SOPHiA GENETICS SA

Ladies and gentlemen, thank you for standing by and welcome to the Sophia Genetics fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the call over to your host, Jennifer Pottage, head of Investor Relations. You may begin.

Good morning, and thank you for joining us on Sophia Genetics Q4 fiscal 2021 earnings call. My name is Jennifer Potich, and I am the head of investor relations at Sophia. Joining me today are Dr. Yurki Kamblong, our co-founder and chief executive officer, Peter Casasanto, our chief biopharma officer, and Ross Muecken, our chief financial officer. Before we get started, I would like to remind you that management will make statements during this call, that are forward-looking within the scope of US federal security laws. These statements are based on management's current views and assumptions, which are subject to material risks and uncertainties that could cause actual results or events to materially differ from those projected. Additional information regarding these risks and uncertainties are included in the section entitled Cautionary Statement Regarding Forward-Looking Statements in Exhibit 99.2, of the report on Form 6-K 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 of its broadcast, March 15, 2022. Please note, both the replay of this call and earnings release will be available on our website in the investor section. And with that, I will now turn the call over to Yorgi.

Thank you, Jen, and good morning, everyone. 2021 was a transformative year for Sophia, and I'm pleased to share with you today how strong finish and momentum we experienced closing out our first fiscal year as a publicly traded company. I want to take this opportunity to express my sincere appreciation to the 500 Sophie employees for their extraordinary efforts and dedication. Our talented team drives our success, and I am thrilled to announce that we were recently recognized as one of Boston's best places of work for 2022, a fantastic achievement to start the year. I am immensely proud of the success we have achieved so far. and I am eagerly looking forward to what lies ahead in our ambitious journey to democratize data-driven medicine. On today's call, I will touch on the impressive progress we have made in the fourth quarter and 2021 fiscal year as it relates to the six strategic pillars guiding our long-term growth trajectory. Our new chief biopharma officer, Peter Casasanto, will then offer a more detailed look into our biopharma pillars and the massive but underpenetrated opportunity that exists in this market. And finally, Ross will review Sophia's financial results for the period and outlook. We remain fixated on six key pillars to drive long-term growth and value creation. First, accelerating the expansion of our network through new customers' adoption. Second, increasing utilization within our existing customer base. Third, driving further innovation on our platform to broaden the applications we support. Fourth, developing key partnerships and collaborations. Fifth, leveraging our platform to drive further growth with biopharmaceutical companies. And lastly, the sixth strategic pillar is excelling operationally within Sophia. Before diving further in, I would like to remind those less familiar with Sophia's story What a powerful business model we offer as a technology player in the healthcare space. Over the last decade, there has been a dramatic increase in the amount of digital data being generated within the healthcare industry. The ability to create insights from this data has led to an acceleration in our understanding of biology. However, much of this data is siloed, preventing it from being fully leveraged for the benefit of patients. Sophia, which also means wisdom in Greek, has built a unique business model to address this untapped opportunity. We developed the Sophia DDM platform to take the data of patients today to inform on how to diagnose and treat the patients of tomorrow. Sophia DDM is a platform that lives in the cloud and uses AI and machine learning to analyze complex multimodal digital health data to generate insights. Sophia represents a new category of software companies. and locking data silos and helping healthcare professionals work together as a community and deploy their collective expertise. Through SOFIA DDM, we can enable the practice of data-driven medicine in any hospital, laboratory, or pharmaceutical company around the world. We sit at the center of a virtuous cycle and benefit from powerful network effects. This means as the number of SOFIA DDM users increase, the volume of raw data input increases which then leads to a further increase in actionable insights continuously being generated. The platform improves and scales as more data is analyzed, which ultimately snowballs into more and more patients benefiting from data-driven medicine. Our software model was optimally designed to support rapid growth, which further strengthens our position for the future growth. And now onto our six key pillars. starting off with our first pillar of customer adoption and network expansion. Healthcare institutions continue to choose Sophia as their trusted cloud-based analytics platform. We had a strong finish on the first quarter with a total of 791 customers across more than 70 countries. The company's priority has remained on the growth of the platform in the U.S. market, which we view as Sophia's largest addressable market, at an estimated $8 billion for clinical oncology and rare diseases. We are continuing to invest in our U.S. opportunity and firmly believe there is significant runway ahead of us. We are pleased with our progress of onboarding clinical customers in this region and are expecting several signed agreements with Tier 1 institutions in the coming months. In the NORAM region, we added seven new logos in 2021. Additionally, we are seeing solid growth with our clinical customer base in the EMEA, LATAM, and APAC regions. On a global level, we are matching our momentum in the RAM. In the APAC region, we recently announced onboarding a leading Taiwanese genetic testing company called Sofiva Genomics. This is important to highlight as it is the first clinical institution in this region to offer SOFIA's newly launched HRD solution which is one of our most exciting product offerings. The validation of our solution by this important customer is already underway. So, FIVA Genomics found great success while implementing our solution in a clinical setting for advanced HRD detection powered by the deep learning algorithms embedded in our platform. Beyond HRD, we are seeing substantial demand in APAC for oncology applications, and we recently signed new customers in Japan South Korea, Singapore, and Hong Kong. Our continued success in landing customers across a broad geographic landscape is a testament of our talented team and execution. We recently appointed Ken Friedman as our Chief Revenue Officer to lead our global clinical sales