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spk07: Good day, and thank you for standing by. Welcome to the Sophia Genetics Third Quarter 2021 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during a session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I want to ask you to have a conference over to your speaker today, Alexander Kahn, Investor Relations. Please go ahead.
spk06: Thank you. Earlier today, Sophia Genetics released financial results for the quarter ended September 30th, 2021. If you hadn't received this news release, or if you'd like to be added to the company's distribution list, please send an email to ir at sophiagenetics.com. Joining me today from Sophia Genetics are Yurgy Kamlong, co-founder and CEO, Ross Muecken, Chief Financial Officer, Laura Hashimoto, Chief Business Officer, and Philippe Manou, Chief Medical Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking within the meaning of U.S. federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section titled Cautionary Statement Regarding Forward-Looking Statements in Exhibit 99.2 of the report on Form 6K on file with the SEC. Except as required by law, Sophia Genetics disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as it is broadcast November 10th, 2021. With that, I would like to turn the call over to Yurgi.
spk02: Thank you, Alex, and good morning, everyone. I'm excited to be here today. and welcome you all as we continue on our journey as a public company. On today's call, I will start with an overview of our progress during the quarter under the framework of our five pillars as it relates to network development and platform usage, after which we will hear from Lara regarding our money expansion. Next, I will discuss in more detail various partnerships and relationships which we are excited about. Finally, I will walk through our goals and objectives for the balance of the year and beyond. I will then turn the call over to Ross for a more detailed look at our third quarter financial results and our outlook for the remainder of 2021. To further expand and leverage the power for our platform, we remain focused on the five key objectives we have previously highlighted. First, expanding customer adoption with new clinical customers especially in the United States. Second, increasing utilization within our existing clinical customer base. Third, further advancing our platform through continued innovation to increase its capabilities and broaden its application. Fourth, developing partnerships and collaborations across the healthcare ecosystem. And fifth, leveraging our platform and database to continue to drive adoption with biopharmaceutical companies. Starting with a new customer adoption, during the third quarter, our total customer base continued to grow, now including over 780 customers globally. We're especially focused on growing the adoption of our platform in the U.S. market, which we view as our largest addressable market opportunity. Additionally, we are very excited and encouraged by the size and scale of our new customer relationships. In the U.S., we recently signed an agreement with City of Hope, a national leader in cancer care, to expand their use of our technology to include a more comprehensive solution for cancer research that will advance analytical performance. Utilizing SOFIA BBM for TSO500, City of Hope plans to upgrade the quality of molecular research capabilities to ultimately benefit thousands of patients. Our platform will allow City of Hope to report expert bioinformatics in one easy-to-use workflow, including somatic tumor analysis, expanded variant, NCND coverage, and more. Our intent is to help elite institutions like City of Hope and labs of all sizes around the world expand the scope of their cancer research with our ability to simplify the process without sacrificing the quality of the results. As we have previously highlighted, Our broad offerings at SOFIA provide value to any customer in oncology using TSO500. As we continue to expand our presence and offerings, we are achieving great traction within the U.S., where we are penetrating a highly centralized market. As a partner of choice, we also remain independent in our approach to establishing valuable relationships within the industry. Our expectation is that City of Hope will be just one example demonstrating the strong value proposition that SOFIA brings to the market as our platform capitalizes on the industry trend of decentralization. In the EMEA region, we also recently signed a multi-year agreement with RCT Gustave Roussier to support their data analytic initiatives, further underscoring our ability to obtain expanded usage through existing relationships. Institut Gustave Roussy is one of the largest cancer treatment centers in Europe and is considered among the top specialized hospitals in the world, along with such prominent names as the Mayo Clinic and Dana-Farber Cancer Institute in the U.S. In addition, we see similar dynamics in other geographies around the world. For instance, we have signed a compelling deal in the APAC region to support the decentralized usage of liquid biopsy testing. As the transition toward decentralization is ongoing, we are now seeing this not only in hereditary and solute tumor testing, but incrementally as it relates to liquid biopsy as well. Altogether, we endeavor to expand our base of relationships with additional agreements, and in conjunction with the opportunity to bridge one with another, we see menu expansion further increasing the size of the network, as Lara will discuss in more detail later. Moving on to our second objective regarding the utilization of our platform, we employ a land and expand commercial model that is focused on winning new customers and then driving greater utilization of our solution by those customers. Once we have secured the customer, we use our direct sales force to build further engagement and help that customer profitably increase testing operations. We also target additional clinician users and departments within each institution. During the third quarter, total recurring platform customers grew from 367 customers in the second quarter of this year to 375 customers, and the total number of analysis for the quarter was approximately 62,000. This strong year-on-year momentum is underpinned by growing demand from new customers as well as existing customers, broadening their usage to growing number of applications. We're also excited about our momentum in North America. In the third quarter, regional platform analysis volume grew 67% year-on-year and 11% quarter-over-quarter. During the quarter, we also added several key customers in the region. Now, shifting to our third objective related to money expansion, I will turn the call over to Lara Shimoto to discuss some exciting developments in further detail. Lara?
