23andMe Holding Co.

Good morning and welcome to the 23andMe's fiscal year 2022 fourth quarter and year-end financial results conference call. As a reminder, this call is being recorded at this time of participants on listen-only mode. After the prepared remarks, there will be a question and answer session. I would now like to turn the call over to Wade Walk, Vice President of Investor Relations, to lead off the call. Thank you. Please go ahead.

Thank you. Before we begin, I encourage everyone to go to investors.23andme.com to find the press release we issued earlier today reporting our financial results for the quarter and fiscal year. A replay of today's webcast will also be available on our website for a limited time within 24 hours after the event. Please note that certain statements made during this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions for future periods, are forward-looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled forward looking statements in our press release, which applies to this call. Also, please refer to our SEC filings, which can be found on our website and the SEC's website for discussion of numerous factors that may impact our future performance. We also discuss certain non-GAAP measures. Important information on our use of these measures and reconciliation to US GAAP may be found in our earnings release. Joining us on today's call are Ann Wojcicki, our chief executive officer and co-founder, Kenneth Hillen, our chief therapeutics officer, and Steve Schuch, our chief financial officer. And now I'd like to turn the call over to Ann.

Thank you, Wade. We are excited about the steps we have taken over the last year and specifically over the last several months to begin to integrate genetics into everyday care with the ultimate goal of making personalized healthcare a reality. One of the unique aspects of our approach is that we will be able to offer people the ability to access and learn about their DNA and then take proactive preventative steps to manage their health and well-being through guidance from our genetically trained lemonade clinicians. Nearly 20 years ago, as the Human Genome Project was being completed, leaders at the time predicted that genetics would have the potential to transform how we diagnose, treat, and prevent all human disease. That vision still exists today, but for a number of reasons, such as lack of reimbursement, education, and training, genetics is not widely adopted into care. We have the opportunity to partner with customers in the traditional healthcare world to use genetic data to truly personalize care. We are taking this next step because it is the logical progression of our vision to help people access, understand, and benefit from the human genome. We have delivered on the first two aspects of our vision, accessibility and understanding, by now offering over 60 health reports in our personal genome service. We've also grown our customer base to 12.8 million genotype customers. Our new focus strives to deliver on the third aspect of our vision, to help people benefit from the human genome. We know there is a huge unmet need for preventative healthcare. It has been reported that 40% of deaths from the five leading causes in the U.S. are preventable. Yet accessibility to preventative care remains a problem for most people. We believe that with our first-of-its-kind genomic health service focused on genetics and personalized health data, we have an opportunity to fill this unmet need and improve people's lives. I think everyone knows that healthcare is not personalized today. In most cases, it's a one-size-fits-all approach. For example, we see guidelines for cancer screening that are primarily based on age, but rarely based on an individual's genetic risk. Because genetic testing is very rarely used outside of prenatal and cancer care, most people don't know their genetic risk factors, much less what to do with that information. In addition, more often than not, insurance presents a barrier to accessing genetic testing. We often know that our customers have had problems translating information about their genetic health risks to tangible health benefits and outcomes. Often they take our genetic health reports to their primary care physicians who largely don't know how to interpret or act on the information. Our efforts on the consumer side will now be focused on building a bridge between health risk awareness and health risk and disease management with our new genomic health services. Our plan is to support patients from the first touchpoint through a continuum of care, being the trusted guide. Over the next few years, we plan to concentrate on the direct-to-consumer self-pay market. Once we establish ourselves in the DTC market, then we can look into growing into other channels. This effort started with our acquisition and integration of Lemonade Health and their telehealth and digital pharmacy services. Our next steps are to roll out our new genomic health services. Just this month, we started data testing a genetic report consultation service with clinicians who are trained in genetic health concepts. This service provides customers with the opportunity to have genetic report consultations on three of our genetic health risk reports. These consultations can help customers better understand the potential impact of their genetic risk profile and discuss the next steps. This is just the start of our effort in this area, and I'm excited about the broader suite of services we plan to introduce later this year. A few notable milestones on the consumer side include the recent expansion of our 23andMe Plus membership service to customers in the UK and Canada. This service offers insights and features to give members even more actionable information to live healthier lives. We also launched three new reports for customers subscribed to 23andMe Plus bringing the total reports available to over 60. The new reports released this last quarter included skin cancer, diverticulitis report, irritable bowel syndrome report. On the therapeutic side of our business, we believe we have an advantage in drug target validation and drug development because we have the world's largest crowd source platform for genetic research. Drug development is fraught with failure. About 90% of drugs in development fail to become commercial medicines. However, studies have shown that drugs developed on genetically validated targets are twice as likely to succeed, and all of our targets are validated using our unique genetic database containing tens of thousands of genetic associations with disease phenotypes. Our research platform has generated more than 200 publications on the genetic underpinnings of a wide range of diseases, conditions, and traits, and we've used this research platform to create a pipeline of more than 50 programs with two now in Phase I clinical trials. We believe that the therapeutics which come out of our discovery engine will eventually play a significant role in helping people benefit from the human genome. With the combination of our personal genome service, our new genomic health services, and our efforts to develop new therapeutics based on genetically validated targets, We believe we are poised to accomplish the full measure of our mission. I now turn the call over to Kenneth to discuss our therapeutics program.

