Personalis, Inc.

Ladies and gentlemen, greetings and welcome to the Personalis fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Caroline Connor, from Investor Relations. Please go ahead.

Thank you, Operator. Welcome to PersonAlysis' fourth quarter 2024 earnings call. Joining today's caller, Chris Hall, Chief Executive Officer and President, Aaron Tashibana, Chief Financial and Chief Operating Officer, and Rich Chen, Chief Medical Officer and EVP R&D. 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, 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. Personnel's undertakes no obligation to update these statements except as required by applicable law. Our press release with our fourth quarter and full year 2024 results is available on our website, www.personnels.com. under the Investor section and includes additional details about our financial results. Our website also has the 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'd like to turn the call over to Chris for his comments on fourth quarter business highlights.

Thank you, Caroline. Good afternoon, everyone, and thank you for joining us for our fourth quarter and full year 2024 call. For those of you joining for the first time, welcome. Personalis is a leader 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 effectiveness and to detect cancer recurrence. The MRD market is expected to mature into a $20 billion market, and with our ultra-sensitive MRD test, Next Personal, we believe Personalis is positioned for success. Our technology is able to spot cancer when there's only one fragment of tumor DNA circulating and a million DNA fragments in blood. Our tumor profiling platforms and tests are cutting-edge. We're able to see more with high sensitivity, and as a consequence, our platforms and tests are used by many of the world's top biopharma companies to improve clinical trial results, personalize treatment, empower a new generation of therapies. Before we dive into our 2024 accomplishments, I want to share another case from this last quarter that highlights the power of our ultra-sensitive test, Next Personal, to change care. During the last call, I discussed how a physician using Next Personal was able to spot a recurrence of breast cancer and get their patient access to therapy ahead of imaging. This quarter, one of our cases involved a woman in her 70s with stage 3 lung cancer that was being treated with chemotherapy plus immunotherapy. The doctor did a series of three Next Personal tests over several months that showed the level of circulating tumor DNA was increasing with each test, suggesting the treatment regimen wasn't working. Notably, all the results were in the ultra-sensitive range. As a reminder, the ultra-sensitive range covers measurements of circulating tumor DNA below 100 parts per million that our next personal test excels in quantifying and that could be missed with less sensitive tests. Based on these results, the doctor switched the patient to a dual immunotherapy regimen with subsequent next personal test indicating an improved response. We hear many antidotes like this, and they demonstrate how our platforms are impacting clinical care. And frankly, stories like this motivate us every day at Personalis. 2024 was a significant year for the company. We laid out a multi-year strategy to grow our business with a focus on our win and MRD strategy, and we made big strides. Our full-year revenue of $84.6 million grew 15% over 2023, driven by biopharma growth of 60% year-over-year, which more than offset the expected decline from our enterprise customer. The growth from biopharma was fueled by an acceleration of clinical trial patient samples from Moderna's Phase III melanoma trial during the first three quarters of 2024. For those new to Personalis, We provide Moderna with our tumor profiling capabilities to help enable them to create personalized neoantigen therapies for patients. Neoantigens are present only in cancer cells, and our platform is used to identify them so that individualized therapies can be created. At the end of 2024, we agreed to a long-term extension of our agreement with Moderna to be their partner for ongoing clinical trials through to commercialization. We expect this relationship to be a key driver of revenue growth for us in the next decade. For our clinical business, 2024 was a pivotal year as we ramped our commercial efforts to pioneer the ultra-sensitive MRD testing market. We drove a solid increase in test volumes as we continued to generate compelling clinical evidence that highlighted the power of Next Personal to detect cancer recurrence earlier than standard of care imaging and instill more confidence in negative ctDNA results. Our collaborators demonstrated outstanding MRD results for breast, lung, and IO therapy monitoring using Next Personal and submitted manuscripts detailing these findings to medical journals, which we expect to see published in coming quarters. Once published, these studies are expected to support our submissions for Medicare reimbursement. On the IP front, we successfully settled our litigation with foresight in a way that underscored the value of our MRD intellectual property. We also cross-licensed our MRD patents with Myriad Genetics for tumor-informed MRD approaches to ensure clear freedom to operate for each company. We believe this patient-centric approach is best for us as a business, but importantly, best for doctors, patients, and payers. Lastly, in 2024, we raised a significant amount of capital. In total, we raised approximately $115 million net of expenses by closing two strategic investments and using our ATM. The first strategic investment with Tempus expanded and accelerated our clinical distribution partnership, and the second investment was by Merck. Merck has been a longtime collaborator, and we're thrilled to deepen our relationship with them. We ended 2024 with $185 million in cash on the balance sheet. and we have a strong liquidity position to continue ramping up our clinical volume ahead of reimbursement coverage. We believe 2025 will be another pivotal year for personnel as we drive our win in MRD strategy and ramp up our testing volumes, touching more and more patient lives. We're confident that this is working and ushering in a new way of managing cancer patients, enabling physicians to intervene sooner when a patient recurs and to have more confidence in a negative MRD result. There are three key areas we'll be tracking as we move through the year. These are the core elements of executing on the next chapter of our WIN and MRD strategy. First is clinical usage. We've gained significant traction in the clinical marketplace as we delivered 1,441 molecular tests in the fourth quarter, an increase of 52% compared with 945 tests in the third quarter. The core of our strategy is a partner-centric approach and we're working with Tempus, leveraging their approximately 200-person sales force to bring our approach to oncologists. In 2024, the PersonAlysis and Tempus commercial teams learned how to work together to relay the value of NextPersonal to doctors, and the growth we're seeing today is indicative of the strength of the relationship. Physician feedback has been positive, and retention is high. We