spk03: Thank you, Yorgi. At SOFIA, we are continuing to invest in scientific innovation to land new customers and bring new, high-impact content to our customers through regular updates to our platform. This menu expansion includes new features, new applications, new data modalities, and new services. Furthermore, we intend to augment our offering across a multimodality framework, generating novel insights enabled by our expanding data assets including genomics data, radiomics data, clinical data, and future additional data modalities. Later on, Yurgi will also discuss two exciting new products we have launched in oncology and rare diseases since our last earnings call to fuel our land and expand model. Building on our suite of over 200 oncology applications, we have launched a new innovative algorithm which applies the power of our advanced analytics with the diverse data sets generated in our platform to accurately detect fusions, gene expression, and other mutation classes in RNA. This new algorithm has been designed to get maximal information from precious samples from which there is limited tissue, such as lung biopsies. With growing therapy options on market and in development for lung cancer, the ability to make the most of precious tissue sample is critical for researchers. At Sophia, we continue to see strong demand for decentralization, an increasingly important trend in the industry. In our continued pursuit of decentralizing data-driven medicine, we are on track to launch early next year our clinical decision support solution comprised of Oncoportal Web and Reporting Tool. Oncoportal Web is our newest genomics interpretation tool developed for the molecular pathologists or variant scientists who are facing a growing volume of complex genomic cancer data as labs adopt larger CGP or comprehensive genomic profiling panels. Oncoportal Web was designed to simplify the interpretation process through transparent logic and clear visualization. Importantly, Oncoportal Web employs molecular profiles, which is a more intuitive way to represent co-occurring biomarkers, reducing the probability of missing interfering variants while improving the efficiency of the interpretation process. With an increasing number of targeted therapy options, this feature is becoming more important as the potential combination of actionable mutations may expand exponentially. To support labs in a decentralized setting, we will be launching a new reporting tool which has an intuitive drag and drop feature for labs to design their own report that is tailored to local oncologist needs, namely a clear and concise format. Within Oncoportal Web, the pathologist can select which variants and supporting information to automatically populate the report generated on the SOFIA platform. The reporting tool gives labs the flexibility to tailor the report to local needs. The ability to create, customize, control, and change the format and content of the report is particularly valued by U.S. laboratories. With our expanded menu and additional capabilities, we are getting closer to our goal in cancer research of getting the right result to generate the right insight by the end user in a digestible report. This requires a comprehensive oncology offering that excel in three areas. One, accurate detection of a broad spectrum of variants at high sensitivity, which is one of Sophia's genetics core competencies that has evolved from our proprietary bioinformatics algorithms, combined with our diverse network representing more than 850,000 genomic profiles in over 70 countries. Interpretation tools that can sort through a multitude of knowledge sources with a focus on quality over quantity of insights. And three, reporting these findings in a format that can be quickly digested and acted on by the end user. At SOFIA, our team is excited to share our progress and all of these new developments. And in a moment, Yogi will discuss how we're moving beyond genomics to multimodal data in oncology. building on our increasingly expanding offerings. Overall, menu expansion continues to be a significant part of the SOFIA story, and I am thrilled to be able to share these updates with you all today. With that, I now turn the call back to Yergi. Yergi?