Thanks, Anne. Here at 23andMe, we are passionate about our customer-driven research platform and its potential to yield insights that could transform therapeutic target discovery, drug development, and ultimately benefit patients. Our database is the world's largest crowdsourced platform for health-related genetic research and has the potential to offer unique insights about diseases and how they can be treated. With this resource, we have the opportunity to understand how changes in a gene affect our risk of disease. This is a very powerful way to identify drug targets, and it has been shown that targets backed by human genetic evidence have a significantly higher chance of becoming medicines than those that do not. Our investment this last year in therapeutics has enabled us to achieve several key milestones in our therapeutics business. These include advancing 23andMe 610, our first wholly-owned program, into the clinic. 610 is an antibody that targets the CD200R1 protein which is an important regulator of both T cell and myeloid cell function. CD200R1 was identified as a promising immuno-oncology target from our proprietary genetic immuno-oncology signature that we developed using our large database of genetically linked phenotypes. We presented data on this program at this year's AACR conference in March. GSK is continuing to advance GSK608 in the clinic with plans to test this antibody targeting CD96 in combination with multiple other immuno-oncology drugs. We elected our option earlier this year to transition to a royalty state in lieu of continuing to share costs and profits. And finally, GSK also exercised their option to extend our discovery collaboration for a further year for an additional $50 million. This decision demonstrates GSK's enthusiasm for our collaboration, and the value of our database provides for identifying and advancing new medicines based on human genetics. Our collaboration with GSK has been very productive, and in less than four years, the collaboration has identified over 50 therapeutic targets and jointly advanced one program into clinical development. As we move into this next fiscal year, we plan to continue to advance 23andMe 610 in clinical development, to progress new candidates in research and preclinical development, and to identify new drug targets from our database as the number of genotype customers and associated phenotypic data continues to grow. We believe our growing understanding of human genetics and biology can result in significant value for patients. Now I'll turn it over to Steve to review our financial results.