efforts. Ken has more than 25 years of experience serving some of the most innovative providers of technologies. His expertise in go-to-market strategy and execution will be a fantastic addition as we continue our U.S. and global footprint expansion plans. Moving on to our second pillar of increasing utilization within our existing clinical customer base. As communicated on our last quarterly call, we employ a land and expand strategy that concentrates on winning new customers and then driving greater utilization of our solution by those customers. We are encouraged with the momentum we see with users continuing to increase their consumption after experiencing the value of Sophia's platform. Total recurring platform customers grew to 382 in the fourth quarter of this year, up from 375 customers in the third quarter. Total number of analysis increased to 66,000 in the first quarter, up from 62,000 analysis in the third quarter, representing a growth rate of 6% quarter over quarter. For us, one way of growing is continuously delivering new content, which leads to our next pillar of expanding money offering. This is an instrumental part of Sophia's stories, and we are laser-focused on driving innovation across our offerings. We continue to provide platform users with frequent updates incorporating new features, new applications, new data modalities, and new services. In addition to our newly launched HRD capabilities, we expect to unveil several exciting new products later this year, one being CurePath, which was recently introduced at the J.P. Morgan Health Care Conference in January. CurePath is a model of the platform within our oncology applications. CurePath will guide clinicians along the care continuum by better predicting an individual patient's disease progression and treatment options. It provides user and indication-specific comprehensive use of patient molecular, clinical, and imaging data powered by robust machine learning algorithms. We are extremely excited about this product and believe it will further differentiate SOFIA as a tech company. SOFIA's observational clinical study called DIPLON4, which was announced at RSNA in November, validates a predictive model fueling Kirpa. The study leverages machine learning-enabled analysis of the aggregation of real-world green T-modal data to identify and validate predictive signatures associated with response to immunotherapy and prognosis of patients with metastatic stage 4 non-small cell lung cancer. Such signatures could help identify patients that are likely to benefit from immunotherapy versus that are not, as well as stratify patients according to risk. Ultimately, this will empower clinicians to make more informed therapeutic decisions for their patients and accelerate the recruitment of the right patients for clinical trials run by the biopharma companies. Since launching the study in November, 16 sites across six countries have signed up to participate. This should contribute to over half of the 4,000 total patients targeted for enrollment over the course of the study. The demand and appetite we have seen from institutions, including prominent academic centers and hospitals, to join this study has been tremendous, and 13 centers, including UMass, have already been activated. We are pleased with the strong traction of the study, and we view the positive reception from the participating sites as a testament to the high level of interest in unlocking the predictive potential of multimodal health data sets through large-scale real-world study. From an operational perspective, we have already enrolled hundreds of patients into the study, and we will provide an update on preliminary findings at ASCO this year. And now on to our fourth pillar of developing key partnerships and collaborations. Our robust partner ecosystem is united by a common and noble goal, to better the lives of patients. We are achieving great momentum with our partners in enabling our shared customer base to generate actionable insights. We announced last July that we entered an alliance with GE Healthcare to integrate data between GE's Edison platform and Sofia DDM platform, as well as commercial collaboration focused on co-marketing and pilot site recruitment in the digital oncology and radiogenomic analysis space. We are currently working together on a new statement of work to begin developing the software infrastructure and architecture that will enable the bidirectional exchange of data between GE's Edison platform and the Sophia DDM platform. Our partnership has been going well, and we have already seen significant commercial traction in lead sharing. This collaboration integrates well with the developments mentioned earlier, including CurePath and the DeepLung4 study. In additional collaboration news, we announced this month that we signed a letter of intent with Ambre Genetics, which is a genetic testing and clinical diagnostic company. Our collaboration will be centered around our shared long-term focus of leveraging multimodal data to accelerate research and the understanding of human diseases. Of the many opportunities in this collaboration, our focus will start on HRD. Shifting over to the next pillar, which is further strengthening our biopharma strategy. This represents a massive opportunity for us. While we have made excellent strides in enhancing our business in the pharmaceutical industry, we believe there is still significant market share to be captured. It bears reiterating that in this important market, we currently serve pharmaceutical and biotechnology companies, as well as clinical research organizations. We continue to promote our current products and services, which we believe will strengthen collaborations with biopharmaceutical companies. To head our dedicated efforts in biopharma, we recently brought on Peter Casasanto as chief biopharma officer. The executive team is thrilled to have Peter, who has a high degree of expertise and deep relationship in this area, with more than 15 years of industry experience. He joined us in January from Selcarta, a global leader in precision medicine. Prior to Selcarta, Peter was in a senior corporate development role at Tempus and previously held leadership roles at Neogenomics and LabCorp, where he scaled pharmaceutical strategies. I am delighted to welcome Peter to the team and look forward to his contribution. Later on the call, Peter will walk through our plans and positioning to further strengthen Sophia's presence in this space. And now shifting to our sixth and final pillar, excelling operationally within the organizations. We remain well positioned from a capital perspective to execute our near-term operating and strategic plans while retaining a level of flexibility to pursue select strategic initiatives. As Ross will discuss later, we are monitoring market conditions and remain focused with our capital to continue excelling operationally as a company. With that, I will now turn the call over to Peter.

