Personalis, Inc.

Good day and welcome to the Personalis second quarter 2024 earnings conference call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the call over to Caroline Corner investor relations. Please go ahead.

Thank you, operator. Welcome to Personalis' second quarter 2024 earnings call. Joining today's call are Chris Hall, Chief Executive Officer and President, Aaron Tashibana, Chief Financial and Chief Operating Officer, and Rich Chen, Chief Medical Officer and EVPR&D. All statements made on this call do not relate to matters of historical fact should be considered forward-looking statements within the meaning of U.S. security laws. For example, any statements regarding trends and expectations for our financial performance this year and longer term, cash runway, revenue expectations and timing, reimbursement goals, size and booking of orders, products, services, technology, clinical milestones, the outcome and timing of reimbursement decisions, expectations for existing and future collaboration activities, cost expectations, our market opportunity and 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 SEC, including the risk factors described in our most recent filings. Personalis undertakes no obligation to update these statements, except as required by applicable law. Our press release with our second quarter 2024 results is available on our website, .personals.com, under the Investors section that includes additional details about our financial results. Our website also has our latest SEC filings, which we encourage you to review. A recording of today's call will be available on our website by 5 p.m. Pacific time today. Now I would like to turn the call over to Chris for his comments and second quarter business highlights.

Thank you, Caroline. Good afternoon, everyone, and thank you for joining us. I'm very proud of our team at Personalis as we continue to fight cancer and help patients with our novel technologies. For those of you joining one of our calls for the first time, welcome. Personalis is one of the leaders in the fast-growing MRD testing market. MRD stands for minimal residual disease and involves using blood, which is commonly called a liquid biopsy instead of imaging or invasive biopsies to monitor therapy and to detect cancer recurrence after treatment. The MRD market is expected to mature into a $20 billion market, and with our first of its kind, ultra-sensitive MRD test, Personalis has emerged as a leader in this space. Our technologies are able to spot cancer when there's only about one fragment of tumor DNA circulating in a million DNA fragments in the blood. Our platforms are used by many of the world's top biopharma companies to improve clinical trial results, find new ways to personalize treatment, and power a new generation of therapies. Earlier this year, we laid out our strategy to drive Personalis to $100 million in revenue in 2025. Now, this aspirational milestone has at its core three growth engines, and its effect has been to shift us into a higher growth mode. In the second quarter, we achieved revenue of $22.6 million, up 35% -over-year. This growth was driven by our biopharma business, which grew 117% -over-year, led by strong demand for our tumor profiling product that is used to create personalized cancer vaccines for patients as well as increasing demand for our MRD product, NextPersonal. Our strong Q2 revenue also helped us to increase our guidance for the full year by $3 million, and we now expect full year revenue in the range of $79 to $81 million. We're particularly pleased to have been able to deliver this top-line growth while also making improvements to both our cost and margins, as Aaron will cover shortly. I'll now review progress this quarter on our three growth engines. First, the first growth engine, Win in MRD, is the most important as we focus on turning Personalis into a clinical diagnostic powerhouse. As I noted, MRD testing uses a liquid biopsy to find evidence of minimal residual disease or cancer recurrence and to monitor therapy effectiveness. We laid out our Win in MRD strategy six quarters ago, and we've been executing on its four pillars. One, focus on cancer types where an ultra-sensitive approach can unlock significant value for patients, payers, and partners. Two, drive reimbursement by developing robust clinical evidence and partnering with the top global collaborators. Three, leverage our deep relationships to accelerate adoption by biopharm partners and power our revenue growth by the use of NextPersonal in clinical trials. And four, commercialize NextPersonal with a partner-centric model. Now, to delve into the first pillar, we've previously explained how we're developing evidence to support NextPersonal's clinical usage and reimbursement in lung cancer, breast cancer, and IO therapy monitoring. The data across multiple studies now indicate we're able to seek cancer recurrence earlier, and this holds out the promise that those patients can seek treatment sooner with potentially better outcomes. The clinical studies that have been done to date indicate we can detect cancer many months ahead of imaging. The data also suggests that patients who are classified as MRD negative, meaning our test doesn't detect circulating DNA from the tumor, largely do not experience recurrence. Having more confidence in a negative result may allow a doctor to de-escalate patients from unnecessary therapies and procedures, potentially avoiding toxicities and ultimately saving the healthcare system money. Our focus on these indications is intentional, and our data has demonstrated that NextPersonal can win in