23andMe Holding Co.

Hello and welcome to 23andMe's fiscal year 2024 second 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 prepare me remarks, there will be a question and answer session. I would now like to turn the call over to Ian Cooney, Senior Director of Investor Relations 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 second quarter. A replay of today's webcast will also be available on our website. 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 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 Anne Wojcicki, our chief executive officer and co-founder, and Joe Selcevich, our interim chief financial and accounting officer. Bill Richards, our head of therapeutics discovery, and Jennifer Lowe, our head of therapeutics development, will join us for Q&A. I'd now like to turn the call over to Anne.

Thank you, Ian. To kick off the call, I would like to start with an update on our strategy. 23andMe's mission has always been to help people access, understand, and benefit from the human genome. The 23andMe brand is most known for how we transformed access to genetic information and enabled over 14 million people to learn about themselves, their ancestry, and their health risks. Over the last five years, we have increasingly put more effort and resources into how customers will benefit from the human genome. Over 80% of our 14 million customers trust and consent to using their genetic information and phenotypic insights for research, creating the world's largest set of recontactable genotypic and phenotypic data in the world. We have a world-class team of statistical geneticists, bioinformaticists, computational biologists, and data scientists leveraging the data to create consumer products and discoveries for therapeutic development. As a reminder, we have three main businesses powered by our database in creating a new future for healthcare powered by DNA. First, our consumer business, where we are taking a precision health approach and generating insights to help customers improve their health and health span based on their unique genotypic and phenotypic profiles. We are moving toward a more subscription-based longitudinal model so we can have a positive impact and help our customers take action to improve their health over time. The subscription business also offers a much more sustainable and attractive operating model for us to create value for our customers and investors. Second, our research business. This is where we are in discussions with collaborators in pharma, biotech, and adjacent industries to sell them licenses to our database. They can then come up with their own insights to help make drug discovery and development more efficient. or care delivery more effective. And third, our therapeutics business, where for the past seven years, we have interrogated our database to pursue targets and develop therapeutics that will hopefully one day help many of our customers directly. We currently have one immuno-oncology asset in the clinic in phase 1 to A with encouraging early efficacy activity. Another IO asset with a particularly exciting profile and a pipeline of molecules targeting immunology and inflammation in the discovery phase. We focus the business on creating value from our dynamic data assets and expect to continue to do so in the future. As we move toward building a model that helps our customers take action from their genetic and health data, we aim to meaningfully increase the percentage of subscription-based offerings so we can provide long-term value and insights to our customers. As therapeutic assets develop, we expect to partner them out to create near-term and longer-term value inflections for our shareholders, while also getting them in the best hands to develop through approval and commercialization for the eventual benefit of our customer. Moving to the second quarter and recent events. Yesterday, we launched a new subscription membership called Total Health, a continued effort to be the world's best at risk prediction. Total Health is our most advanced prevention-based health membership. It includes clinical-grade exome sequencing, biannual blood testing, and access to clinicians with unique training in genetics. Members of Total Health will also receive all the reports and features offered in our existing 23andMe Plus membership. Through the combination of comprehensive genetic data, blood biomarkers, personal and family health history, and genetics-trained clinicians, Total Health will provide members with personalized guidance for ongoing disease prevention and early detection. This membership is for the consumer looking for access to advanced genetic risk testing so they can focus on ongoing health management through direct access to mitigate or prevent disease. This is precision health with the support of a clinician who specializes in genetics. In addition to the launch of Total Health, we continue to add more value to our 23andMe Plus membership. Last month, we introduced 23andMe Health Action Plan, a new digital feature that draws on your personalized genetic reports, health history survey data, as well as blood and biomarker data to provide tailored bite-sized health recommendations for subscribers to take action. In addition to suggestions on altering activities like sleep, diet, and exercise, eligible members may also receive recommendations for further clinical actions, like getting a blood test, which now can be ordered directly through 23andMe. We also recently launched 23andMe HealthTracks, a digital health tool aimed at driving behavior change