Thank you, Yergi. And hello, everyone. I'm excited to be joining the SOFIA team at this point in the company's journey and look forward to help strengthening BioPharma's strategic positioning. SOFIA is a company that I have long admired for its mission-driven business model and successful performance track record. BioPharma represents a large opportunity for us, given our cloud-based architecture and decentralized global model that allows us to ingest, harmonize, and analyze multimodal data. This is valuable and unique data spanning hospitals, laboratories, and institutions that is frankly difficult to get elsewhere. These data bring a much-needed heterogeneic data set to represent the environment seen in the real world, particularly for areas like oncology. The ramp-up of the SOFIA DDM platform on the clinical side is in turn feeding our unique ability to support biopharma in finding patients and associated biomarkers of interest. This applies to trials and for marketed drugs. as well as helping our customers understand the global testing landscape. Together with our own solutions, these real-world data insights can scale and ramp up rapidly, supporting a future revenue opportunity. Among the many exciting opportunities we see in the biopharma arena, Sophia's HRD solution stands near the top. Taking a step back, HRD stands for homologous recombination deficiency. 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. We currently have one European patent application and one U.S. patent application relating to a method to detect HRD, which will be used in our solution. The solution's decentralized nature allows users to preserve ownership of data and save time while also offering comprehensive genomic insights without compromising the data's quality. In line with the strong traction we are already seeing with the solution, we recently announced a partnership with AstraZeneca to expand access to in-house HRD testing across European laboratories and institutions. Having AZ as a partner further validates our model to democratize data-driven medicine, leveraging a decentralized model and innovative platform for clinical decision support. This is just the tip of the iceberg, and we are excited to talk with other biopharma partners around our capability to develop and deploy similar solutions globally with a focus on patients and technology-forward approaches. We expect this to be one of many biopharma partnerships that we will form on our journey. The market right now is robust. Data has become front and center for most of the large pharma companies and are now instrumental sources to fuel both early adopters and newly formed informatics and analytics teams intersecting across multiple stakeholders, from discovery to R&D to clinical development, health economics and outcomes research, digital health and commercial, among others. Each of these represent potential SOFIA customers with the end goal of supporting the biopharma industry with an enterprise-wide data solution. A lot of effort is going into evangelizing the SOFIA value proposition. especially as we continue to grow our genomics database and add in other key multimodalities. These include imaging radiomics via the GE partnership and clinical and biologic features to develop, test, and validate our predictive analytics algorithms. The addition of the radiomics feature extraction, coupled with genomics and outcomes data, represent a unique and significant value proposition to the biopharma market. It's an exciting time. and I look forward to the opportunity to support Sophia's plans for growth within the biopharma space. And now, I will turn it over to Ross to review the financial results in more detail.

Thank you, Peter. We saw continued strength across the board in Q4 with excellent execution and operational efficiencies, setting us up for a strong end of the year. There were solid consumption trends across our customer base in the fourth quarter, with total revenue growing 40% year-on-year to $10.9 million on a reported basis despite FX headwinds, which negatively impacted our growth by approximately 250 basis points. For the full year, total revenue for 2021 was $40.5 million compared to $28.4 million for 2020, representing 42% growth. The growth in revenue was primarily driven by new customers added to our platform, coupled with increased usage rates across our existing customers. Our net dollar retention rate for the full year 2021 was 142%, which is considered best in class among elite cloud-based software companies. Our quarterly revenue churn remains below 1%, and our annualized revenue churn rate has remained at a historical low of approximately 3% of total revenue for 2021. Additionally, our LTV to CAC ratio remains noticeably above the coveted industry benchmark of three times. Platform analysis volumes increased to approximately 66,000 analyses in the fourth quarter of 2021 compared to approximately 44,000 analyses in the fourth quarter of 2020. Average revenue per platform customer for the full year increased to $92,000 compared to $70,000 for the prior year period. Gross profit in the fourth quarter of 2021 was $6.8 million, an increase of 40% compared to a gross profit of $4.9 million in the fourth quarter of 2020. Gross margin was 62% in the fourth quarter of 2021 in line with the prior year period. Adjusted gross margin was 65% for the fourth quarter and 64% for full year 2021. Total operating expenses for the fourth quarter of 2021 were $27.8 million compared to $16.2 million in the fourth quarter of 2020 on an IFRS basis. R&D expenses for the fourth quarter of 2021 were $6.4 million compared to $5.2 million in the fourth quarter of 2020. Sales and marketing expenses for the fourth quarter of 2021 were $8.6 million compared to $4.2 million in the fourth quarter of 2020. General and administrative expenses for the fourth quarter of 2021 were $13 million compared to $6.8 million in the fourth quarter of 2020. Operating loss in the fourth quarter of 2021 was $21 million compared to $11.3 million in the fourth quarter of 2020. Full year operating loss was $71.5 million compared to $37.4 million for 2020. Adjusted operating loss in the fourth quarter of 2021 was $17.6 million compared to $10.9 million in the fourth quarter of 2020. Adjusted operating loss for 2021 was $61.5 million compared to $34.2 million in 2020. Net loss in the fourth quarter of 2021 was $21.4 million or 33 cents per share compared to $10.5 million or 22 cents per share in the fourth quarter of 2020. Adjusted net loss in the fourth quarter of 2021 was $17.9 million, or 28 cents per share, compared to $9.9 million, or 21 cents per share, in the fourth quarter of 2020. Net loss for the full year 2021 was $73.7 million, or $1.33 per share, compared to $39.3 million, or 93 cents per share, for the full year 2020. adjusted net loss for the full year 2021 with $62.3 million, or $1.13 per share, compared to $35.7 million, or $0.84 per share, for full year 2020. Cash and cash equivalents were approximately $265 million as of December 31, 2021. With respect to our capital position, we believe we are well positioned to execute our near to medium term strategic and operational plan. We will continue to selectively invest in our business to drive growth while maintaining a strong capital position and the optionality to pursue strategic initiatives, including both organic and inorganic investments. Now let us turn to our guidance and outlook. Consistent with the forecast we provided earlier in January, Sophia expects full-year revenue for fiscal 2022 to be in the range of $51.5 million to $54 million, implying growth of 27% to 33%. With respect to our quarterly revenue cadence, we would anticipate our results to be slightly more second-half weighted versus 2021, given the timing of several key product launches, as well as the anticipated ramp of key new business width. Overall, we remain confident in the momentum of the business as we build an even stronger Sophia in 2022 and beyond. With that, I would like to turn the call back to Yurgi for closing remarks before taking your questions.

