SOPHiA GENETICS SA

Hello, ladies and gentlemen, and thank you for joining Sophia Genetics' second quarter 2023 earnings call. Our host for today is Catherine Bailon, head of investor relations. Ms. Bailon, you may begin.

Good morning, and thank you for joining us on Sophia Genetics' second quarter fiscal 2023 earnings call. My name is Catherine Bailon, and I am the head of investor relations at Sophia Genetics. Joining me today are Dr. Yurgi Kambla, our co-founder and chief executive officer, and Ross Mugen, our chief financial officer and chief operating officer. Before we get started, I'd like to remind you that the management team will make statements during this call that are forward-looking within the meaning of United States 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 entitled Cautionary Statement Regarding Forward-Looking Statements in the form 6-K for the second quarter earnings release on file with the SEC. Except as required by law, SOFIA 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, August 8, 2023. This presentation includes non-IFRS financial measures. These measures are calculated by management and do not have any standardized meaning under IFRS. These non-IFRS measures supplement IFRS measures but should not be viewed as substitutes for IFRS measures. We have included a reconciliation of IFRS measures to non-IFRS measures in our press release issued this morning, which is available on our website. Please note, both the replay of this call and the earnings release will be available on our website in the investor relations section. And with that, now I'll turn it over to Jordi.