spk02: Thank you, Lara. You've already heard us talk about genomics in the context of oncology, in which we have made tremendous progress. We have also discussed the development of our capabilities as well as our participation in prospective and retrospective observation studies, the main one being deep lung form. Along those lines, as previously discussed, the ambitious deep lung study is well on its way, and as planned, we will expect to announce details of the study by the end of this year. Moving on to our fourth objective of partnerships, we are committed to developing partnerships and collaborations across the healthcare ecosystem with companies who provide products and services to our customers. We believe that each new collaboration we develop helps facilitate further adoption of our platform, the evolution of the solution we provide to customers, and the growth of our network and product capabilities. A larger network enables us to continue to collaborate with customers to develop new solutions and to commercialize these solutions, benefiting all users across the healthcare ecosystem. Our established partnerships continue to be productive in expanding our menu offerings with the launch of two new products, reaffirming our decision to be technology agnostic by complementing our partners with our analytical capabilities. We have extended our platform genomic analysis capabilities to another industry-leading exon to select human all exon V8. The pipeline is tailored to the unique features of this product, supporting Agilent customers. Additionally, we have made our SOFIA platform available to use with MGI's TechCo solution, which is already gaining traction This addition further demonstrates the robustness of our data analytics capabilities and reaffirms our commitment to providing users with a universal platform for bioinformatics solutions. Further, as some of you may be expecting, we have exciting news that I am proud to share. In July, we entered into a letter of intent with GS Care, and we have now executed a final master alliance agreement. Under this agreement, we will be working together with GE on a variety of opportunities in the healthcare market and collaborating on different initiatives and projects in the fields of digital oncology and radiogenomic analysis. The first projects we're working on together relate to the creation of infrastructure to integrate data between GE's Edison platform and the Sophia DDM platform as well as commercial collaboration focused on co-marketing and pilot site recruitment in the digital oncology and radiogenomic analysis space. We also intend to work together to combine our and GA's existing capabilities to jointly develop and provide multimodal analytics. This new alliance is an important milestone as we see many future opportunities to help accelerate the adoption of our platform worldwide. Furthermore, While today our sales are tailored to specific applications, this alliance could support our transition from the application setting to the enterprise setting. We are thrilled with this alliance with GL Square. It is highly consistent with our collaboration philosophy, and we believe this could be a significant catalyzer for SOFIA, as it could expand the size of our network and degree of access. We intend to pursue more alliances because we strongly believe that relationships like the one with Chi will allow us to move faster. Through collaborations, we believe we will be able to accelerate innovation, more quickly increase the size and scale of our network, connect with a larger volume of data, and offer a greater expansion of capabilities. This all together shows why we create and foster collaborations, and we are excited for what comes next. Moving now to the exciting area of bioforma market, with regards to this fifth objective, we are making excellent progress in this arena. As a testament of our continued momentum, I am excited to announce that we have signed an agreement with AstraZeneca, and as SOFIA continues to make strides in collaborating with leading global bioforma companies, we see opportunity to pursue similar agreements going forward. In this important market, we currently serve pharmaceutical and biotechnology companies and clinical research organizations or CROs. We continue to promote our current products and services, which we believe will strengthen existing collaborations with biopharmaceutical companies, as well as lead to new relationships. Additionally, we plan to develop new offerings for biopharma as we expand the number and type of new applications and data modalities on our platform. Sophie has achieved great performance in executing and in gaining more access and data in clinical markets. We continuously find ourselves better positioned in serving the biopharma market. We believe these opportunities go hand in hand. A success in one area supports success in the other. Along these lines, last quarter we discussed great traction in the vital area of homologous recombination deficiency, or HRD, in clinical markets and mentioned that we see tremendous momentum within the biopharma market as well. HRD is a complex biomarker, notably important for PARP inhibitors, that helps identify whether cancer patients may respond better to specific treatments, and its use could ultimately lead to personalized therapies that benefit the individual patient. HRD is one of our most exciting product offerings at SOFIA. and we are already seeing strong interest in this solution across our biopharma customers. We have initially focused on developing our solution using ovarian and breast cancer tissue types, but we believe other cancer types, including prostate, pancreatic, bladder, and lateral biliary tract and head and neck cancer will require HRD testing. Those are being investigated using PARP inhibitors across the continuum of care in over 150 actively recruiting clinical trials, as reported on clinicaltrail.gov. Conceptually, our approach could also be relevant beyond PARP inhibitors for other targets that are part of the HRD pathway, and if mutated, could lead to genomic instability. I am pleased with our progress across the biopharma landscape, and we are now investing heavily to expand this team to meet the growing demand for our services in this market segment, including our HRD offering. As we look ahead to the remainder of the year and into 2022, we're focused on continuing to grow across these five pillars, particularly in the U.S. Overall, I am very proud of the progress our team has made to date, and I am confident we are well positioned to execute our strategy going forward. There is much to look forward to at SOFIA, including our exciting progress in HRD, growing penetration in North America, expanding opportunities with Biochroma partners, and potential inorganic growth opportunities. With that, I would now like to hand the call over to Ross to discuss our financial results. Ross?