Thank you, Ross. After a successful and unforgettable year in 2021, our focus shifts to Sophia's future. We're extremely proud of our performance, which we believe reflects our continued ability to execute our vision and the opportunity ahead. Our six pillars remain our foundation to drive growth and value creation for this year, as well as the years to come. I am encouraged and as confident as ever about the long-term path that we have embarked on. We have a fantastic opportunity to drive compelling returns and shareholder value. As I reach the end of my closing remarks, I am pleased to announce that Sophia will be hosting an investor day in the second half of this year. Stay tuned for more details to come. Thank you to our partners, customers, investors, and employees for joining us on this journey. Without you, none of this would be possible. I look forward to continuing to update you on our future success of democratizing data-driven medicine. Operator, you may now open the line for questions.

Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touch-tone telephone. If your question has been answered, you should press the pound key. Our first question comes from Tejas Savant with Morgan Stanley.

Hey, guys. Good morning, and thanks for the time here. Maybe one for you, Ross, to kick things off. Can you just walk us through your assumptions of the low versus the high end of the guide, and then perhaps lay out what's excluded from the guide at this stage?

Yes. Good morning, Tejas. This is Yogi, and I leave Ross to answer directly your questions.

Thanks, Tejas, for the question. So I would say, you know, obviously a number of different variables relative to utilization assumptions, ramping of new business, also FX we did, as I noted in the prepared remarks, have, you know, an unexpected, I would say, detriment in the fourth quarter, and we're continuing to see some of that in the first quarter. So a lot of it is, frankly, just relative to some of the uncontrollable factors we have in the business. But overall, I would say relative to what we presented, we tried to offer what we have extreme visibility on, right? And clearly, as you pointed out, there's a number of pieces, whether that's around some of our pharma contracting, whether that's around HRD, whether that's around our relationship with GE and some other elements. that could provide incremental contribution over the course of the year. You know, we're very fortunate to have a business that's incredibly visible, and so we wanted to present something that we felt, based on our backlog that we were carrying into the year, as well as the bookings momentum we saw in 2021 and the utilization trends, something that we felt very comfortable with at both ends of the range.

Got it. That's helpful. And then just on the point you made about visibility, guys, I mean, in terms of things like labor shortages in hospitals or perhaps shortfalls in cancer screening volumes, are you seeing any of those sort of – did any of them impact January and have those trends improved here into March? And can you comment on, you know, customer appetite to trial new solutions given the, you know, uncertain operating environment here and inflation pressures here?

Yes, thank you, Tejas. So indeed, the current environments are being, I would say, a bit unpredictable overall, right, in the world. Now said that, you may remember that we're lucky or fortunate with our business to support academic centers primarily. And so in terms of volumes of patients, their volumes are not fluctuating, right, with COVID or as well with what's happening now in Ukraine. So we don't see an impact on the volume of activity of our clients in the platform. That is updated every hour. So we have an hourly view on what's the consumption of the platform. We haven't seen that in January. We haven't seen that in February. We haven't seen that in March. And I would say thanks God, right, because in the end it's patients that otherwise wouldn't benefit from this type of testing and then maybe as well treatment options that they could benefit from. Now, in terms of appetite stages, we do see a lot of appetite. In particular, and I think we've been quite clear about that, but regarding HRD testing, as you may have heard as well, now PARP inhibitors are to be used as adjuvants for breast cancer treatment. So people understand that many more patients will have to be tested with the HRD score. And we do see a lot of demand there across the board from APAC to NORAM to LATAM as well as Europe.