these markets. To elaborate a bit on our approach, lung cancer and breast cancer shed very little DNA in the blood, so cancer is difficult to detect without an ultrasensitive approach. Lung and breast cancers can be aggressive when they recur, so early detection is critical. For patients on IO therapy, we believe the potential decision to switch treatment requires the insights from monitoring that are provided by our ultrasensitive tests. These factors make breast cancer, lung cancer, and therapy monitoring the ideal indications for us. In October of 2023, we launched the first commercial ultrasensitive MRD test into the clinic. NextPersonal is being marketed alongside our Medicare reimbursed tumor profiling test, NextDX, which is used to help put patients on appropriate therapy. We started our commercial journey with just 10 doctors in an early access program, and we've been adding incrementally. As we previously stated, our intention is to gradually add more doctors into the program until we receive reimbursement. Our -over-quarter growth continues to be healthy as we delivered 561 clinical tests in the second quarter, a 66% increase from the 338 results delivered in the first quarter of this year. In addition, Tempest commenced their commercial launch of NextPersonal late in the second quarter, and we expect this to fuel additional growth. Early feedback has been that clinicians are seeing a leap in actionability from our approach. If you remember, we report circulating tumor DNA in the blood down to one part per million, which means that if there is just one fragment of tumor DNA circulating in about a million DNA fragments in the blood, we expect to see it and quantify it. This is a leap forward in the field. The extra analytic sensitivity we report on with our next personal test unmask a region that has previously been hard to see consistently. We call that region the ultra-sensitive MRD range. About 30% of the CT DNA positive samples in our clinical testing have been in this ultra-sensitive range. That is a jump in the actionability of MRD testing and means physicians can see cancer recurrence earlier, have more discrimination in monitoring therapy, and have more confidence that patients with negative CT DNA results are in fact cancer-free. Indeed, we've had many anecdotes relayed from our early access doctors that the ultra-sensitive range is allowing them to see cancer sooner and intervene with a patient to get them the management they need and also to consider deescalating therapy when our test determines patients are negative for CT DNA. For example, a female patient from the Northeast receiving therapy for breast cancer tested positive with our next personal test. Her position saw low traces of cancer in the ultra-sensitive range for over several months. And luckily for this patient, the detected levels trended downwards until the patient's cancer finally became undetectable. Continued monitoring can potentially help inform taking patients like this off therapy in the future and provide reassurance to both the doctor and the patient. Moving to our second pillar, we're focused on building and publishing clinical evidence to gain reimbursement and continue to work with many of the top thought leaders around the world. In previous calls and during the ASCA webinar, we talked about the importance of our work with two of the leading cancer centers in Europe, Royal Marston and Breast Cancer and Valdehebron and Immunotherapy Monitoring. Both of these collaborators have provided access to studies that are broad and comprehensive. In the case of Royal Marston and the Institute of Cancer Research in the UK, which are one of the leading global institutions of breast cancer, the study included patients across the major breast cancer subtypes, including HR-2 positive and triple negative breast cancer. And patients were followed in this study for a medium of six years. The study results were highlighted at ASCA during a podium presentation and the results were compelling. NextPersonal detected early stage breast cancer, a medium of 15 months before imaging scans for patients. For Valdehebron or VHIO, the work is in pan cancer and included greater than 120 patients across 18 different cancer subtypes. The studies show that NextPersonal could be potentially used to predict immunotherapy response for patients. Similar to what we're seeing with our breast cancer studies, our test is detecting traces of cancer well ahead of imaging scans. These Royal Marston results in the VHIO studies for immunotherapy monitoring join our tracerX working lung cancer to form the backbone of our efforts to gain Medicare reimbursement. Investigators in all three of these studies, Royal Marston, VHIO, and tracerX, are working to submit manuscripts to peer-reviewed journals, which is a key step for us ultimately to submit for Medicare reimbursement. Once those manuscripts are published, we can then submit the individual dossiers for each of the indications to Medicare. There were two other data sets at ASCA that highlighted NextPersonal that are also worth noting. One was a study with Dana Farber for her two positive patients that showed NextPersonal was correlated with outcomes in patients receiving neoadjuvant therapy. Neoadjuvant therapy is given to these patients before surgery to try to shrink the tumor before the cancer is removed. In a second study, this one with Duke, deepened the data indicating NextPersonal could be used to predict immunotherapy response. The third pillar of our NextPersonal strategy is to leverage our biopharma relationships to drive the use of NextPersonal in clinical trials.