Thanks, Kenneth. Fiscal year 2022 was a transitional year for 23andMe. It was highlighted by our public listing in June 2021, followed in November by the strategically important acquisition of Lemonade Health, which now underpins our planned introduction of a genomic health service, as Anne discussed earlier. While those were milestone accomplishments for the company, our existing day-to-day operations also made great progress. During fiscal 2022, our personal genomic service or PGS business increased our customer count by 1.5 million genotype customers or 13% to 12.8 million, significantly extending our competitive data advantage. In addition, our active subscriber base in 23andMe Plus grew from 125,000 to 425,000, contributing meaningfully to revenue and gross margin, while also improving on our average customer economics. Our investments in our therapeutics portfolio have increased our pipeline to more than 50 programs, as Kenneth has told you, and we moved a second 23andMe validated program into the clinic. Our research services business will be sustained by GSK's election in January to remain our exclusive data partner for a fifth contract year, which starts in July of 2022 and comes with a $50 million payment, which is double the previous annual payment. This extension is a clear signal of the increased value in our data platform and the insights it can produce. All in all, this was a very productive year strategically and operationally, and we continue to build real value. Now let's turn to financial performance. We'll start off by noting that our 12 month results for the year ended March 31st, 2022 were within our previously issued financial guidance ranges. Our revenue for the three and 12 months ended March 31st, 2022 was 101 million and $272 million respectively, representing increases of 14% and 11 percent, respectively, over the same periods in the prior year. Fourth quarter revenue growth was primarily due to the inclusion of three months of telehealth revenue and higher research services revenue versus the prior year period. These increases were partially offset by lower PGS revenue. Twelve-month revenue growth was primarily driven by the inclusion of five months of telehealth revenue and by increased subscription and research services revenue. Looking at the composition of our revenue, consumer services revenue, which includes both our PGS and our telehealth services, represented approximately 83 percent of total revenue for the three months and 82 percent of total revenue for the 12 months ended March 31, 2022. And research services revenue, which was substantially all from the GSK collaboration, accounted for approximately 17 percent of total revenue for the three months and 18% of total revenue for the 12 months ended March 31st, 2022. Our gross profit for the three and 12 months ended March 31st, 2022 was $47 million and $133 million respectively, representing a 6% and 14% increase over the same periods in the prior year. The improvement in fourth quarter gross profit was driven by the increased revenues previously mentioned, while the 12 month period additionally benefited from cost efficiencies within PGS cost of sales. Operating expenses for the three and 12 months ended March 31st, 2022, were $117 million and $387 million, respectively, compared to $112 million and $302 million for the same period as the prior year. The increase in operating expenses for both periods was attributable to several factors, including increased sales and marketing expenses consistent with the promotional activities of the PGS business, the addition of telehealth operational expenses, increased therapeutics-related research and development expenses, a one-time net litigation settlement payment, and in the case of the 12-month period, one-time transaction costs associated with the acquisition of Lemonade Health. Looking at the bottom line, net loss for the three and 12-month periods ended March 31st, 2022, was $70 million and $217 million, respectively, compared to net losses for the same period in the prior year of $67 million and $184 million, respectively. The increase in net loss for the three and 12-month periods were primarily driven by higher operating expenses, as noted earlier, and in the case of the 12-month period, by a favorable change in fair value of warrant liabilities of $33 million. Next, let us look at our adjusted EBITDA. For details about how we define adjusted EBITDA and related reconciliations, please see our earnings press release. Total adjusted EBITDA for the three and 12 months ended March 31st, 2022, was a deficit of $30 million and $151 million, respectively, compared to deficits for the same period in the prior year of $11 million and $77 million, respectively. The increase in total adjusted EBITDA deficit was driven primarily by the increase in operating expenses mentioned previously. Looking specifically at the adjusted EBITDA for the 3 and 12 months ended March 31, 2022, for the consumer and research services segment, we saw a surplus of $3 million for the fourth quarter and a deficit of $30 million for the full year, compared to surpluses in the same periods in the prior year of $18 million and $13 million, respectively. We note that quarterly adjusted EBITDA for the consumer and research services segment has exhibited seasonal variation, just as the segment's top line does, and is impacted by factors including PGS revenue recognition timing and the pattern of our media spending, which has varied over time. For this reason, we focus managerially on our full year adjusted EBITDA performance. The full year adjusted 2022 EBITDA deficit in this consumer and research services segment versus prior year surplus was driven primarily by the previously mentioned increase in sales and marketing expenses as well as the impact from inclusion of five months of telehealth results. We will continue to work towards returning the consumer and research services segment to cash flow break even and above over time as we expand our consumer offerings with our new genomic health services. We ended the quarter with a solid balance sheet, including $553 million in cash, which provides us with sufficient capital to continue to advance both segments. Now let's turn to our updated guidance. Our full year fiscal 2023 guidance is based on a conservative approach to planning, recognizing the current uncertainties in the general economy and in financial markets. Within the existing consumer businesses of PGS and telehealth, we are prioritizing the minimization of adjusted EBITDA deficit rather than maximizing top-line growth. For those business segments expected to drive future growth, which include the company's new genomic health services and our therapeutics business, we plan to focus on the most strategically and financially valuable options and invest appropriately in each. Because the new genomic health service is not anticipated to fully launch until later in the fiscal year, we do not foresee meaningful revenue contribution from these new consumer products and services within fiscal year 2023. As a reminder, our fiscal year 2023 guidance carries the full year impact of the consolidation of the telehealth business into the company's overall consumer segment. This is only five months in fiscal year 2022. as well as including the current and anticipated effects of general inflation on certain of our costs. With that as background, we are projecting full-year revenue for fiscal year 2023, which will end on March 31st of 2023, to be in the range of $260 to $280 million. We are projecting full-year gap net loss to be in the range of $350 to $370 million. And finally, we are projecting our consolidated full-year adjusted EBITDA deficit to be in the range of $195 to $215 million. With that, I will now turn the call back over to Anne.