Yeah, just to add on to what Yurgi shared, I would say, you know, in terms of the first quarter, you know, it's always tough to ascertain sort of certain factors, right, and what drives. I would say overall demand has been pretty consistent and strong throughout the period. And so We've seen a number of the notes from peers and, frankly, haven't seen that same level of volatility. That being said, I would say on the new business side, you know, it's a really interesting period for us. We're seeing, I would say, unprecedented activity with very large customers. So the size of certain RFPs or quotes are much bigger than what we have seen in the past and some quite significant. That being said, I do think decision-making, particularly in the early part of the fourth quarter, likely was impacted, right, in terms of folks being distracted in January. But we've certainly seen, I would say, continued activity throughout the quarter on the new business side. And, frankly, overall for us, I'm as encouraged as I've been around not only the size of the conversations, but the types and the players that we're discussing with. And so I would say, overall, it's still quite a healthy environment for us. But, obviously... You know, as I mentioned when I answered your question with respect to the range, there are some things we can't control. And you can obviously see the situation in the Ukraine, what that's done to some currencies. And so that's probably, for us, more of the volatility than the underlying, I would say, drivers of the business.

Got it. And then one final one for me here on Care Pass. Yogi, can you help us put some numbers or perhaps size this opportunity? In the past, you sort of mentioned the radiologists and pathologists being the initial demographic, but longer term, there is a broader opportunity among payers who could be interested in multimodal data as well. Help us think through some of the addressable market sort of implications of Care Pass.

So to start with, I can't disclose numbers regarding the addressable market stages. But beyond that, I think given you're touching on something very important, it's an opportunity for me to share with you again what is our vision like, right? So we believe that there will be a tech player that will break data silos across hospitals and data modalities. And in particular in cancer, this will enable hospitals to to basically monitor real-time, real-world patient cases versus other patients that suffered from the same type of cancers and have been treated with different type of therapies, right? And so by doing that, one can start clustering patients to better empower oncologists in making decisions when it comes to the most promising treatment path. As you may remember, we launched an effort in the CURPATH for deep lung cancer, so stage 4 non-small sanguine cancer cancer, which are patients that today primarily benefit from immunotherapy, and where actually there is not a great predictive model to know who will benefit from the therapy and who will not benefit from that therapy. And as you know, immunotherapy becomes more and more prominent in cancer, right? So, which gives you an indirect sense of the size of the market. And so, the numbers that we've been highlighting this quarter are more related to our adoption of the CURPAS in the context of the Diplom-IV, where we said that we've been already able to activate 16 sites to run this clinical trial or clinical study, which is tremendous, right? Because as you may remember, Tejas, we announced the launch of this study in November last year at RSNA. And since then, we've been, I would say, very appealing to many and being able to attract 16 sites across these six countries, including recently UMass. and we're going to present the first results at ASCO this year. Beyond the clinical market where the CURPAS could serve the oncologist, as I was explaining, these data are extremely important, obviously, as well for the biopharma to deliver to the market more targeted treatments, which is an advantage with our technology.

Got it. Very helpful. Thanks, guys.

Thank you, Teja. Have a good day.

Our next question comes from Mark Massaro with VTIG.

Hey, guys. Thank you for taking the question. I guess, Ross, you talked about, you know, you're seeing unprecedented activity from large customers. Can you give me a sense for how much of this is coming from academic centers or labs in the U.S. versus maybe hospitals, labs, and or biopharma globally?

Yes. Hello, Mark. Good morning. So, indeed, as you may remember, right, we've been primarily serving academic centers from inception, which, as you know, are very sophisticated centers. And I think this demonstrated the uniqueness of our technology, right? Because to be able to penetrate these academic centers, you need to come with a technology that is highly differentiating. And more recently, we have been announcing important contracts. We've been signing with some reference labs around the world. So last year, we announced DASA being upgraded with our HRD capabilities. This quarter, we announced SOFIVA Genomics in Taiwan being upgraded or actually adopting our HRD capabilities, so another private lab. And as you know, there was always a question whether a technology player like SOFIA could have as well great success in the U.S. where more samples are going to the reference labs and the central labs versus other countries which are much more decentralized. So the good news is that, yes, we do see traction. You may have seen our press release with Ambre Genetics where we are partnering so that we will be able to eventually support all their bioinformatic needs. And we see the same traction with many other reference labs and central labs in the U.S. right now, Mark. And I think to some extent, you know, the industry is becoming more sensitive about industrializing solutions. And so favoring tech players like Sophia who can bring robust day-to-day outcomes from a platform rather than build themselves their own bioinformatics teams, right? So, we expect to be signing much more of this type of contracts in the future, and by doing so, grow our business in the Noram market.

Okay. And I would just add on to what you're... Go ahead, Ross.

I was just going to say, Mark, I just add on. I think, obviously, these deals are larger and more complex and take a bit more time, but I think... It's interesting, if you look again at our activity levels in the business, it's interesting the number of players in the realm that Yergi spoke to in the U.S. and ex-U.S. that are all coming to, I think, a similar conclusion at or around the same time, right? So, to me, it feels like there is some shift in recognition that elements on the data side aren't core, right, to many of these businesses and or they need to have someone like us who's a technology enabler allow them to achieve sort of the strategic merits that they want to strive for in a cost-efficient way. And so I think, you know, that's very encouraging for us and it's frankly a new development over the last number of months and I'm Again, quite excited about what I'm seeing and the activity levels, and hopefully we'll have more to share for you over the balance of 2022.