We're engaged

with the most, excuse me, with most of the world's top biopharma companies and have continued to generate excitement around our next personal test, most recently from discussions at ASCO. Customers want and need an ultrasensitive approach to ensure that the most appropriate patients enter into clinical trials. For example, we believe that our ultrasensitive assay means that patients testing negative are much less likely to have a recurrence. Our biopharma customers can then expect that these patients are less likely to benefit from a therapeutic intervention, holding out the promise that NextPersonal will be an excellent approach to optimize biopharma trials.

We have booked millions of dollars of revenue from biopharma customers for MRG projects to date and expect the growth to accelerate. Now move on to the fourth and final pillar, commercializing NextPersonal in the clinical market using a partner

-centric model. In December, we announced our key partnership with Tempest to commercialize NextPersonal in the clinics with oncologists, and recently, Tempest announced the launch of our products to their customers. To quickly review, we expect to leverage Tempest's 200-plus salespeople channel to co-commercialize NextPersonal and accelerate growth. Personals will be responsible for processing samples in our lab, obtaining reimbursement, invoicing health insurance payers and patients under the arrangement while paying Tempest fair market value for the commercial services they provide to us. Overall, the deal is worth approximately $30 million for personnel should all milestone payments be triggered and if Tempest fully exercises their rewards. We expect this to allow us to ramp up commercial efforts quickly with minimal additional cash investments. We're now on the Tempest requisition and we're processing samples sent to our lab. The goal for the balance of the year is to purposely grow our efforts together, learning how to work seamlessly as partners, integrating our business systems, and refining our message to oncologists. This way, we're set to drive accelerated growth together on the backside of reimbursement approval. The Tempest relationship is working extremely well today. Our cultures and our teams work well together and we're confident that we're creating something great for doctors, patients and payers. While we made strides with our first growth engine, our win an MRD strategy to establish NextPersonal as a leading MRD test. We've also made progress with our second growth engine, leveraging our ImmunoID Next Platform to deepen relationships with biopharma customers who use the offering to pioneer new therapies. Our biopharma business grew 117% year over year and we had solid performance across our product portfolio. Customers primarily use our ImmunoID Next Platform in two ways. First, they leverage our platform to power translational research and find new biomarkers and insights that can enable their drug discovery efforts. Second, companies in the personalized cancer vaccine or the PCV market use our platform to create a molecular fingerprint of a patient's tumor to develop personalized therapy. We previously told you about our partnership with Moderna in which Moderna is utilizing our platform in their mRNA cancer program. Moderna and its partner Merck are enrolling patients and our collaboration with Moderna is an important driver of revenue for us in 2024 and 2025. We have several other partners that work in this space as well. The third engine of our growth is growing our personalized side approach as we service enterprise customers. In these relationships, partners adopt our platforms and technologies to power their solutions. For example, Natara has leveraged our Exome Platform as a part of their MRD product to help them scale while they work to build in-house capabilities. As planned, they've reached the point where they can now run the product in their lab and we expect to wind down our work with Natara by the end of 2024. We have no intention to extend the current commercial arrangement. With other strategic parts of our business accelerating quickly, PCV, Biofarm MRD projects, and our clinical diagnostic business, the additional capacity will shift to support those critical parts of our business. I should also note we're having other discussions exploring scaling up enterprise work in 2025. A second important enterprise relationship is the VA. The VA utilizes our whole genome sequencing capabilities to power the Million Veteran Program, a national research program looking at how genes and lifestyle affect health and veterans. We've helped power this program with the VA for over 10 years. The VA informed us this quarter that they plan to renew the contract another year, and we expect to receive a new purchase order by the end of September. Before I turn it over to Erin, I have a couple of important corporate updates. First, we recently completed an agreement with Murio Genetics to cross license patent estates covering tumor-informed approaches to detect minimal residual disease or MRD. Both companies value tumor-informed approaches for cancer patients and have developed deep foundational patent estates in the field, and each sees the benefits of an ultra-sensitive approach as key to making MRD testing the standard of care. The agreement we entered into helps solidify each company's freedom to operate in the MRD market and broadens access to the benefits of MRD testing for cancer patients. Personnelists and myriad are each pioneering tumor-informed genome scale approaches to power ultra-sensitive MRD tests, enabling cancer recurrent detection early and more refined therapy monitoring than alternative approaches. Additionally, we settled our litigation with Foresight, which resulted in us granting them a license to our MRD patents. This is a great outcome for personnel assist. One, our IP that we've developed over many years is valuable. We were able to show that, and we'll be paid royalties moving forward. And secondly, we can focus on running our business and putting litigation costs behind us. Both the cross-license agreement with myriad and the settlement should give investors confidence in the value of our IP, the strength of its protection, and our ability to create value from it. With that, I'll now turn it over to Aaron to review our financial results.