spk04: Thanks, Gheorghi. Total revenue for the third quarter of 2021 was $10.4 million compared to $7.2 million for the third quarter of 2020, representing a 45% increase. As a reminder, our third quarter revenues were impacted by the direct and indirect effects to the COVID-19 pandemic, as well as seasonal trends. The increase in year-over-year revenue for the third quarter of 2021 was primarily driven by new customers onboarding into our platform and improved usage rates across our existing customers, particularly in North America. Our strong growth during the quarter was underpinned by three key SOFIA-centric KPIs. They include platform analysis volume growth, recurring platform customers, and average revenue per platform customer. Our core platform customer base is comprised of those who access our platform through our bundle and dry lab offerings. During the third quarter, we saw significant growth as we onboarded new customers through our land strategy and grew usage rates through our expand strategy. Platform analysis volumes increased to approximately 62,000 analyses in the third quarter of 2021 compared to approximately 41,000 analyses in the third quarter of 2020. Recurring platform customers grew to 375 customers in Q3 of 2021 compared to 318 customers in Q3 of 2020. In addition, our average revenue per platform customer during the third quarter increased to $89,000, compared to $67,000 for the prior year period. Additionally, as a software company, we also track a number of industry-specific KPIs, which we believe are also indicative of our underlying financial performance. These key software KPIs include net dollar retention, churn rate, and LTV to CAC ratio. Even with the impact of COVID headwinds in 2020 and 2021, our net dollar retention for the rolling 12-month period has improved to 137%, which is competitive with top decile SaaS companies. The metric indicates that we are growing our revenue generated from existing customers' net of churn, highlighting the effectiveness of our expand strategy. With respect to our churn rate, I would note it's remained at a historical low of less than 1% of total revenue for the first nine months of 2021. Furthermore, our LTV to CAC ratio remains above the industry-coveted three times threshold, demonstrating our ability to efficiently generate additional value through investment and customer acquisition. Gross profit in the third quarter of 2021 was $6.5 million, an increase of 53 percent compared to a gross profit of $4.3 million in the third quarter of 2020. Gross profit margin was 63 percent in the third quarter of 2021 as compared to 60 percent in the third quarter of 2020. Adjusted gross margin was 65 percent in the third quarter of 2021 after adjusting for the capitalization of our software development expenses. Gross margins improved year over year as a result of continued improvements in managing computational and storage-related costs, while adjusted gross margins were in line with the same period last year. Total operating expenses for the third quarter of 2021 were $27 million, compared to $13.7 million in the third quarter of 2020. R&D expenses for the third quarter of 2021 were $7.7 million compared to $5 million in the third quarter of 2020. This was primarily due to an increase in employee-related expenses for R&D initiatives related to the development of new products and applications. Sales and marketing expenses for the third quarter of 2021 were $7.7 million compared to $4.1 million in the third quarter of 2020. The increase was primarily due to an increase in headcount-related expenses, commissions and sales-related costs, and higher variable expenses, including marketing and travel-related expenses as COVID-19 restrictions continue to be lifted. General and administrative expenses for the third quarter of 2021 were $11.7 million compared to $4.6 million in the third quarter of 2020. The increase was primarily driven by continued scale-up of the organization, the development of quality-related initiatives to support potential expansion of the business into more regulated markets, increased share-based compensation expenses related to the IPO, and IPO and new public company-related expenses. Operating loss in the third quarter of 2021 was $20.5 million compared to $9.4 million in the third quarter of 2020. Net loss in the third quarter of 2021 was $21.2 million or 35 cents per share compared to $10.5 million or 24 cents per share in the third quarter of 2020. Adjusted net loss in the third quarter of 2021 was $18 million or 30 cents per share compared to $9 million or 20 cents per share in the third quarter of 2020. Cash and cash equivalents were approximately $281 million as of September 30, 2021. Turning now to our outlet for 2021, Sophia Genetics now expects full-year revenue for 2021 to be greater than $40 million, representing growth of at least 41% over the prior year. With that, I'd like to turn the call back over to Yurgi for closing remarks.