Okay, and then as we think about CarePath, you know, you talked about UMass. I think you talked about 16 sites have adopted. And how should we think about the rollout of CarePath in 22, maybe into 23? And then I think you talked about a study that we may expect to see at ASCO. How should we think about just CarePath rolling out in any data readouts over the coming year?

Yes. So the stage we are in, basically, Mark, is a stage where we are demonstrating the value of following this radiogenomic data longitudinally, right? And we decided to start with non-small sanguine cancer stage 4 for patients that are being treated with immunotherapy because, as I was telling to Tejas, there is not good biomarker to predict who would respond or would not respond to immunotherapy. And these type of treatments are expensive and can be toxic as well, right? So with CurrPath, as one is gathering data, we believe that thanks to our machine learning techniques, we will be able to create a cohort of patients to basically give a more informed perspective to the oncologist on what would be the chance for that next patient versus other patients to benefit from immunotherapy. So along those lines, the market adoption is anticipated not before we start disclosing the numbers, right? So we are building it thoroughly, step by step, first for non-spontaneous cancer, as I explained, The first data will be exposed to the market at ASCO. Following what, we're going to continue the study. And just as a recap, this study aims to follow 4,000 patients longitudinally and should end by 2023. So if you like, for this potential predictive capabilities, Mark, you shouldn't expect the career path being commercialized before end of 2023. But aside that, as we do so, we are building capabilities for the biopharma industry. And we could, before we release the results, the final results on the Diplom4 study, already leverage on our current past capabilities to help the biopharma industry basically further pilot these type of studies. And maybe, Peter, you want to give a perspective of what's the power of our model here versus what you have seen in other companies where you had senior leadership roles.

Yeah, sure. Thanks, Yergi. You know, The deep lung force study is definitely a very important area right now in the biopharma conversations that we're having, particularly around, as you mentioned, how can we look at these patients longitudinally? I mean, I think that's the key, really understanding their treatment outcomes in coordination with their genomic and radiomic data. And to have a platform that can follow these patients in the real world is critical, right? And so I think The other key piece there is now we're having conversations with biopharma as to essentially how we can stand up care path for clinical trials. So I think, you know, when you straddle both clinical trials and real-world data, you know, the market potential really becomes quite large.

Yep, that makes sense. My last question, obviously, you know, you have strong visibility with your base business. You know, that keeps clicking and resonating around the world. But I'm just curious, you've talked in the past about pursuing digital pathology, spatial genomics, transcriptomics, metabolomics, proteomics. So how do you balance maybe some of the investment in your base business and going out and winning new customers versus investing in new platform plays for the future?

Sure, Mark. So as you may remember, our philosophy is first to be able to support labs in the clinical market as well as biopharma companies with data that already exists today, right? And so imaging data are the preeminent in the field of cancer to follow longitudinally patients. Genomics data started now to be adopted. Of course, pathology information is very important, but there are still few scanners to digitalize the slides out there in the market. So our philosophy is that as this type of technology will move from the life science field to the clinical market, our platform needs to be ripe so that we can onboard this type of data modalities. But along those lines, maybe on the biopharma side, Peter can give you a sense as well of what is the appetite and the demands today for multimodal and diverse or mixed data sets.

Yeah, sure. Thanks, Yergi. So, Mark, we're actually having these exact conversations with biopharma right now. You know, they're looking at what we're doing on, you know, our version of multimodal, which has been, I think, focused more so on genomic and radiomic with the but the clinical data and, you know, these biopharma have other omic data that they've been generating with, you know, partner labs. You mentioned digital pathology, for example. That's just, that's definitely been a sort of a hot ticket item, if you will, because they know we already have the infrastructure and the algorithms to do imaging segmentation for radiomics. They want to also then bring in their digital pathology data and add that as yet another data stack that we can bring and include into our predictive algorithms. So whether it's us doing the digital pathology segmentation or even just kind of bringing in their own segmented data from a partner they may have been working with, either way, they see the power of adding that plus radiomics and genomics and clinical. And, you know, so you're just kind of continuously adding these layers and these data stacks that then it just increases and helps with the fidelity of the algorithm, right? So I think digital pathology for sure, and then we have some others, you know, some other sort of genomic-type data as well as proteomic data that they want to also bring in. So, you know, that's where this is heading, and that's why we're excited, because it's really going to make these predictive algorithms stronger as we move forward. Okay, that's it for me.

Right, you should... Yeah, okay. Just one comment around that.

Obviously, we're, as well, very careful about cash management, and maybe Ross wants to make a comment around that.

Yeah, you know, one other thing, Mark, just to keep in mind, right, we already have a fairly, I would say, established commercial model and a product market fit, right, for our platform. And so, in that sense, you know, our LTV to CAC, right, remains really robust. Frankly, it may even be too high right now. And so... in that our commercial investments are yielding incredibly strong returns. And so that really allows us to think about a number of these opportunities and also utilize partnerships which tend to be capital efficient. And so we're fortunate in our model that we're able to balance many of these ambitions being a software player without having to materially ramp up spend. And so on that, you know, we're able to move into many of these exciting growth areas but maintain, I would say, the operating burn and profile you would expect for a business like ours, which differs from many of the other peers, right, traditional peers in the life science space.

Thank you. Our next question comes from Dan Brennan with Cowan.