Thank you, Chris. Total company revenue for the second quarter, 2024, was $22.6 million, an increase of 35% compared with $16.7 million for the same period of the prior year. The increase in revenue was driven by higher volume from biopharma and personalized cancer vaccine customers, which was partially offset by declines from the BAMB page. Biopharma revenue grew 117% compared to the same period last year, and the growth was primarily from ImmunoID Next. In addition, we recognized 0.1 million of clinical revenue from our Next DX tumor profiling test. Growth margin expanded to .6% for the second quarter compared with .7% for the same period of the prior year. The -over-year increase of 6.9 percentage points was primarily due to product cost reduction and operating leverage from the 35% increase in revenue. Over the last year and a half, our focus has been to reduce product costs and to reduce lab operations expenses to drive margins higher. Recall that just a few quarters ago, our gross margin was only 19%, so we are making very good progress. Also, we had over 4 percentage points of unreimbursed clinical test costs during the second quarter. Otherwise, gross margins would have been closer to 40%. One of our top goals is to continue expanding gross margin. As we go forward, we expect margins to continuously improve with scale, although there could be some -to-quarter variability due to fluctuations in volume, unreimbursed clinical test costs, and other factors. Operating expenses were $24.9 million in the second quarter compared with $30.1 million for the same period of the prior year. Most of the -over-year decrease was attributed to actions taken to reduce headcount in 2023. R&D expense was $13 million in the second quarter compared with $17.9 million for the same period last year, and SG&A expense was $11.9 million compared with $12.1 million for the same period last year. Net loss for the second quarter was $12.8 million compared with $24 million for the same period of the prior year. The second quarter net loss included a $3 million non-cash gain related to fair value accounting of the outstanding warrants issued to TEPIS. This non-standard income was a result of the decrease in fair market value of the warrants at June 30, 2024, compared with the fair market value at the end of last quarter. And for clarification, the accounting implications for the warrants have no bearing on the cash value if they are exercised in the future. Now, under the balance sheet. We finished the second quarter with a strong balance sheet with cash and short-term investments of $87 million. During the quarter, we used $8.4 million to fund operations, and we have more than one and a half years of cash on the balance sheet, which is expected to last through the first quarter of 2026. Now I'd like to turn to guidance. For the third quarter of 2024, we expect total company revenue in the range of $21 to $22 million, revenue from pharma tests, enterprise sales, and other customers in the range of $17 to $18 million, and revenue from population sequencing of approximately $4 million. And for the full year, we increased our guidance and now expect total company revenue in the range of $79 to $81 million, an increase from our prior guidance of $76 to $78 million, revenue from pharma tests, enterprise sales, and other customers in the range of $71 to $73 million, an increase from our prior guidance of $68 to $70 million, and this estimate includes revenue from the Tera of approximately $21 to $22 million. And for the second quarter of the year, we expect total company revenue in the range of $22 million, of which $5 to $6 million is expected in the second half of the year. Population sequencing revenue to be approximately $8 million. Non-GAAP net loss of approximately $75 million, a decrease from our prior guidance of $77 million, and exclude any income or expense related to the outstanding warrants issued to Tempus. And cash usage is expected to be approximately $60 million, a decrease from our prior guidance of $62 million. We look forward to updating you on our progress during the next conference call in a few months. And with that, I will turn the call back over to the

