SOPHiA GENETICS SA

Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sophia Genetics fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Kellen Sanger, Sophia Genetics' Head of Strategy and Investor Relations. You may begin.

Thank you, and good morning, everyone. Welcome to the Sophia Genetics fourth quarter and full year 2023 earnings conference call. Joining me today to discuss our results are Dr. Yergi Camblong, our co-founder and chief executive officer, and Ross Muecken, our chief financial officer and chief operating officer. I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties, and factors that could cause results to differ appears in the press release Sophia Genetics issued today and in the documents and reports filed by Sophia Genetics from time to time with the Securities and Exchange Commission. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website. With that, I will now turn the call over to Yerky.

Thanks, Kellen, and good morning, everyone. During today's call, I will start with an overview of our progress in 2023, followed by a quick look at our performance in Q4. Next, I will highlight our quick priorities for 2024. Then, Ross will provide a more detailed look at our financial results, business trends, and guidance for the upcoming year. Before I get started, I want to take a moment to reflect on some of the trends we saw in healthcare in 2023, and also more broadly across industries. In many ways, 2023 was the year of AI. it was the first time that the general public gained access to powerful AI models and learned what they can do. As the co-founder and leader of an AI-driven precision medicine company who has been working on building AI in healthcare since Sophia Genetics' inception in 2011, this moment has been a fulfilling experience for me. I will take this opportunity to highlight that since inception 13 years ago, we have invested over $400 million to build some of the most advanced AI capabilities in the healthcare sector. We have recruited a team of more than 200 of the top data scientists and engineers in the world who contribute to building and developing our platform, Sophia DDM. Sophia DDM today is widely recognized by healthcare professionals for its world-class analytical performance and by some of our partners, as the leading AI platform in healthcare. However, at Sophia Genetics, innovation is not the development of new technologies, but rather the adoption of those technologies in the market. And in that spirit, let's turn to 2023 and the progress we made driving adoption of Sophia DDM. 2023 was a tremendous year for Sophia Genetics. We grew revenue 31% year over year, to 62.4 million by continuing to drive widespread adoption of our platform. In 2023, SOFIA DDM was used by 450 core genomic customers across the globe to perform over 317,000 analyses. This record number of analyses represents a remarkable 27% year-over-year growth when excluding COVID-related volume. At the beginning of 2023, we laid out three primary drivers to achieve our ambitious growth objectives. First, we highlighted the large market potential for SOFIA DBM solid tumor application. Specially, we expressed excitement over HRD, which was exhibiting workplace analytical performance due to an innovative deep learning algorithm we developed called GINGER. Second, we highlighted high potential for growth in the US market. And third, we explained that the genomic and multimodal data computed every day on our platform, in addition to our advanced AI algorithms being trained on these data sets, would create meaningful value for our biopharma partners. I'm proud to say that we delivered in each of these three areas. With respect to SOFIA DDM solid tumors applications, and in particular HRD, we saw impressive growth. SOLID TUMOR revenue grew above company average in 2023 and HRD was a major driver with over 150% revenue growth during the period. We're pleased to see both existing and new customers adopt SOFIA DDM for SOLID TUMOR applications. We signed an impressive 36 new logos for SOLID TUMOR applications in 2023 and by the end of Q4, we were proud to have a total of 129 core genomics customers using solid tumors applications. This group includes nearly 50 customers using SOFIA DDM for HRD, all of which were attracted by the application's world-class analytical performance. Moving on to our second growth driver for 2023, the US market. In 2023, U.S. revenue grew 70% to $9.5 million, up from $5.6 million in 2022. We signed nine new core genomic customers in the U.S. in 2023, and we're proud to welcome some of the top U.S. cancer centers and labs to the Sophia DDM network. Apart from customers' relationships, we also had a landmark year with our partners in the U.S., namely we continue to build our strategic partnership with Memorial St. Catherine. During 2023, we entered into a partnership with MSK to help them to decentralize their liquid biopsy test, MSK Access, and their solid tumor test, MSK Impact, and to make these tests available to healthcare institutions across the globe. We officially launched MSK Access powered with Sophia DDM in December and have been pleased to see strong demand for this application in the market. In the U.S., we announced a number of new signings for MSK Access powered with Sophia DDM and are looking forward to capitalizing on this momentum going into 2024. The third growth