Thank you, Steve. As you can see, we have a big agenda for the coming year. We are excited for the challenge and for the opportunity. Our success in this endeavor is a win for millions of people. Now let's open it up for questions.

At this time, to ask a question, please press star 1 on your touchtone phone. If you would like to get out of the cube, please press the pound key. Once again, that's star 1 for questions, star 1. Our first question will come from the line of Tiago Faust from Credit Suisse. Your line is open.

Thanks for taking the question. So just two quick ones for me. So the first one is just on cash run expectations for 23 or perhaps your current cash position and how much runway does that buy you given the current operational plan? And I have a couple of questions on the therapeutic side. Just Any thoughts on any read-through from recent TGET readouts across the space to the CD96 asset? And any expectations of additional programs perhaps entering clinic now that you have 50 active programs? I know it's hard to have visibility, but what could be a reasonable pace going forward? Thank you.

Thanks, Tiago. Let me hand that to Steve to answer the first part and obviously Kenneth to the second.

Yeah, sure. So, you know, starting with the $553 million balance that we talked about, you can kind of put that side by side with the adjusted EBITDA operating cash flow guidance of 195 to 215, and it gives you a sense of kind of what that runway is in terms of if that were the sustained, you know, kind of burn rate for the next couple of years. And so you can kind of look at that. We only give guidance for this one year on that front. But more generally, I would say this configuration gives us a certain amount of time flexibility as we think about funding the company in the future. And I think even though we do have some benefit of time, as appropriate, we'll look at every option that makes sense for us to think about, you know, a next funding for this company. And I think, you know, we'll be opportunistic over time because we do have the benefit of time. And that's, you know, it's kind of the way we're looking at it right now.

Thanks, Steve. Yeah, sure. Thanks, Anne. Yeah, Tiago, maybe I can just – talk first of all, just I think you asked about kind of recent data. You know, one of the pieces of data was Roche reported data for their anti-tigit antibody, both in a trial in small cell lung cancer and then a second trial in non-small cell lung cancer. In the small cell lung cancer trial, that was a negative study. In the non-small cell lung cancer, the study, as you know, didn't meet its co-primary endpoint of progression-free survival. So it's clearly, you know, I think a bit of a disappointment there that Roche did say, and it's obviously hard to interpret, but they did say that, you know, this first analysis, the OS data was immature, the study is continuing, and they also noted there was a numerical improvement in both of the co-primary endpoints. So I think we'll just have to wait and see how that data continues to emerge. In terms of what that means for the CD96 program, you know, as you know from our Immune Oncology signature, the genetics in that pathway are around CD226. And so one of the things that GSK had invested in, not just the collaboration program we had with them on CD96, but also in anti-tigit antibodies with ITOS, and then also an anti-PB rig antibody with surface oncology. And I think, you know, one of the potentially interesting things is the ability to really drug multiple parts of that pathway. You know, the CD96 antibody, as you know, continues in phase one. GSK is now leading that, and they will really be responsible for communication plans moving forward. But hopefully at least that summary is helpful.

Yeah, no, that makes sense. Appreciate that. Thanks.

And then you asked about kind of where things were in the pipeline for Again, in part because of the GSK collaboration, there's not a great deal that we can say about programs, but obviously we do have, so we've identified 50 targets from the database, so we have many programs in our portfolio. And so I think, you know, I remain optimistic about continuing to advance those, but we haven't provided any further guidance on when we would expect, you know, next IND or next Phase I program. We're really working very hard and very excited about the CD200R1 program which, as you know, started these one studies in January of this year.

Got it. No, that makes sense. Thanks again for taking the question.

Thank you. Our next question will come from the line of Daniel Grosslight from Citi. Your line is open.

Hi, guys. Thanks for taking the question. Maybe we can go back to guidance for 23 and it helps kind of bridge some of these numbers for me. So it seems like you're titrating growth down as you focus more on profitability, which makes a lot of sense. So revenue at the midpoint is effectively flat, but it does also include a full year of lemonade revenue. So kind of that core organic revenue is going to be down for the year. And then adjusted EBITDA loss is also increasing by around $50 million for the midpoint, so it doesn't seem like you're getting the immediate impact of titrating some of the consumer growth down. So I assume that the increase in the loss is due to increased therapeutics and this new genomic health service investment, but maybe if you could put a finer point on that and help between the slowdown in revenue growth organically and the expansion of the loss in 23.