Great. Thanks, guys, for the questions, Yorgi, Ross, and Peter. I guess maybe the first question would just be on the 22 guide. So you grew 42% in 21 and FX, excuse me, you know, is close to 45. You know, the guide this year, I think the midpoint is about 30. Obviously, you've got, you know, some of the Omicron impact still, but I'm just wondering, is that just conservatism or are there other factors to consider with the step down in growth?

Thank you, Dan, and good morning. So, first, I would say, Dan, we are very proud, right, about this growth, 42% year-on-year as being tremendous for Sophia.

And Ross can give you more color on your question.

Yeah, I think, Dan, just philosophically, right, we want to set realistic expectations. And, again, our business is super visible, right? our goal is to consistently be able to perform, right, or outperform. And so you should think about that. And we're relatively conservative, you know, as a team in terms of how we externally communicate. And so you should think about that in the context of the guide. But I would say I would certainly not think about, you know, the growth that we've got into the 30%. it's not being still quite strong. I think it's a very robust environment. Obviously, as I've talked about a bit, we will see from an FX perspective, at least in the current market, a reasonable headwind year on year. But I would say aside from that, we hope to be able to share with you consistently strong performance. And again, as the macro, you know, hopefully does not deteriorate at least further from where we are and we consistently outperform and you see from us Several of the other exciting things we've alluded to on this call, we hope to be able to continue to deliver strong results over the balance of 22.

Great. Thanks for that. Maybe on the U.S. side, it's obviously a critical growth aspect or focus for you as a percentage of revenues, you know, it's picked up here the past couple years. Can you just, or, you know, I think it's around 10% or so. Can you just walk it through kind of your mix of customers in the U.S. today? between AMCs and maybe some of the larger, maybe more reference lab-type customers and smaller community? And what can drive a bigger inflection in the U.S. growth rate here to see it become a bigger part of your business going forward?

Yes, thank you, Dan. So as you may remember, right, when we started in the U.S., we started really with academic centers. And we've been sharing a number of names which are really tier one prominent institutions like Moffitt or Mayo Clinic and others who are users and customers of our platform. Now, as you know, a lot of samples as well go indeed in the U.S. to reference labs and central labs. And we are seeing more and more traction there with those type of labs. And we just announced this week, as you may have read, the press release regarding the letter of intent we have signed with Ambre Genetics, which I think can highlight what we can do with any reference labs and any central labs as being an enabler, right, for their own business. So this will be definitely a way to grow for us in the U.S. Beyond that, Dan, beyond so penetrating, if you like, these accounts in the U.S., we can grow as well with Ambre. multimodal capabilities. And this goes as well in line with what we have been discussing, again, with embryogenetics or Mayo Clinic to take two examples, where beyond genomics, we're starting together as well to build capabilities which are multimodal to combine genomics and radiomics data. And last in that journey, obviously, our partnership with GE, which is already very well set, right, in the U.S. labs and hospitals, could be an accelerator for Sophia to penetrate the market.

Great, thanks, Yirgit. Maybe, you know, in terms of the ASP per customer, is the right way to think about it kind of in that, you know, mid-single-digit-plus type of level, or as you add these capabilities, could there be an inflection in kind of the revenue capture per customer going forward at a moment that big?

Russ, you take it? Sure. So I would say on the ASP side, obviously we've had now for many years a very favorable trend. I would say consistently it should be certainly apples to apples in that, you know, mid-single or low to mid-single range. I would say overall, right, it will very much depend on product mix and how the market develops, right? So you think about the shift to larger panels, right? you think about adding on incremental capabilities over time in radiomics or digital pathology or some other areas, those are going to have different impacts, right, on the mix and on the ASP. And so I would say overall, we feel quite confident that our percentage, right, of the total value share of a patient or diagnostic will go up materially over time. And I would say... Again, maybe going forward, we'll try to provide a little bit more color on same-store ASP movement versus overall ASP movement because, again, I think mix will have a huge impact at periods on how that may trend. And so with that, I would say stay tuned. But, again, overall, we feel quite confident that as a percentage of that total diagnostic or patient cost, our value share is moving in the right direction.

And last, along those lines, Dan, we very welcome as well the fact that more and more things will be regulated, right, in our space, because this should increase as well the reimbursement per patient for genomics and beyond, and as well would, I would say, make the market bigger Because for not the early adopters, but the late adopters, having a regulated market basically reassures them, right, on the fact that they will be able not only to support patients, but be well reimbursed for this activity. So along those lines, again, regarding HRD, which is something we've been speaking a lot about, we have good hope that the paper analysis will be significantly superior to what we have today in terms of ASP. and that they should contribute on seeing our ASP go up as we have been seeing over the last eight years.

Great. And if I can just sneak one more in. Just on biopharma, how do we think about the impact on your revenues and profitability as biopharma grows as a percentage of mix? So could you help us think through what's assumed for biopharma contribution this year Could we expect to see additional agreements like the ASHRAE agreement and then any comment about kind of where biopharma could go over the next few years?

This is a bit early to share with you, Dan. You know, we like to share numbers on things where we have, as Ross said, supreme visibility, right? And so this requires having already an ongoing business, but when it comes to numbers, interaction. Peter, can I invite you to the number of discussions we're having right now with the pharma?

