one clinical data using our lead therapeutic development candidate, FID07, to treat head and neck cancer. at American Society for Clinical Oncology, or ESCO, annual meeting in June 2024. Of 11 head and neck, sequamous cell carcinoma, or HNSCC, available patients with weekly dose level from 50 milligram per square meter to 160 milligram per square meter, five or 45% had a partial response and seven or 27% had a stable disease by recent. Three out of five HNSCC patients with partial response had previously been treated with texanine. The duration of follow-up meeting range is four months. No high-grade neuropathy has been noted. FID-07 demonstrated preliminary evidence of anti-tumor activity in heavily pre-treated HNSCC patients across different primary tumor sites, with an overall response rate of 45%. As a result, we initiated a phase two clinical trial of FIDO7 in combination with cetacimab in patients with HNSCC in January 2024, and enrollment began in the second quarter. so far have enrolled and dosed the first three patients in this trial. We expect to enroll approximately 40 patients in various sites with enrollment expected to be complete in early 2026. We currently estimate the total patient clinical trial cost for the phase two to be around $10 million. We continue to advance our second drug candidate, FID-022, a nanoencapsulated SN38 in preclinical studies toward an investigation of new drug application by end of this year. While FID-022 has shown superior efficacy of irantekin in various xenograft model including colon, bile duct, ovarian and pancreatic cancers in our preclinical study. No significant unspecified toxicity were observed in both rats and the monkey GLP toxicity studies. In addition, we also made a significant advancements in development of antibody drug conjugate using our novel patent linker and a payload platform technology. our ADC has shown better efficacy overall over different tumors with a broad range of targeted antigen increasing levels than some of the best ADC benchmark and the market in the preclinical studies. In meanwhile, ADC with a novel target using our novel platform technology are also being prepared with the goal of generating the leading candidate for clinical trials. As a reminder, all our drug candidates were formulated with our novel nano-intestination technology, which included over 30 issued active patents and active patent applications and a targeted therapy platform designed to improve therapeutic windows and pharmacokinetics profile for both new and existing cancer drugs. Overall, we believe we have a good strategy with both our core laboratory services business and our therapeutic development business. When seeing momentum in our core business, we shall be believed to continue to grow, strengthening our business model, and fuel our therapeutic initiative. We continue to maintain a strong balance sheet to execute our strategy. I would like to thank our employees, partners, stakeholders, for your hard work and loyalty in a very good second quarter for our business. We look forward to continued growth in the second half of 2024. I will now turn the call over to Brandon Pruduce, our chief commercial officer, to talk more about our regulatory service business results during the second quarter. Brandon?