Absolutely. Let me hand it to you, Steve, first.

Yeah, for sure. Yeah, so, you know, as you noted, the top line comes with a full 12 months versus just five months of this year of the top line of telehealth. It also comes with a full year of the bottom line, of telehealth. So that's part of what gives rise to that difference. And that's, you know, that'll hit the consumer research services segment component of EBITDA. And as you noted, you know, we have, you know, a continually growing investment on the therapeutic side that's giving rise to part of that. The other thing that's going on here is that we have You know, we have just the inflationary costs on our labor base, which, you know, is running at a higher rate in terms of merit and promo and all of those things across the entirety of the company, you know, during this inflationary time. And so that's going to run really throughout the business. And so and then in terms of like specifically how the work that we'll do to launch the new products, while there will be some modest incremental hiring, I think the effects of actually getting that launched and getting that out there won't be as big an impact, for instance, as just taking on the full 12 months of the telehealth business, operating expenses and that sort of thing. So just to put those in relativity.

Yeah, that's helpful. Okay, and I just want to understand this new genomic health service a little bit better. Is this the service that connects the 23andMe report readouts with a Lemonade provider, or is this something in addition to a Lemonade provider that you're going to be investing in?

It is really about connecting. The first step, I would say, is really about connecting our customers as well as future customers with a care provider if they want to be able to best interpret, to best help with the information. And I think part of that also gets people onto a plan for how do you actually implement this information into your life. So we look at, we said this also as part of our SPAC process, like the beginnings with the subscription product and how do we actually really enhance that more and more with part of the lemonade acquisition with access to the healthcare providers as well as the pharmacy component and being able to really do pharmacogenetics. So we recently launched a very beta product with a couple reports giving access to care, and I think you can imagine that we will have a more comprehensive offering later in the year, early next year, with respect to how do we really, you know, help our customers and future customers get access to a care provider to, you know, follow the whole kind of plan.

That makes sense. And so what would the economic model there be? Would I have, like, a button on my 23andMe app that says connect to a care provider and then, you know, you charge me $50 or something for that or is it a subscription? How are you thinking about monetizing that?

Yep. I mean, I think that's your tapping. I think that is what is happening today. So I don't know if it's not rolled out to 100% of our customers, but there's beta testing right now with some of our customers saying, what are the types of services you want to get? Like I said, I think that you can expect us to be doing and investing a lot more work into our subscription programs. So I think that's where, you know, fundamentally when I think back on the last 16 years with the company, And our engagement rates, we have incredibly high engagement. People come back over and over again. And so there's clearly a demand where people want more. And so when I think about ability for us to provide care services, it's not always, you know, having to talk to a coach, but it could be various online services that are, you know, directed by a medical professional that help you really take advantage of the information. And again, the focus for us really has been on that unmet need of prevention and And if you look at a lot of our reports, they really help people open up the door to saying, you know, you don't yet have a condition, but you have the opportunity to potentially prevent. So how can we now help you implement that into your life?

Yep. Okay. And then on the lemonade piece of the business outside of this new service that you're building out, but kind of the core lemonade or I would say legacy lemonade, there's obviously been a lot of, and Steve, you mentioned this too, inflation issues. in CACs and especially when you're talking about marketing direct to consumer and some of the social and search channels that has weighed on all of the DTC oriented company results. How are you thinking about spend in some of the legacy lemonade channels to acquire customers, particularly mental health and some of these other very competitive spaces which have really deteriorated unit economics in this space?

Yeah, let me answer that to begin with and then hand it over to Steve. I would say the reason, again, for us buying Lemonade was really to get that infrastructure and all those pieces in place so that we could execute on genomic medicine. And I absolutely, like I hear you in terms of, you know, CAC going up and, you know, it's more competitive. The differentiator that 23andMe has is the connection to your genome and the 13 million customers we have that are quite engaged. So when I think about the opportunity for us, it's really about delivering personalized care, personalized recommendations that integrate genetic information, and there's no one else really in a position to do that. Steve, do you want to jump in if there's anything else specific in terms of numbers?

