Personalis, Inc.

Good day, and thank you for standing by. Welcome to the Q2 2022 Personalist Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Caroline Corner, Investor Relations. Please go ahead, Caroline.

Thank you, Operator. Welcome to Personnel's second quarter 2022 earnings call. Joining me on today's call are John West, President and Chief Executive Officer, Tashi Banna, Chief Financial Officer. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of U.S. securities laws. For example, any statements regarding trends and expectations for our financial performance this year and longer-term 2022 cash use, cash runway, the timing for initiating clinical revenue from our new facility, new orders, products, services, technology, clinical and regulatory milestones, and our market opportunity business outlook. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with the SEC, including the risk factors described in our 10Q for the second quarter of 2022, to be filed today. Personnelis undertakes no obligation to update these statements, except as required by . Our press release with our second quarter of 2022 results is available on our website, www.personnelis.com, under the investor section, and includes additional details about our financial results. Our website also has our latest SEC filings, which you A recording of today's call will be available on our website by 5 p.m. Pacific time today. Now I'd like to turn the call over to John for his comments on second quarter business highlights.

Thank you, Carolyn, and good afternoon, everyone. I'm pleased with our progress this quarter as we drove growth from our oncology business by 74% over the same period of the prior year. This reflects increasing demand for our highly differentiated and comprehensive cancer tests. Our pharmaceutical customers are increasingly seeing the value of our platform, and they are incorporating it in their clinical trial designs right from the start. In fact, approximately two-thirds of our backlog or orders received for which we are awaiting samples is for prospective trial patients. Prospective trials are conducted with current patients who are being followed over time. whereas retrospective studies are based on patient samples collected in the past. In addition, we remain focused on preparing the company for success in the clinical diagnostic market, which I will highlight later. Our customer base continues to broaden. More than 70 customers have now ordered services using our Next platform, including most of the top 10 global pharmaceutical companies as measured by their annual revenues. We are also in discussions with several potential pharmaceutical customers about Next Personal, our MRD test, and our funnel of business opportunities continues to expand. We expect biopharma orders for Next Personal to ramp throughout the remainder of this year, with the potential for significant revenue acceleration in 2023 and beyond. Our next platform provides biopharmaceutical customers with the most comprehensive analysis of tumor burden and biomarker identification available today to provide a better understanding of each cancer patient's genetic profile. We also believe that tissue and liquid biopsies together can provide a more complete view, leading to optimal therapy and treatment decisions. Our tissue and liquid biopsy-based offerings provide data on all of the approximately 20,000 human genes, a breadth and depth that notably differentiates us from competitive offerings. Tissue samples give us access to RNA, which can indicate certain tumor drivers, and to the immune cells, which may have infiltrated a patient's tumor and can indicate therapy response. By analyzing liquid biopsy samples, we can provide information about a patient's tumor across multiple time points from small blood samples. Next, personal has been optimized for maximum sensitivity, particularly for when the amount of tumor DNA in blood plasma is very low, such as in early stage cancer, after surgical resection, or in patients with complete response to therapy. We believe that the earlier you can detect cancer recurrence, the better your odds of beating it. This simple concept has driven intense efforts to improve cancer diagnostics. Next generation sequencing has proven transformative in this respect, enabling highly sensitive detection of fragmented tumor DNA and blood plasma. We have focused on what this technology can do for the detection of molecular residual disease, MRD, the detection of very few cancer cells that have so far survived therapy and persist below the detection threshold of conventional technologies. But while these advancements are cause for excitement, caring for cancer patients requires more than early detection of recurrence. It also necessitates data for long-term management. Our next personal design also provides that information. Even when a tumor is caught early and successfully eliminated, survivors are at a substantially increased risk of developing secondary cancers. This is because treatment rarely addresses the underlying cause of the malignancy. Next Personal has been designed to look for both recurrence of a prior cancer and the possibility of a new cancer. With more than 20 million cancer survivors in the United States alone, there is a significant population in need of ongoing detection and careful, active, long-term management. In recognizing the fast pace of technological innovation, Personnel's ethos has always been to build for the future. This ethos drove us to develop NexPersonal, one of the world's most sensitive MRD assays, which can detect circulating tumor DNA with 10 to 100-fold increased sensitivity relative to contemporary tests. But NexPersonal wasn't built just to detect cancer recurrence as