operator

to

begin the Q&A session. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone, and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speaker phone, please lift the handset before pressing any keys. One moment, please, for your first question. Our first question is coming from Morgan Stanley.

Hi, Madison on for you. How are you guys? Hi, Madison. Hey, congrats on the quarter and thanks for taking the question. I have a two part here. Just first one. I was wondering, should Moderna's PCV eventually secure FDA approval? I was just wondering if you could remind us what the potential upside could be on that. And are you spec'd into the product or is it possible that another sequencing vendor could also start to sequence for Moderna once approved?

Hi, Madison. Thanks for the question. In terms of the Moderna relationship, so we are ecstatic about how this has been operating. Again, we've been partners with Moderna since 2016 to 2017. In terms of where this goes upon commercialization, that's something for Moderna to talk about. We're not really talking too much about the upside or the opportunity. We just know that it is a huge opportunity for us. We're excited about it. But that should come from the Moderna folks to talk about. In terms of the offering, so again, today samples are taken from patients and the patient samples are sent to personalists. We profile them and we send back this rich, informative set of data back to Moderna so they can then customize a vaccine or therapy for that individual patient. In terms of, again, the relationship, we believe we have a very, very solid relationship and Moderna values our platform. So in terms of the longer term prospects, we feel very confident about this going into the future.

Got it. Okay, that's good to hear. And then just on with Tempest launching their own MRD solution, I was wondering how you make sure that they are incentivized to also market next personnel. Like, what is the incentive structure there put in place for the product so that they get an equal commercial push from the sales force?

Yeah, no, great, great question. I mean, first of all, just backing up while we're on the Tempest requisition, like we're growing the number of Tempest sales reps that are selling the product over time aggressively to be able to gate the volume. So, you know, it's like right now we're starting the journey and moving it up slowly. Tempest's product is a blood base. It's not the same type of product. It's a tumor-naive product. Ours is a tumor-normal product. They positioned it at colorectal cancer. We're positioned at long breast and IO therapy monitoring. So products are positioned a little bit differently. And I think it's actually really, really great to have both products under the same roof. Because the truth is for some patients, you're not going to have access to the tissue. And you're just going to have access to the blood. And so I think if you just step back and think about it, Tempest is uniquely the company that's stitched together both a tumor-naive and a tumor-normal approach under one roof. And they're really set up to accelerate growth in the marketplace with a comprehensive offering. So we actually think the two products work together really well. And I think that's how Tempest is doing it. And it's set up nicely.

Got it. That's good to hear. Thanks so much for the

time. Thanks Madison. Next question on the line will be coming from

Mark Nasserow from VDIG.

Hey guys, this is Vivian. Thanks for taking the questions. I just wanted to touch on next personal reimbursement. Just to remind us, I was thinking about a potential crosswalk or gap so there for pricing. Just where you think that will land and any potential upside as it relates to potential ADOT status. Thanks.