Thank you, Catherine, and good morning, everyone. We appreciate you joining us on our call today. I am pleased to share that our second quarter results came in strong with total revenue for the second quarter going 30% year-over-year on a constant currency basis after adjusting for COVID-19-related revenues. We delivered this growth while maintaining our fiscal discipline, resulting in meaningful expense reductions from the prior year period, and so I am equally pleased to tell you that our operating loss on an adjusted basis was $14.6 million, an improvement of 5 million or 25% from the second quarter of 2022 and an improvement of 1.6 million from the prior quarter. On today's call, I will start by reviewing our progress in the second quarter as it relates to our strong business execution and the continued customer adoption of our market-leading platform. I will then turn it over to Ross McCann, our Chief Financial Officer and Chief Operating Officer, to share our financial results for the period in more detail, followed by our outlook for the remainder of 2023, and we will end by taking your questions. Let me start with a review of the second quarter highlights. We added 16 new logos in the second quarter. Of our more than 750 customers, 434 are Core Genomics customers that utilize our platform regularly, through our dry lab bundle and integrated access modes. Our strong Q2 performance is also demonstrated by robust usage numbers across the board. For the second quarter of 2023, analysis volume across our core genomics customers across proxy for patients was 78,146, an all-time high up 18% year-over-year. When excluded COVID-related volumes, platform analysis volumes were 77,125 for the second quarter of 2023, up 27% year-over-year. I will now highlight some logo wins during the quarter across our geographies. In EMEA, we announced a new central lab in Italy that went live, Cupo Centro Servici Medici, CSM, one of Italy's largest. CSM is a consortium that brings together numerous laboratories throughout Sicily. It offers roughly 1,500 distinct types of tests to best serve the population. The use of SOFIA DDM will support CSM's expansion of next-generation sequencing offerings in hereditary cancers and allow them to materially improve turnaround time. In France, we added a new logo at the Centre Hospitalier de Bastia, a general hospital located in Corsica. They went live using SOFIA-DDM for myeloid malignancies. Also, in Nimiye, Ankara Ethnic City Hospital, the largest hospital in the capital city of Turkey, went live during the quarter. The hospital, which opened its doors in September 2022 and serves about 15,000 patients daily, will utilize multiple SOFIA-DDM applications to streamline genomics testing, especially associated with hereditary disorders. In the APAC Asia-Pacific region, which saw above company average growth in analysis volume in the quarter, I would like to share with you our excitement about the Peter MacCullum Cancer Center, otherwise known as Peter Mac, that goes live on Sophia DDM. Peter Mac is a world-leading cancer research, education, and treatment center based in Melbourne, Australia. They will be using SOFIA DDM to aid with testing that determines positive HRD status and will be focused on samples from women newly diagnosed with advanced ovarian cancer. Through our AI-enabled algorithms, Peter Mark oncologists will be able to know the HRD status of their patients' tumor, aiding in the determination of which of their stage 4 ovarian cancer patients are likely to benefit from treatment plans that include PARP inhibitors, a relatively new alternative to chemotherapy in the treatment of ovarian cancer. And also in APAC, I would like to highlight a customer expansion example with SOFIVA Genomics, a Taiwanese genomics reference lab that originally adopted SOFIA-DDM in Q1 2022, and that is now launching the SOFIVA Genomics HRD status test leveraging on SOFIA-DDM platform, best-in-class AI-based algorithms, to maximize the accuracy in defining the HRD status for ovarian cancer samples. In the LATAM region, which is also growing above company average, I would highlight for you NOMAD Genetics, an innovative reference lab specializing in genomics testing that is headquartered in Mexico City and Santiago de Chile. NOMAD Genetics will also be using SOFIA DDM for determining the HRD status of patients. Next, turning to the NORAM, North America region, I would like to highlight Tulane University School of Medicine, a new logo in Louisiana. Tulane was upgrading their sequencing platform and selected SOFIA DDM because we could enable quick rollout of hematological testing. With SOFIA DDM, Tulane can quickly sort and analyze NGS data, identify key biomarkers, and perform stratification, so that researchers can share data-driven recommendations with clinical researchers who are fighting over 100 types of blood cancers that are quickly progressing. Another NORAM win during the second quarter was Natural States Laboratories, a regional lab based in Little Rock, Arkansas. They chose Sophia DDM to help them expand their cancer testing capabilities, especially using it to launch in-house testing for hereditary cancers. Looking at the second quarter from the standpoint of genomics applications available on SOFIA DDM for oncology and rare inherited disorders, we saw both categories with data volumes growth approximately at the company average year-over-year. In oncology applications, newer subsegments like HRD and liquid biopsy exhibited volume growth in the triple digits, while comprehensive genomics profiling grew several times above the company average. Within the rare and inherited disorders category, exome-based beta was the fastest growth subsegment, a testament that science has quickly evolved and laboratories are more comfortable going beyond medium-large gene panels. While we are very excited about the increase of the SOFIA network and the increase on SOFIA DDM usage, I would like to take a step back and explain to you why this is important. When Sophia Genetics was founded, we intentionally began by servicing the clinical market through advanced cloud-based genomics data analytics in a decentralized setting. To date, using this unique approach, we have established a global network of over 750 healthcare institutions that have collectively used our Sophia DDM platform to analyze over 1.4 million genomic profiles. Another construct of our original idea was to be cloud-based. And to that end, we have been unwaiving to this commitment. We knew that the power of data could not be achieved if silos were tolerated. Artificial intelligence techniques such as deep learning, machine learning, pattern recognition, and statistical inference are being used for over 10 years to build our algorithms. Then, each analysis we do for our customers further trains our algorithms. The SOFIA DDM platform has demonstrated the superiority of non-siloed data in its use to decipher the best treatment considerations in oncology. Our analytical capabilities have been critical to successfully onboard world-leading partners, such as Memorians on Catherine, who, while not yet computing their data on SOFIA DDM, trusted our vision, our experience, and our capabilities to share their most precious data assets with us. Indeed, MSK choose to democratize their patient data set of over 75,000 profiles across data modalities, including genomic, clinical, treatment, and outcomes data by sharing them into the SOFIA DLM platform. The vision that we share with MSK is one in which academic institutions come together from across the world, powered by a decentralized cloud-based technology provider such as SOFIA, to share their data and knowledge. This will enable participating institutions to conduct collaborative research on bigger and more diverse datasets, accelerating the discovery of new insights. Additionally, this will enable biopharma companies to partner with these institutions to leverage their data and expertise in the pursuit of truly personalized diagnostics and treatments. The third element, which we see on the near horizon, is creating a data lake of a select group of world's leading cancer institutions, a consortium of the highest tier participants where they can have a safe sharing environment to further their science. These select leading centers, such as MSK, will contribute certain aspects of their data into the consortium. We're excited to serve as a trusted host of this burgeoning collegial protected data lake. We could not be more excited about the prospect of further building this global, large-scale, multimodal collective intelligence to advance cancer research. This desire of a collective intelligence across hospitals has already been proven by our ongoing DeepLung4 flagship initiative. We have now onboarded 30 hospitals across the world in this multicentric international initiative to develop multimodal machine learning models that are able to predict response to immunotherapy in advanced lung cancer. In this context, we have recently onboarded Polyclinico Gemelli in Rome, Italy, a top cancer center in Europe. Additionally, we are very excited to have now activated five centers across the LATAM region, which will further increase the data diversity on which our algorithms are trained. The recruitment of the study is going strong, and we expect to reach the milestone of 2,000 patients enrolled soon. We will be communicating a pre-specified interim analysis in Q4 of this year, and at that time, we intend to give a first solid perspective on the performance of our models. We are very much looking forward to updating you as soon as those results will be available. Beyond the interest of hospitals for this collective intelligence, we're also making great progress with our biopharma partners. We are currently working on several advanced opportunities to deploy our multimodal capabilities in several oncology applications through biopharma collaborations. Indeed, beyond immunotherapy in lung cancer, we have demonstrated that our multimodal predictive models can similarly be applied to a variety of other oncology indications such as breast, kidney, or brain cancer, among others, as well as different therapeutic modalities, such as different classes of targeted therapies, chemotherapy, and combinations thereof. Just this past quarter, a top five oncology pharma company sent their phase three clinical trial data outside their organization for our teams to analyze for the purposes of multimodal algorithm build. This was a first for both organizations and demonstrates that same trust in SOFIA to be good stewards of highly sensitive patient information. Turning to key events, during the quarter, we attended ASCO, the Conference of the American Society of Clinical Oncology, where our collaborators at the Centre Léon Bérard in Lyon, France, provided an important update on the clinical validation of HRD using samples from the PAULA-1 study, which was a study supporting the approval of AstraZeneca's PARPinivisor, Olaparib, as a first-line treatment for ovarian cancer. With all this momentum, you can sense what makes us super excited about the investments we are making today and their potential in the future. So, to conclude my section, we're experiencing the cusp of our data flywheel effect. I feel quite thrilled to see each incremental adoption of our data cloud model by some of the most prominent global cancer participants. I believe this to be a leading indicator for future success for Sofia Didier. And so in closing, I feel as excited today as ever that Sofia Genetics has the elements in place that will enable us to accomplish what we set out to do 12 years ago, to harness data from the global community to generate actionable insights that contribute meaningfully to patient care and patient outcomes. And now, I will turn the call over to Ross to discuss our financial performance in more detail.