believe our growth is a testament to the power of our ultra-sensitive approach and the compelling data we've been generating. Since launching our test commercially in the fourth quarter of 2023, we've grown test volume by at least 40% sequentially each quarter, and our goal is to continue to increase test volume by 30% to 40% each quarter until we achieve reimbursement. We've been adding billing and customer care staff and focusing our internal teams on reducing turnaround time and scaling our lab to meet the increasing demand. Additionally, we have built out our sales team to complement Tempest's effort and are ready to hire additional commercial team members to accelerate sample growth on the backside of reimbursement. Second is deepening the clinical evidence and achieving reimbursement. We are on track to get CMS reimbursement for at least two indications in 2025. As we've previously discussed, we've focused our evidence generation on three indications, breast cancer, lung cancer, and IO therapy monitoring. We've previously summarized the findings from the investigators at Royal Marston for breast cancer, VHIO for therapy monitoring, and TracerX for lung cancer, and those three studies and their results power three different Medicare submissions. We're pleased to report that our collaborators have now submitted manuscripts for all three of those invitations to peer-reviewed journals. Additionally, the breast cancer paper was recently accepted, and we have now submitted for Medicare coverage in breast cancer ahead of our internal expectations. Publication is pending, and we won't say more about it until it is in the press, but we're excited with this progress towards Medicare reimbursement. When the VHIO and Tracer X papers are accepted for publication, we plan to submit for Medicare reimbursement for immunotherapy, monitoring, and earlier stage 1 cancer, respectively. In summary, we are tracking to achieve reimbursement at least two of the indications this year, and I look forward to updating you as this continues to unfold. Our clinical study pipeline continues to deepen with now over 20 studies in progress. And breast cancer, we're working with Vanderbilt, John Hopkins, and other institutions on the PREDICT study, an approximately 180-patient study in early-stage triple-negative breast cancer and HER2-positive breast cancer, and have an ongoing prospective study called Be Stronger 1 in triple-negative breast cancer that has now enrolled more than 80 patients. We have an ongoing study with Dana-Farber on HER2-positive patients, and the Institute Curry on an approximately 100-patient early-stage triple-negative breast cancer study. We're also working with MD Anderson on an additional breast cancer study. In iotherapy monitoring, we're working with Valdehebron or VHIO, UKE in two different melanoma studies, Duke in a study of gastric cancer patients, and UCSD on a pan-cancer iotherapy study across eight different subtypes. In early-stage lung cancer, we're continuing to work with TRACERx team, and we're pushing forward on another study called DARWIN2. As the year progresses, collaborators will be presenting results of many of these studies at conferences. We expect this data to continue to highlight the importance of an ultrasensitive CT DNA detection and breast, lung, and IO therapy monitoring, as well as other cancer types. All of this is pointing towards a better way for managing cancer patients with an ultrasensitive approach. We, of course, at Personalis are not done, and we expect to announce additional studies through the year. Deepening the clinical evidence is important to gain clinical traction and payer acceptance. The third area we will be tracking for investors is progress with our biopharma customers. Most of our biopharma revenue comes from our leading ImmunoID Next platform, which is an advanced tumor profiling platform used to support translational research and novel therapies. The ImmunoID Next platform remains a platform of choice for biopharma companies developing immunotherapies, but we see other opportunities to serve biopharma customers. To those ends, our tumor profiling product set will continue to broaden with new versions developed to capture additional business from biopharma companies that have grown to trust Personalys as a partner. This approach will expand the spectrum of biopharma use cases that our platforms can reach. And, of course, we are deep into our second year of selling Next Personal for MRD testing to biopharma companies. Biopharma customers want and need an ultra-sensitive approach to more effectively select patients for clinical trials and to more accurately monitor trial results. And we believe Next Personal elegantly meets the market needs. The ultra-sensitive approach may allow customers to get an answer regarding success or failure of clinical trials more quickly and more accurately. We believe this can make for increased efficiency and can translate to significant revenue for our biopharma customers by getting answers sooner. We've done multiple pilots and technology assessments in 2024, and the value we create for biopharma customers is increasingly appreciated. We grew the revenue from MRD testing from biopharma companies more than 50% in 2024 and expect continued growth in 2025. The strategy of driving our ultra-sensitive testing into biopharma customers while evolving our tumor profiling platforms to win more business should drive our growth in 2025, and I look forward to reporting on our progress in coming quarters. We're running fast towards multiple milestones in 2025. I believe it will be a significant year for personnel and, most importantly, for cancer patients as we execute against our growth drivers and redefine the way cancer is managed with an ultra-sensitive MRD approach. I want to take a minute to address our 2025 four-year guidance. We have two core areas of focus in 2025. First, we are driving volume growth in front of next personal reimbursement, and we are confident that we can continue to grow in test volumes at 30% to 40% each quarter. Second, we are driving towards reimbursement this year and plan to achieve reimbursement at least two indications by the end of the year. We're guiding revenue to be in the range of $80 to $90 million. Aaron will further discuss the details in a minute, but I wanted to provide some high-level context. That is, we're modeling a run rate that is comparable to full-year 2024, despite the loss of the lion's share of Natera's business. When you take into account an expected decline of about $20 million from Natera's business, our expected growth rate in full-year 2025 is around 31% at the midpoint of our guided range. We expect 2025 will be another transformative year for personnel, and we appreciate all the investors that came into the story this last year and are now part of our journey to pioneer ultra-sensitive MRD testing. We have created a unique company that is poised to be a key part of the fight against cancer. And of course, that only happens because of the dedication and passion of our employees who work so hard to help us achieve our mission and improve the journey for cancer patients. With that, I will now turn it over to Aaron to review our financial results.