Yeah, great question. I mean, we build all of our economic models, assuming we get similar to what other players have been reimbursed in the marketplace. But there's a couple, you know, different shots on goal to drive that higher. One is that the test in and of itself is a more resource intensive test than an exome based test. Medicare reimburses based on that. So we think that's one way just fundamentally that the test should be priced higher because it's a more resource intensive test to run, which is how these tests ultimately are priced. And secondarily, there is a shot to get ADOT status so we're working on managing. But the expectation we've set is that we're tracking to have gross margins greater than 60%, even if we don't achieve any of those things. We're set up well and the tempus relationship brings sales and marketing costs down in that 20 to 25% range. And so we built the economics from there. And then the rest of it will just drive the numbers to be a more lucrative if we're able to achieve higher reimbursement.

Perfect. Thanks so much for the color there. And then just to follow up on Moderna has sort of exceeded expectations. Can you just remind us, I think they've expanded the number of indications they're looking at on PCV. So maybe just touch on that and then also your longer term outlook on the pharma side of the business. Thanks.

Sure. Thanks, Vivian. So in terms of the Moderna relationship, remember they're in the Phase III clinical trial right now with melanoma patients. They had treat success in Phase II. In terms of the volume that we're seeing today, a lot of that is because of the Phase III trial. So the number of patients in the Phase III trial significantly outpaced what you'll see in Phase I or Phase II. In terms of other cancer types, yes, they are focused on additional cancer types as well. But in terms of talking too much in terms of specifics, that's something again that should come from them, but they are working on others as well.

Great. Thanks so much for taking the question. Thank you. Next question will be coming from Thomas

Clayton from Lake Street.

Good afternoon, guys. I appreciate you taking the questions. Chris, you mentioned in an earlier response, kind of gating the Tempest efforts here in the near term. Can you talk to us a little bit about exactly how you're going to do that? How many reps are you going to bring on and how are you going to pace those reps so you don't overburden the system with too much volume when you're not getting paid? Any color that would be super helpful?

Yeah, yeah. So we've started out with a small number of Tempest reps that are actually trained in marketing and talking about the product. The plan is to grow that over time. So it's to graduate it or approach that enlarges the resources put at the sales process as we go. If you remember, there's actually some volume gates also built into the agreement so that Tempest has agreed not to exceed certain numbers on a -to-year basis, and we've all been sort of aligned around that. So part of the challenge here is how to show increasing clinical traction with doctors and investigators so that they're using the product and they feel comfortable at the same point in time managing the burn rate and running those tests because you want to be at a spot where the run rate of running tests is good enough so that the revenue really explodes when you're able to get reimbursement because you've already got a running start. So we're trying to walk that tightrope and we've structured the agreement and the commercial rollout plan with Tempest to achieve that. I think we believe we're on our way to executing in a way that's consistent with that.

Got it. And you mentioned in your prepared remarks the publications for each of the key datasets and breast and IO and lung. Any visibility into timing of that? I guess the follow-on to that would be what are your expectations now around submission of dossiers to CMS?

Yeah, yeah. So a couple things on that. I mean, all the data has been run and the data has now all been publicly out there. All the data looked awesome. I mean, it was great this quarter to see the breast cancer data, which created a really nice buzz in the community and the IO therapy monitor was also an oral presentation and it's gotten a lot of interest and excitement. And that joins the tracer X data. So you've got multiple studies where the test is really showing that it adds great value. So investigators are working on those papers now. They're being put together. You know, they're all in different phases, but they're all sort of nearing the end of it. We don't actually control the submission of those. They write and drive those publications because they're in their name. We're optimistic that those will be submitted soon. We'll submit to Medicare as soon as those are published. So to be clear, like Medicare wants to see a peer review study in order to consider an application. So that's the next step in the journey for us is to have those studies actually submitted and published. And that's what we're working on and that's in the investigators' hands right now. Giving dad rich riches with bands. So we're on track. It is looking great and we're hopeful to get these published soon. Yeah. So if you just one of the really great things about us from an execution standpoint is we are executing on a plan that we laid out more than a year ago about how this all would all happen. And we've we have gotten the data. We've gotten the study set up. We've gotten the samples in here. We've run the samples. The samples have been have been discussed in scientific, scientific meetings and the data has all been run. The papers are all happening exactly the way we had talked about doing it in the plants that we had laid out. So we've been executing at a really, really rapid pace, and I'm proud of the team for bringing it up to