It's the number one category that we focused on at the increment in setting up the, you know, the plan for this year. And, you know, as I mentioned in the guidance, I mean, we're, you know, we're not planning on anything material coming from the new businesses this year as Anna and the team get those built and tested and rolled out. And so we're the legacy businesses as they're currently configured are the are the drivers of the top line and the way that we're resourcing them. And there is inflation in media spend, and we've taken that into account in looking at the efficacy of our media spend, and I think we'll be dialing that back a little bit. As you noted, and as we've talked about, we're emphasizing cash efficiency in this business over just pure top line growth this year.

Yep, got it. And last one for me, and I'll hop back in the queue here. Just on the CD96 asset, are you still expecting a readout this year on CD96? I think GSK filed or noted on our latest call that it's now kind of pushed out a little bit, but that might be a different combo trial. So I'm just curious if that CD96 readout is still expected for this year.

Kenneth, why don't you go? Yeah, so sure, happy to do that. Thanks. So I think, you know, as you know, GSK is now solely responsible for the continued development of GSK-608 against CD96. And so they are going to be responsible for communicating their plans. You know, what I think we can say is that the studies continue to enroll. And so, you know, I really don't have further details on that.

Okay. Thank you.

Thank you. I'm not showing any further questions in the queue at this moment. I'd like to turn it over to Wade for any additional comments.

Thank you, Victor. We have a few questions from investors through our online platform. I'm going to take some of the top questions here, and we'll answer these. The first question is, what are the future plans for 23andMe? Do you have ideas for creating future products, and do you have any plans to modify your current products?

Yeah, I can take that, and I think if I catch the gist of the program, I mean, we definitely feel like there's an amazing opportunity to evolve the product. And I would say the rise of telemedicine, the rise of even online pharmacy has really opened up the door where people are comfortable and used to this kind of interaction with health care providers. So we have always seen this vision of how can we best serve our customers by giving them genetic information and helping them have the next steps they can take. and it's been a challenge with physicians having a lack of reimbursement on consults around genetics and lack of training. So we have this opportunity now, I think, to really create a full-stack product where people can get access to the information, they can learn about it, they get ongoing information, we will help them integrate it, and as well as they will have direction from health care providers So I think there's a real opportunity to have a full-stack, really integrated experience, and that's what we are focused really on building out for the next year.

Thanks. Our next question is, how are we planning to compete with Ancestry and their subscription revenue? Our customers seem to be one and done without much incentive for additional spending. How are we addressing this?

I would say we're quite different from ancestry. I mean, ancestry really is solving a specific need, which is about getting your records. And while 23andMe has a significant ancestry component about finding your relatives, I would say that what we're very much focused on is the larger market, which is the health market. So how is it that people can continue to learn about themselves, learn about important health information as it's discovered and as it comes out, and then really integrate that in our life? And so when we see the customer engagement levels that we have, people come back, obviously, for new relatives, but they really come back as well for the new health reports. So more and more we're emphasizing that way, and I think that there's... But while Ancestry and 23andMe both leverage genetic information, we leverage it for very different purposes, and I would say the health market, from all the analysis we've done, appears to be a larger market.

Thank you. The next question is, As 23andMe is already experienced in the field of genotyping DNA, are you at all interested in investing in the gene editing field or partnering with the company involved in the space?

Well, I would actually look to Kenneth. Gene editing is a phenomenal tool that I could see one day definitely having applicability with our therapeutics team. So I don't know if there's anything else you want to add to that, Kenneth, but it's a great tool that we could potentially leverage one day for our own kinds of research.

Yeah, so happy to respond. Yeah, I mean, it's a very exciting space, I think, as people know, in the CRISPR-Cas9. There are multiple different types of gene editing tools. Obviously, we get genetic insights from our database and where we thought there was something that, you know, could have the potential to have an impact on patients' lives, and it would involve something like gene editing. I think in that case, you know, we might look for opportunities to partner with other companies Today, we have the GSK collaboration, which is exclusive with GSK. And they, as you know, they're not a gene editing company. So I think it would be more of a long-term thing for 23andMe rather than something in the near term, but absolutely something that we continue to monitor and observe, and we'll look for those kinds of opportunities.

Thank you. The next question is, where do you see the company in five years?