early as possible. It was built to help cancer survivors actively defend their health by tracking both relapse and secondary tumors. The Next Personal platform is built to integrate custom content based on each patient's individual tumor, as well as fixed content that's common across tumor types. By capturing such a broad swath of data, Next Personal generates critical molecular information that may guide therapeutic decision-making. Our objective is to provide oncologists with information needed for them to advise on the optimal course of action for patient treatment. Next Personal, therefore, provides DNA sequencing coverage of variants, which may indicate drug therapy options, response to therapy, or emergent resistance to therapy. We consider this approach not just tumor-informed but comprehensively tumor-informed. To that end, we have recently been issued an additional U.S. patent for our novel methods for detecting molecular residual disease, MRD, and recurrence by using whole genome sequencing of a patient's tumor to identify variants with a personalized liquid biopsy assay. I am pleased that our team has been recognized for our innovation with the granting of this new patent. In addition, we announced yesterday that we have filed a lawsuit against Foresight Diagnostics for patent infringement in the U.S. District Court for the District of Colorado where Foresight is based. The suit is based on this new patent, along with two other U.S. patents issued to Personalis. These three patents span two separate patent families, which claim priority back to 2013 and 2016, respectively. While we will not be discussing any further details regarding this litigation in today's call, I will say that, as we indicated in our press release yesterday and our recent blog post, Personalis is a pioneer in the field of leveraging whole genome sequencing for medical applications. And we have invested hundreds of millions of dollars in research and development across a broad array of disciplines since the company's founding over a decade ago. And I can tell you that we stand firm in our resolve to protect that investment and our leadership position in the field. I would now like to comment on our recent progress and some of our planned milestones regarding our clinical diagnostic efforts. Although we have slowed hiring in general, we are selectively hiring staff with clinical and medical experience within a diagnostic setting as we prepare for our clinical launch. In support of our new diagnostic business, we're also incorporating clinical protocols in our new facility, and we remain on target to begin moving in during late Q3, conducting clinical qualifications during Q4, and initiating clinical revenue from our new facility in early 2023. We are also making progress to complete a validation study for our next EX test, which is our tissue-based diagnostic offering based on our next platform. We expect to use this validation data to apply for a New York State regulatory approval and to submit to the Palmetto Mold EX technology assessment process later this year. with the aim of receiving a favorable reimbursement ruling from Moldy X in early 2023. Our medical affairs team continues to forge relationships with world-class medical institutions. These relationships are critical as the cancer centers of excellence set the standard of care. We're in discussions with multiple institutions and will provide further updates in the future. With all of our progress on the mentioned milestones to date, We expect to be well positioned for entry into the clinical diagnostic market using our comprehensive tissue-based NexDx test. And we expect to begin selling a small volume of these tests to oncologists before the end of this year. In addition to NexDx, we're also planning a laboratory-developed test, or LDT version, of our MRD test, NexPersonal, and expect to complete this milestone in 2023. We expect clinicians who begin using our NextDx test may later also use our NextPersonal test, since the two can provide complementary information. We expect that the path to reimbursement for our NextPersonal LDT will also begin via assessment by the Palmetto-MullDx program. Recently, we added Lani Schaaf to the Personnelist Board of Directors, and she brings extensive clinical diagnostic experience from her executive roles at Thermo Fisher and Roche Diagnostics. Welcome, Lonnie. Finally, I want to briefly comment on the exciting wave of breakthroughs in DNA sequencing technology that have been announced this year and what it could mean for personnel. We have been an early access customer of Ultima Genomics, for example, which is at the forefront of realizing the $100 genome. Most personalised products are large-scale, using either deep exome or whole genome sequencing. We built our platform expecting that the throughput and cost of sequencing will decrease over time. As that happens, and because of the size of our platform, we think we can benefit more than other companies whose products may use much less sequencing. New sequencing platforms focused on high throughput at lower costs potentially give us opportunities to reduce the cost of our large assays. In summary, our team continues executing on our strategic priorities and growing our oncology business despite some economic headwinds that Erin will comment on. Customer adoption of our next products has been excellent, and we continue to drive further adoption and increase penetration with new and existing customers. We have compelling products and pipeline efforts for both biopharma and clinical diagnostic test markets, and we have a strong balance sheet positioning us for both near and long-term growth. With that, I will now hand it over to Aaron for our financial results.