spk02: Thanks, Ross. I'm immensely proud of what we have accomplished at SOFIA and continue to be even more excited about what lies ahead of us. 2021 has been and continues to be a momentous year for our organization, and we remain confident in our objectives and mission going forward. We're still at the onset of our ambitious journey and look forward to updating you as we continue our progress. With that, we'll now open up the call for questions. Operator?
spk07: Thank you. At this time, to ask a question, please press star, then the number one key on your touchtone phone. And to remove yourself from the queue, just press the pound key. Once again, that's star one for questions. Our first question will come from Tycho Peterson from JP Morgan. You may begin.
spk05: Hey, good morning. Yergi, I want to start with maybe the menu build-out strategy and just thinking about some of the more complex analysis, you know, comprehensive genomic profiling and HRD. Can you just talk a little bit about, you know, early interest traction and then, you know, how you think about those impacting ASPs over time as well?
spk02: Yes, thank you so much, Taiko. Indeed, so what we observe is that the more, I would say, data-driven medicine, precision medicine goes ahead. the more the biomarkers become complex, right? And so the more the bioinformatics become essential in identifying these biomarkers. And along those lines as well, what we observe is that as these biomarkers are being now added into the bioformat pipelines, there is a chance that they will be better reimbursed. And so as you anticipate that the ASP will go up for this type of applications.
spk05: Okay. That's helpful. And then on GE, you know, congrats on getting that deal finalized. Can you maybe just talk a little bit about next steps, timelines, other particular milestones we should be paying attention to from the outside for that partnership?
spk02: Sure. I will take it high level and then let Ross develop. So as you may remember, we had mentioned that the intent here is to partner with a player who has 4 million imaging devices around the world. And so by partnering with them, accelerate the potential of breaking data silos across hospitals, but as well across data modalities. And the two first initiatives we're working on are regarding the commercial co-promotion of our platforms as well as the connectivity of their Edison system, which syncs locally with our Sophia DDM Cloud Platform to accelerate the break of the data silos. Ross, do you want to give some more color?
spk04: Thanks, Jurgi. So obviously a lot of work, Tycho, has already been done with the GE team since we last spoke, so we're incredibly excited about the progress made on a number of the initiatives, that will benefit us in 2022 and beyond. I would say, you know, obviously there's a very large radiology conference coming up soon. We'll have a dual presence there. So I think you'll see continued momentum in our partnership coming out of that event into the new year. And overall, you know, we'll be updating you over the next several quarters as we start to embark on a number of the key initiatives underlying the partnership, And we'll update you, obviously, relative to the impact. But I would say, you know, certainly we have many partnerships and we intend to have many more. But this is obviously one where we're committing a lot of resources and as are they. And so we're very excited about ultimately what this will bring for us and Sophia as a business.
spk05: Great. Maybe the last one just on some of the, you know, recent and ongoing trends with the pandemic recovery. I mean, you kind of noted the COVID headwinds, although you haven't really, I think, quantified. But, you know, how do you think about kind of volumes versus, you know, where we were pre-pandemic? And can you give a little bit more color on the incremental site add this quarter? You know, how many were kind of hospitals versus labs? How much is driven by oncology versus neurology versus, you know, other parts of the menu? Thanks.
spk02: Sure. Thank you, Taiko. So indeed, as you see from our numbers, first, we are quite happy to see consistent growth, right, despite the pandemic situation and the fact that there are being as well some companies affected by the pandemic in terms of their number of tests that they would deliver to the patients. So in our case, the utilization has continued to grow. and the number of hospitals and labs that are using our platform has continued to grow as well quarter on quarter, moving from 348 users of our platform for bundle and dry lab in Q1 to 367 in Q2 to 375 in Q3. So I would say these numbers highlight the importance of our platform and the fact that despite the situation, our model still enables us to grow. For the forward-looking perspectives, I will leave Ross to address that. Thanks, Taiko.