this point. Great. Appreciate you taking the questions. Thanks, guys. Thanks. Our next question will be coming from Mike

from need.

Hey, guys, this is Joseph on for Mike a couple of questions here. Maybe I think you said 4%. There was a 4%, I guess, revenue had run. What do you want to call it from clinical tests that were reimbursed? Are these tests that you plan to go out there for reimbursement or are you kind of already excluded this from future revenue? Yeah, I

mean,

we

we we the cost are in the quarter. We certainly bill insurance companies for them, but we just don't expect to get paid for them because they're not they're not medically necessary. In the case of Medicare, we don't have all but so they weighed down gross margins. So, I think Aaron's point was if they hadn't if those hadn't been in there, weighing them down, which is all part of the investment we're making into the growth. And I think you think we all appreciate what we're doing there. The gross margin would have been near 40%. So we made tremendous progress. I think is the larger point

with the gross. Yeah, absolutely. Absolutely tremendous progress on margins and cash for an overall, I guess, maybe just on cash for the reduction in the guidance for cash firms. Just curious. Is that coming from further? I guess cost reduction initiatives or was this mostly coming from upside from raising the revenue guidance?

It's really from the revenue and the gross profit, right? Revenue went up 3Million dollars

gross

profit there as well.

Okay, great. And then just maybe 1 more you had mentioned the Duke. Data said it's being predictive. I assume this was a amino ID. Of of immunotherapy response just curious. Sorry. Yeah, it's just right. It's

actually next personal. It's the product.

Oh, I see. Okay. Okay. That that that makes perfect sense. But I guess the question then, do you see that use case mostly sticking with pharma or is there a potential to use that use case in the clinical setting for immunotherapy eligibility?

No, absolutely. Certainly across the clinic. It's one of the large use cases. For these .R.D. assays, because doctors, you know, it's tough. You're stimulating the immune system. And so it's tough on imaging to to to see whether or not your therapy is working because you could have an immune response. And the tumor looks like it's growing on it on imaging. Looks like the patient's getting worse. But indeed, the immune system and the drugs are working exactly the way you would think it would be. You would be misled. And so these these blood tests are actually, I think, taking over for doing a lot of the heavy lifting in terms of monitoring. So it's one of the key use cases. There are now three data sets supporting the use here. One is with UK, which is Melanoma and another one with Duke, which is the gastric patients. And then the data set, which is pan cancer, that's really the key one. And the other two support it. So there's three data sets that are coming together to support the reimbursement for for I.O. therapy monitor. And it's one of the key use cases.

And Dad, Rich. Yeah, no, it's just like you said, you know, 40 percent of all cancer patients are eligible for immunotherapy, but actually only 12 percent of patients actually respond. So if you think about that becomes really critical to be able to understand whether these patients are actually having a response to therapy. And so is definitely one of the key tools now that they can use. And we're showing the data that is highly predictive of response. And so that's that's definitely one of the key indications.

I see. Okay, makes makes perfect sense. I had read that comment as I guess testing for eligibility pre treatment rather than monitoring. But thanks for clearing that up.

No, absolutely. It's monitoring. It's key. And and it's one of the big parts of the 20 billion dollar estimated 20

billion dollar market. Thanks.