Yeah, sure. Thanks, Yergi. So the biopharma is definitely the number of conversations have ticked up quite a bit. I mean, we're now speaking with 18 top 20 large pharma globally. And these really range from you know, our genomic insights for real-world data to the multimodal studies that we've talked about all the way through to new product launches like HRD. So, you know, while we can't give the revenue mix today, I mean, just rest assured that, you know, these conversations lead to more proposals, more proposals lead to more bookings.

Great. All right, guys, thanks a lot.

Again, ladies and gentlemen, if you have a question or a comment at this time, please press the star then the one key on your touch-tone telephone. Our next question comes from Julia Quinn with JP Morgan.

Hi, good morning. Thanks for taking the question. Just a couple of follow-ups. Regarding the DEPLON study, could you give us a sense of the timeline and when we might expect a product to be commercialized around it? And is this, you know, the main study that you're planning to run? as a beachhead for multimodal, or are there other potential indications that you are planning to pursue in parallel?

Yes, good morning, and thank you, Julia. So, a couple of answers, right, to your question, which is an important question. So, as we are being here, so we are building this platform to be multimodal, right, and so this is extremely important to be able to cluster patients and basically give to the oncologist a more informed perspective of how a patient, a given patient, looks like other patients. And so in this context, we started to power up our care path module in the platform with a deep look for data, which intend to basically follow in a study 4,000 patients across about 30 sites, for the next 18 months now, so that we would be eventually able to equip oncologists with new ways to follow patients, but on top of that as well, be able to eventually predict which patients suffering from non-small cell lung cancer would respond or not respond to immunotherapy. And that's important because, as you know, immunotherapies have become very prevalent, but in the meantime are very expensive, and there is no clear biomarker that can explain who will benefit from this type of treatment or not. So in terms of product, to answer your first question, in the clinical market, We don't intend to sell these CURPAS deep lung-related capabilities before the end of the study, right, because we have to make it very thorough, and we are developing everything as well under design control to support our claims. Beyond that, the CURPAS capabilities are very important for other types of cancers, to answer your second question, and so we contemplate to launch as well other studies. eventually around brain cancer, eventually around breast cancer, to be seen. But indeed, the platform capabilities on the cure path are being used so that they can be universal and holistic to any type of solid tumor. And that's a very important point, so thank you for the question. Last, beyond the clinical market, we can already leverage on the career path with the biopharma, right? And Peter and his team today have been having discussions over the last weeks with 18 out of the top 20 pharma worldwide, including our career path capabilities to eventually as well support real-time, real-world clinical trials in a decentralized way while harmonizing and collecting the data into our platforms. And in that sense, to finish, Julia, the GE partnership as well is important for us because if we connect the Kirpas and Sofia DDM into the Edison platform of GE, we can accelerate as well the collection and the harmonization of imaging data as well as clinical data that's already being collected by the Edison platform locally into this site.

Thank you. That's very helpful, Kalar. And then just in terms of large central labs, and you mentioned that you expect a number of large customer announcements in the coming month, is it possible for you to give us a sense of how many central labs you're working with or in discussion in the pipeline today? And then presumably these central lab customers are stickier and run at a much higher pull-through versus your regular customers today. Do they demand the whole menu or only pieces of the workflow? I mean, is there a difference for these central labs in terms of the capabilities demand or their willingness to share data? And how should we think about the pricing and profitability profile of these central lab customers?

Yes, thank you, Julia. So first, I cannot share with you numbers, right, regarding our pipeline. But what I can tell you is that we're discussing with most of them today. And to answer your second question, we're discussing with many of them for different type of applications. It's very rare that it's to cover all their needs because themselves have already established solutions for some of the testing that they already have in routine. Now, AMRI is a bit different. So AMBRI that we just announced could be indeed a very broad and global partnership to eventually cover all their needs. And I think this is obviously what we aim to do with any, right? But our job in the end, Julia, is very meticulous. First, we need to demonstrate these central labs that we bring benefit for a specific application, such as HRD or such as gene fusion detection or exome data computing. And once we have done that, we move to the next application, right? The next project. And so this is how we've been always growing as well in the academic market through this so-called land and expand business model. When it comes to the stickiness from what we have seen, indeed the type of partnership that we have built with the central labs and reference labs like DASA, and we've been very public about that, have been always very long-lasting, very close, And so in terms of the ability of SOFIA to be, I would say, embedded in the system, pretty profound. But aside that, just as a reminder, our return rate, even in the academic centers, is very low. It's below 1% a quarter, right? We, I would say, benefit from the efforts we initially set in the academic center now to grow in the U.S. with the central labs, but we don't operate the growth very differently than what we are being experiencing with the academic centers, which is something quite nice, frankly, because it means that in terms of execution, our recipes work very well as well in the central labs.

Great. Super helpful. Thank you so much.

And I'm not showing any further questions at this time. I'd like to turn the call back to Yorgi for any closing remarks.

So given there is no more questions, I would like to thank you all for having heard our earning calls and Q&A session today. Stay tuned. And, indeed, you can expect news from us in the next weeks and months as we are penetrating the U.S. market, delivering our capabilities to the biopharma space, as well as building our multimodal capabilities. Thank you all, and have a great day.

Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.