What a great question. I love that kind of vision because that is absolutely what we are building for. Over the long term, how are we actually really making a significant impact in our customers' lives as well as the healthcare system in general? I believe strongly that the expertise that 23andMe is bringing here is how to interact directly with our customers, how to engage them, and genomic medicine expertise. So when I think about the opportunity over the next five years, it's really about how does 23andMe bring genomic medicine to everybody. And some of it's going to be direct to consumer, but some might be through additional channels. But everyone, when I talk to healthcare providers, everyone can agree that one day the human genome is going to be part of care. It is already an incredibly meaningful tool that could be applied today. throughout all aspects of care. So how are we going to get from the moment today where very few people are actually getting genetics integrated in their care to a world where it is universal and everyone has the opportunity for truly personalized care?

Thank you. It's very exciting. The next question is about asking about when we'll know more about the current testing of Chem8 drugs. And I think they're referring to the drugs in clinical testing right now. And Kenneth, I know you already answered that question about GSK-608. So maybe you could just speak for a second about our wholly-owned program, 23andMe 610.

Sure, happy to wait. So yeah, so 23andMe 610, It's an antibody that targets the CD200R1 program, which we think is important based on our Immune Oncology signature and our biology data in Immune Oncology. That program entered the clinic earlier this year. We announced in January 2022 that we had initiated clinical trials. We continue to enroll patients, and the trial continues, you know, to make the progress as expected. We're excited, obviously, to continue to advance that program forwards. And then, as I referred to earlier, you know, we have a – one of the things that's really unique about 23andMe is that we have a portfolio of programs. Some of those are – most of them are in collaboration with GSK, but also some that are wholly owned assets for 23andMe. And so just looking forward to continuing to move those, to advance those. They're the most compelling with the highest probability of success towards the clinic and then ultimately into clinical development.

Thanks, Kenneth. Next question is, what are your plans to make the company more profitable for stockholders?

A couple things, and I think that I can also hand over to Steve. I think, one, 23andMe has been really focused on making sure that we are efficient with how we're using all of our resources and making sure that we are really maximizing a lot of the value we have, especially out of everything that we have recently acquired with Lemonade. Second, it's absolutely clear to me that there is an opportunity to develop additional products that really serve a need in the healthcare world and the consumer world that are founded in genetics. And I see the beginnings of our subscription product and the opportunities for us to really enhance that and add a lot more that serves a real need for our customers as well as the healthcare system in general. Um, obviously on therapeutics, that is a longer road, but there is a very clear and well-defined path when you do have successful compounds. So we're investing and we believe with strong conviction around the pipeline we have, especially having a, uh, you know, coming from a human genetic target. So when I look at dust, but the three prongs here, one is really being very efficient with how we are using our resources. Two, really creating products that are going to solve an incredible opportunity and a need for our customers as well as the healthcare world. And three, really continuing on our path for developing therapeutics that we believe will have a higher likelihood of success because of the Genetic Foundation. Anything to add there, Steve?

Just a couple of things to put a finer point on it. You know, when we look at – I mean, we got this business to – we got the consumer business in fiscal 21 to above break-even on an operating cash flow basis. And one of the ways that happened is that we were much more efficient in the marketing spend category in terms of the relationship between marketing spend and how much revenue we were driving. And I think – so I think one of the keys lies in there, and I think the driver of that will be that that segment becomes more driven. The consumer part of that segment becomes more driven by product than it does by marketing. So super important concept there. And then I think scale to the top line, you know, returning back to, you know, a good growth profile as the new products roll out late in the year, also super important because we have some fixed costs in GNA and some of the technical functions in the consumer segment that are, you know, there's a minimum size to them to run the infrastructure. So those are both super important to get that. And that's our first order of business to get that segment back to contributing cash to the company.

Thank you. I think we'll take one more question here and then wrap it up. The last question is, are you entering any new partnerships?

I don't believe there's anything else that we can announce right now, but we are always looking at ways that we will be able to enhance our customer offering. And I would say after, you know, in the post-GSK world, we will definitely think about ways that we can continue to enhance our research-related partnerships. So partnerships is always top of our mind. We're always evaluating opportunities, but nothing today for us to announce.

All right, thanks. I think with that, we'll wrap up the Q&A, and I'll turn it over to Ann to wrap up the call.

Just want to say thank you to everyone for joining, and we look forward to talking to you next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.