Should

you have further

questions? Please press star followed by the number one in your touchstone and you will hear a prompt that your hand has been raised. Again, should you have a question, please press the star followed by the number one on your touchstone phone and then you will hear a prompt that your hand has been raised. Our next question will be coming from Arthur from H. C. Wainwright.

Hey, good afternoon, Chris and Aaron. This is also for our case. Congrats on the quarter. I had a couple of quick ones. Hey, I had a couple of quick ones. So, first, regarding the total molecular test, the five hundred sixty one. How about the physician right now enrolled in the in the number bumped also?

That's what that includes all the tests that we got, which are which are which are from those positions. And some and some tempest positions that were added towards the late of the last quarter. So so they're coming from that group. Now, we did grow the number of positions. We started with 10 and we've been slowly growing that out. And and so does there are more positions being added in a particularly great clip,

but

that's what that is.

Gotcha. Thanks for the color. And my second question is, so regarding the the razor guidance for the regarding revenue, it seems to coming more from the farmer testing business. I'm just curious if these driven more by the in your ID service or there's some interest in the next person from the farmer.

So it's actually both. So most of the revenue today is from the next pharmaceutical business has been very, very strong over the last few quarters and Q2, especially the pipeline for next personal. With our biopharma customers is growing rapidly, and so we're going to start to see that start to take up over the next few quarters here as we go forward.

Gotcha. That's good here. And the last question is, so for the next personal, what's your plan when you're looking beyond the breast cancer, lung cancer and IO therapy monitoring? What's the potential beyond that?

We haven't really stated anything beyond that just yet. Arthur right now we're focused on cancer types. It's close to half of the market. It's going to give us plenty of things to keep us busy with over the next couple of years. So right now we're hunkered down and focused on these cancer types.

Gotcha.

Thanks, and thanks

for taking my question. Go ahead, Arthur. We have another question from Dan Brennan from PB Cohen. Hey, it's John for Dan. So

it's really nice to have new performance in the quarter at 22.6, which is well on your way to the run rate to hit the 100 million in 2025 levels. So, to get closer, can you just share some thoughts about how you're feeling about achieving this milestone, especially with Natara business rolling off and be great. You could kind of walk through expectations for different revenue buckets in terms of like, MRD, vaccines, enterprise and the.

Sure, great. Thanks for the question in terms of looking ahead into 2025. We haven't given specific guidance to the buildup of it, but the way to look at it. So in Chris's prepared remarks, he talked about the enterprise work with Natara ending by the end of this year. So we can assume and you folks can assume that there's going to be zero from Natara in 2025. We're going to have about 22 million dollars in 24 from Natara. You could assume most of that is going to be offset by our biopharma increase. Biopharma will increase from not only, you know, ID next, but also next personal. Again, the funnel is growing immensely and we're expecting that to start to take up here over the next few quarters. In addition, we're also engaged in and looking for additional enterprise type of work. And so, you know, we're optimistic that there could be something on the horizon as well. The might be seven to eight million dollars. So if you assume the current run rate there, you know, that's it's going to be flat. All right. But most of the buildup

or growth is going to come from biopharma. And then it'd be great

to get a little more color on the myriad deal. This is what we're both personnel looking to get out of agreement. And then maybe in the lens of like, it seems personnel is kind of changing its IP strategies from one where you were previously enforcing your patents. And now it seems like you're sharing your IP with the area and settling foresight. So that'll be it.

Yeah, I mean, I think I think it's all about patient access and and and having a model that. You know, is comprehensive and and argin and helps all build the market and but in a way that actually, you know, you want to create value for the IP. So in the case of myriad, you know, they have a lot of deep foundational work there. And by doing a cross license deal, we give, you know, each other, you know, make sure that we each other can move in a way that we both have freedom to operate. And I think that's really good for both companies, for shareholders and for patients and doctors and as a way for us to be appropriately spending money. And in the case of foresight, you know, there's some great IP and we end up end up with royalties there and moving forward, you know, we'll continue to to find ways to to to bring value for

the for the the IP that we've developed.

Thank you. There

are no further questions

at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.

Goodbye.