spk04: So I would say in terms of how the quarter played out overall, right, and volumes, I would say it was generally as we expected. You know, overall, obviously last year we had fairly significant impact from COVID, and so we obviously called that out from the prior year. But I would say You know, the quarter essentially came in as we were modeling, and frankly, we're also seeing very strong momentum into the fourth quarter, hence the change in guidance. And so we're quite confident on our trajectory, and I would say overall with some of the new product introductions as well as some of the new announcements you heard on this call, we're quite constructive on our ability to deliver on our plan and deliver very strong momentum into 22.
spk05: Great. Thanks a lot, and congrats on the quarter.
spk07: Thank you. Thank you. Thank you, Tejko. Our next conference line up, Tejas Devant from Morgan Stanley. Can you begin? Tejas, your line is open. Once again, your line is open. Tejas, you may be on mute. All right. We'll go to our next questioner. Our next question will come from the line of Dan Brennan from Calend. You may begin.
spk08: Great. Thanks for taking the questions. Maybe just starting off just with guidance. So 41% at least growth, excuse me, at least 41% growth full year. Are you guys comfortable saying at least 4Q will be up sequentially? Because at the low end of that, you could have a flat sequential quarter just trying to get a sense of kind of what we should be thinking about for a minimum for 4Q. Sure. Thank you, Dan.
spk04: Ross, can you please answer? Sure. So, Dan, appreciate the question. So, yes. We will see revenues, volumes, et cetera, up in the fourth quarter. I think, you know, just given, you know, the highly visible nature of our business and multiple drivers, you know, given we obviously went public in the summer, we've stuck to this sort of methodology of guidance. I think you'll see from us a more formal range, right, when we eventually guide for 422, but I can confirm that You know, we are seeing very strong demand here in the fourth quarter and October and November and quite confident about the trajectory into 4Q at the end of the year. And then also we note that, you know, a number of the key customer announcements you heard on today's call start, late in 4Q and then start to contribute more in 22. And so, you know, the magnitude of the sequentials, I think, you know, remain sort of consistent with the cadence we were expecting. But obviously, it should give you also increased confidence for our trajectory into next year.
spk08: Great. Thanks, Ross. On the biopharma side, have you guys disclosed how big that business is? And can you give more color on the Astra deal?
spk02: Yes. Thank you, Ben. So, First, I would say we do see more and more demand from the biopharma industry. As you may remember, we started our journey first addressing the clinical world, right? The intent being that the broader would be in our penetration in the clinical world, the more our offering would get complete, the more data we will capture, the better we will be positioned to serve the biopharma industry. And so I think the enhancement around the AstraZeneca deal which is around the PARP inhibitors program today, highlights that our strategy is effective. Now, we're not disclosing specific numbers of the Astra deal, but you can expect in the next quarters that we will announce other similar deals with other biotech or other biopharma companies.
spk08: Great. Thank you. And, you know, I know you talk about this kind of flywheel effect as you add more customers and you drive utilization up. obviously it just contributes to the total growth of the business. Is there a point at which you do see like an inflection in the growth, you know, kind of as we look out beyond Q4, just wondering any kind of color in terms of maybe the duration of the relationship or just as we think through, could there be a point in the model where growth inflects?
spk02: No, sure. So this relationship will be multi-year with that biopharma company. And indeed, as you said, they are flywheel effects. And along those effects, we expect as well eventually that the collaboration and the development plans that we are now materializing with GE will further accelerate our ability to serve the biopharma industry, right? Because we will be in a unique position combining at scale genomic and phenotypic data longitudinally in oncology. And this is, I think, what the biopharma industry expects to be able to leverage fully on real-world data and stratify patients pre- or post-clinical trial.
spk01: Got it.
spk08: And then maybe just one more high-level kind of question. Your competitive positioning versus the big cancer labs, you know, Garden Foundation and the like, do you coexist with them? Is it a zero-sum game? Just kind of give us a sense of, Your success and their success, just kind of as you go into your customers, are they kind of looking to adopt Sophia as opposed to them, or do you have a lot of customers doing both?
spk02: Thank you for that question, Dan. So as you know, right, the U.S. market is more centralized, and as we have predicted, there is a trend towards decentralization. And nowadays we are discussing more and more with different labs and specialty labs and central labs that either wants to decentralize, if you like, their offering or don't have necessarily all the context. And Lara will give you some more call order on what we predict is going to happen in the space as basically we're moving from low to high volume data into precision medicine.