by integrating lifestyle and genetics into a single model for the first time. In July, we launched a new FDA-cleared pharmacogenetics report for 23andMe Plus members on a commonly prescribed statin called Simvastatin. In 2020, about 8 million people in the U.S. were prescribed Simvastatin, making it among the most prescribed medications in the U.S. This new report allows people to understand how their genetics may impact how they respond to the statin and whether or not they may experience side effects. We had another milestone FDA clearance in August to report additional BRCA variants for all 23andMe Health Plus Ancestry customers. This allows us to report 41 additional variants in the BRCA1 and BRCA2 genes known to be associated with higher risk for breast, ovarian, prostate, and pancreatic cancer. Many of these additional variants occur more often in populations that have traditionally been underserved by genetic testing, including the African American and Hispanic Latino communities. As part of the FDA clearance, we were also granted the first ever FDA predetermined change control plan, allowing us to update our BRCA report with additional validated variants without additional premarket review. You can begin to see the significant investment we've been making in our product and report innovation within our consumer business over the last few months. This includes continuing to provide value in the form of membership services while expanding margins. We've seen better than expected results after increasing our kit and subscription pricing, with higher margins partially offsetting reduced kit sale volume. Transitioning to therapeutics. We completed the restructuring of the organization with a clear focus on the areas where we believe our data insights provide us with the greatest strategic advantage. This includes continuing to advance our immuno-oncology assets, certain programs stemming from the GSK collaboration, as well as focusing on the immunology and inflammation therapeutic areas. This allows us to pursue the most impactful programs in the most efficient manner in terms of capital and resources. In Q1, we discussed pursuing non-exclusive collaborations with pharmaceutical companies for target discovery. We continue to pursue these collaborations across an array of structures and are excited about the opportunity to attract multiple and varied partners in this business. Last week, we announced progress in this area with a new one-year non-exclusive data license with GSK, which extends our collaborations. Under the agreement, we will receive a 20 million upfront payment, which enables GSK to conduct drug target discovery and other research using the 23andMe database. The license also includes access to certain research services, such as further analyses of the 23andMe dataset not provided in the core data release. The collaboration with GSK has been hugely successful, and this collaboration extension validates the power of the 23andMe database to consistently produce novel insights for therapeutic development rooted in human genetics. As part of this agreement, we have made the strategic decision to take the royalty option in lieu of the opt-in on three programs we previously initiated together, which will help us reduce our cash burn and allow us to focus on our wholly owned programs. We also continue to advance our pipeline of clinical and preclinical programs. Last week, we presented positive safety and preliminary efficacy data from the phase 1 slash 2A clinical trial of our wholly-owned immuno-oncology program, 23andMe 610, an antibody targeting CD200R1. In two presentations at the Society for Immunotherapy of Cancer, an annual meeting, we showed the therapy is well-tolerated at our highest dose level. We also reported stable disease in 52% of response of valuable participants in our phase one dose escalation portion of the study. This includes preliminary clinical activities of 23andMe 610 and a patient with neuroendocrine cancer showing a maximum reduction of 19% in target lesions with a single lesion achieving a sustained 58% reduction in the longest dimension. The participant continues on study drug past 40 weeks with stable disease at the time of data cutoff. Overall, we've demonstrated that 23andMe 610 is well tolerated and shows promising preliminary efficacy in patients with advanced solid malignancies. We are continuing to enroll the Phase 2a portion of the trial and anticipate reporting further data next calendar year. We are also continuing to advance a preclinical program, P014, an investigational antibody that has dual mechanisms, targeting ULBP6, 5, and 2 to restore anti-tumor immunity through NK and T cells and inducing FC receptor-mediated killing of ULBP2, 5, 6 expressing cancer cells. With these programs advancing, the extension of our GSK collaboration and our streamlined focus on immunology and inflammation, we're excited about the progress and direction of our therapeutics group. In closing, I'd like to provide a brief update on the ongoing cybersecurity investigation that we initiated early last month. Detailed information can be found in an 8K we filed with the SEC and on our blog. At this time, we do not have any indication that there has been a data security incident within our own systems. Data privacy and security remain a top priority. We have recently required all customers utilize two-factor authentication, and we will continue to invest in protecting our systems and data. And with that, I'll turn the call over to Joe to review our financial results for the quarter.