23andMe Holding Co.

Hello, and welcome to 23andMe's fiscal year 2024 first quarter financial results conference call. As a reminder, this call is being recorded. At this time, all participants are in a 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 Katie Watson, Vice President of Communications at 23andMe, 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 first quarter. 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 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 a 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 U.S. GAAP may be found in our earnings release. Joining us on our call today are Ann Wojcicki, our Chief Executive Officer and Co-Founder, and Joe Salsavage. our Interim Chief Financial and Accounting Officer. Kenneth Hillen, our Chief Therapeutics Officer, will join us for Q&A. I'd now like to turn the call over to Anne. Thank you, Katie.

During our first fiscal quarter of 2024, we continued to make progress on advancing our therapeutics business and executing on our consumer strategy by providing additional customer value and expanding our product margins. 23andMe concluded the exclusive drug discovery phase of our GSA collaboration in July, and we now look forward to opportunities to work broadly with a number of therapeutics partners to enable genetic-based drug discovery. The collaboration was a large success, combining the unique skills, resources, and scientific expertise of both companies to generate more than 50 therapeutic programs. We will continue to advance a number of ongoing programs both collaboratively and independently. 23andMe is now focused on partnering with multiple therapeutics companies for target discovery. During the GSK partnership, we validated the enormous potential for 23andMe to aid with therapeutic discovery and we feel confident in our ability to work both independently and with a number of partners going forward. We are now actively pursuing new opportunities with pharmaceutical and biotech companies. Details on future collaborations will be shared as available. With the end of our GSK drug discovery period, it was important for the company to reassess our overall therapeutic strategy and resourcing. Over the last five years, we have built a large infrastructure to support the work of the collaboration. and we recognized the need to right-size and realign the business to set us up for long-term success. Based on this, today we significantly restructured our therapeutics organization, which included a reduction in workforce. 71 employees, or nearly 50% of our therapeutics organization, were impacted. To remind our investors, in June, we announced that we reduced the size of the consumer and G&A team by 9%. Overall, we have reduced headcount by nearly 200 people since April 1 of 2023. We have a clear and focused plan for the therapeutics business, one that will enable us to focus in two areas where we believe our data insights provide us with the greatest strategic advantage. The first is to focus on continuing to advance our wholly owned immuno-oncology assets. We continue to be pleased with the progress of patient enrollment in the Phase 2a portion of our Phase 1 slash 2A clinical trial for 23andMe 610 and hope to share additional scientific information on the program at a medical conference later this calendar year. We are also excited to announce today that we are progressing a second IO antibody asset, one that targets solid tumors through a novel mechanism that enhances natural killer cell mediated anti-tumor activity. We intend to provide an update on this program at a later date and continue to explore various options, including potential partnerships. The second area is to tailor the Therapeutics Discovery Organization to focus on the immunology and inflammation therapeutic area. We are excited about the strength and breadth of our data in immunology and inflammatory diseases and are looking to position a number of our leading immunology therapeutics programs to advance them toward the clinic. A smaller, more focused therapeutics organization allows us to reduce our cash burn and provides the overall business with a longer cash runway. In addition, effective today, Kenneth Hillen will be stepping down as Chief Therapeutics Officer with the intention of retiring from 23andMe on February 8th. He will continue to provide support through the transition. I'm pleased to announce that Bill Richards will be stepping up to lead our discovery organization as head of therapeutics discovery, and Jennifer Lowe will continue to serve as head of therapeutics development as we advance our pipeline. Both will be reporting directly to me. Shifting to our consumer business, we remain focused on increasing product margins and delivering long-term customer value. In May 2023, we increased the price of our 23andMe Plus subscription for new members. and we are seeing positive results. Last month, we also increased the price of our PGS kits. These updates are part of our ongoing strategy to improve product margins through higher average selling prices and marketing efficiency. We continue to grow our customer base and expand our unique crowd source platform of genetic and phenotypic data contributed by our engaged customers. This past quarter, we added to the value of our 23andMe Plus subscription by launching three new polygenic risk score reports for depression, lupus, and panic attacks. We now provide subscribers with a 38 reports on important conditions that have an impact on millions of customers. We remain focused on delivering member exclusive premium insights and features that allow our subscribers to take action to improve their overall health. With Lemonade, we offer pharmacy and medical services in 50 states and continue to meet the demand of customers looking for help with ED, hair loss, mental health, and other conditions. Lemonade is a key part of our future strategy that integrates 23andMe genetic information with medical services, allowing customers to take actionable next steps. Over the past quarter, we also added finer ancestry composition details for our PGS customers, including indigenous American and indigenous Caribbean populations. Our ancestry service now offers ancestry composition for 2,500 geographic regions. Last week, Science Magazine featured a cover story on groundbreaking research led by our 23andMe research team, along with collaborators at Harvard and the Smithsonian. on ancient DNA collected from the Catoctin furnace site in Maryland, where enslaved and free African Americans labored in the 18th and 19th centuries. Using the ancient DNA and the 23andMe database, 23andMe and Harvard researchers were able to find connections between the Catoctin individuals and more than 40,000 of their living relatives. This research demonstrates the power of DNA to fill in gaps previously erased by atrocities like the slave trade and the benefit to living individuals to learn of potential connections to their past relatives. In addition, this past quarter, our research service group launched a sickle cell carrier status awareness program with Morehouse School of Medicine, Sickle Cell Foundation of Georgia, aiming to increase access to information on sickle cell carrier status and offer resources to individuals with sickle cell trait and sickle cell disease. We would be remiss not to talk about AI, large language models, and our strategy at 23andMe. We are well positioned to capitalize on AI advancements given our unique database of human genetic and health information. 23andMe has the largest recontactable database of human genetic data with self-reported phenotypes, with over 14 million customers and growing annually. We believe AI is going to play a significant role in the future for both the consumer and therapeutics businesses. At 23andMe, we have always recognized that genetic data serves as the cornerstone for a deep and meaningful understanding of health. Our growing database has reached a scale that can truly empower emerging AI models. In the same way that we led the charge in large-scale consumer genetic testing, we are now positioned to bring AI to bear into healthcare and research. We see opportunities in uncovering completely new patterns and relationships that can help prevent, diagnose, or treat a range of conditions, and making genetics and preventative health far more accessible and scalable to our customers through the application of large language models. And with that, I'll turn the call over to Joe to review our financial results for the quarter. Thanks, Anne.