spk03: Yes, so what we are hearing is that there is a movement towards decentralization. I think we're seeing as precision medicine becomes standard of care that there's more interest in being able to maintain control of the sample and the data within that institution as well as translate that into a better patient experience in terms of turnaround time and having a holistic approach to that patient.
spk08: Great. Okay. Thank you very much. Congrats.
spk02: Thank you, Dan. Thank you, Danny.
spk07: Yeah. Once again, let's start one of the questions. Our question comes from Tejas Savant from Morgan Stanley. You may begin. Hi.
spk01: This is Neil Long for Tejas. Sorry about that. I had some technical issues earlier. But I had a quick question on the HRD RUO solution. What remains on the to-do list ahead of rollout in early 22? And will this initial launch be limited to ovarian and breast? And what's the timeline for expansion into other cancer types from there?
spk02: Yes, thank you. Lara, do you want to take this question?
spk03: Yeah, so we are still on track for our release of the HRD. We believe that This provides the market with a unique approach for measuring genetic instability as caused by HRD. And the ability to expand beyond our current tumor type is being sort of facilitated by our early access programs. Through the RUO program, we are able to get some research going around other tissue types, other tumor types.
spk02: Yes, and maybe, Philippe, you could as well further develop on the importance of the HRD signature and HRD-like genomic instability signatures beyond ovarian and breast cancer. As we know, there are a lot of clinical trials that are ongoing. Could you please further develop there, Philippe?
spk00: Yeah, absolutely. So I think HRD is clearly a very important biomarker in ovarian, as you know, today. We see a lot of traction and interest from biofamine HRD in other disease areas, prostate, breast, pancreas, where you already have a few approval as well. I think when we come back to our solution, what I think distinguishes us from the rest is we're probably one of the only ones that take a comprehensive view of HRD. So we only, not only look at the cause, but also at the consequences. So we have a panel of 28 targeted genes that look at any known mutation that cause HRD. And we also look at the low-passhole genome assay that essentially captures the consequences of HRD in terms of genomic instability. So being able to combine the two, it allows us to very finely characterize HRD signatures, but also the potential to go beyond HRD to other causes and types of genomic instability, which we believe will also open up opportunities for bioforma in ovarian, but also other tumor types.
spk02: And maybe to last, Dan, what I would add is that HRD, as I answered to Taiko as well, I think it's the proof of the benefit of our algorithmic capabilities, right? And so the more The oncology applications will require complex biomarkers. The more you will be seeing SOFIA being involved.
spk01: Got it. Thanks. And one more from me. Any impact from tightening labor markets on your hiring plans?
spk02: Yes. Thank you, Tejas. Sorry. I said that. I apologize. Ross, can you further develop on the hiring plans?
spk04: Thanks. So obviously, like many, we have seen challenging conditions, particularly in some of our more technical roles. But I would say fortunately, post-IPO and as well, given we have multiple geographies that we are hiring in where we are a very desired employer, we're seeing actually quite nice still pacing on our hiring and haven't seen really wage inflation outside of what is typical. And so we tend to be, again, I think an employer of choice in many of our regions. And I think because of that and so many folks come to Sophia for the mission and given the promise of what we're doing, we really haven't seen that, I would say, influence us. And we also, again, as a software company, don't tend to have too many FTEs in some of the areas on the labor side that we've heard some of the peers call out relative to maybe lab technicians and so forth. From that perspective as well, I think our mix also probably benefits us a bit here from that dynamic.
spk02: Thank you, Ross. And just maybe to completely answer from Ross, as you may remember, the motivation for us going public was, one, being more visible to accelerate our penetration in the chemical market and the biopharma market, but two, was as well being visible to attract high-quality individuals. And in the next months, you will see we will have a few announcements, which I guess confirms what... Ross just mentioned about the attractiveness of SOFIA to attract really very qualified individuals in joining our adventure.
spk01: Got it. Thanks for the color and apologies again for the earlier technical difficulties. No problem.
spk02: Thank you so much, Sijat.
spk07: And I'm not showing any further questions in the queue at this moment. There's still no questions in the queue. And this will conclude our conference for today. Thank you all for participating. Yes. You may disconnect. Thank you, everybody. Have a great day.
spk02: Yes. Before disconnecting, thank you, everyone, for having heard our Q3 announcements, and we're very much looking forward to engage in the next weeks, in particular around a couple of conferences that are in our roadmap and where we intend to participate with Ross. Thank you all.
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