driver we focused on in 2023 was delivering value to our biopharma customers. The first way we accomplished this was by a number of deals with biopharma partners where they sponsored the deployment of Sophia DDM. Biopharma customers are motivated to do this because they are mutually interested in expanding access to cancer testing. Our partnership with AstraZeneca has been a major proof point in this area. Last month, we announced that AZ sponsored the deployment of Sophia DDM's HRD application across Spain in 2023 with resounding success. While the deployment of our genomics offering continues to be a key focus for us and our biopharma partners, we have always intended to complement our genomics computing capabilities with multimodal analytics. Multimodal data and multimodal algorithms analyzing that data provides significant value to biopharma companies. 2023 was a landmark year for us in building our multimodal capabilities. We launched SOFIA CREPAP, a module of SOFIA DDM, which enables customers to perform longitudinal analysis of multimodal patient data. This includes multimodal models designed to predict treatment effects of different therapy decisions. As you can imagine, these capabilities provide differentiated value to our biopharma customers who are willing to pay for the access to the multimodal patient data and to multimodal algorithms which analyzes them. Towards the end of 2023, we completed a momentous project with one of our KIPP biopharma partners, where Sofia Kirpas identified a signature in subpopulations of lung cancer patients, which could indicate different treatment effects for a specific drug. We continue to remain excited about these use cases for our multimodal offering and the value these capabilities bring to our biopharma customers. In 2024, We plan to expand the footprint of Sophia Carpath's Beyond Men Cancer to breast, prostate, and kidney cancer. We recently announced two data partnerships which will accelerate our progress in this mission. First with MSK, second with Exactis Innovation, a network of 13 hospitals across Canada dedicated to improving cancer survivorship. These partners will help us gain access to valuable multimodal data sets, which will be ingested into SOFIA CURPATH for our biopharma customers to use and access. Now that I have provided a brief overview of 2023 as well, I would like to spend a minute discussing Q4 2023 performance in more detail. In Q4, we grew revenue 27% year-over-year to $17 million. We performed approximately 85,000 analyses, up 20% year-over-year, including COVID-related analyses, or 24% year-over-year growth, excluding COVID-related analyses. As of December 31st, we had 450 Core Genomics customers who are using our platform regularly to analyze patients for cancer and rare diseases, up from 434 in the prior year and up 19% sequentially from Q3. Q4 was a great quarter in terms of landing new logos. In the fourth quarter, we landed a resounding 35 new core genomics customers. These customers will add to our total number of core genomics customers over the course of 2024 as they are onboarded onto Sophia DDM. As mentioned previously, it typically takes customers six to nine months to enter routine usage. After landing a new logo, our expanded strategy continues to be effective as existing customers adopt more and more applications. As of the end of Q4, 56% of customers were using two or more applications, up from 49% a year ago. 31% of customers were using three or more applications, up from 28% a year ago, and 21% were using four or more applications, up from 17% a year ago. Moreover, our net dollar retention was 130% in Q4 2023, at 2,800 base points, from 102% at the end of 2022. The continued proof of our ability to expand within existing customers exemplifies the importance of landing new customers across the globe. On that note, I will take a quick moment to highlight our progress in a key growth market for us, India, where the usage of our platform grew 70% from 2022 to 2023. I recently returned from a heartwarming trip across India, visiting our fantastic partners there, such as Tata Memorial Hospital in Mumbai, and the Institute Rotary Cancer Hospital in New Delhi. I also spent time with our newest partner, Carkinos Healthcare, an oncology platform boldly addressing the over 2 million estimated cancer cases in India each year. Together, we will work with Carkinos to provide genomic testing applications to the population of India, in addition to a range of other strategic objectives. I am especially inspired by the shared vision between Sophia Genetics and Cartinoth, and I am excited for what this means for the broad deployment of Sophia DDM across India. Beyond India, I would like to announce today a few additional major signings and expansions. In the US, we recently signed Lifespan Health System, a network of award-winning hospitals in Rhode Island with dozens of locations across state. Lyspam adopted multiple SOFIA-DDM immune applications due to their top analytical performance and our platform's ability to seamlessly integrate into the workflow. In Spain, we recently expanded our relationship with the Valdebron Institute of Oncology, one of the top comprehensive cancer centers in Europe, with adopting SOFIA-DDM solid tumor application for HRD. Valdebron joins other top European cancer centers using SOFIA DDM for HRD testing, including the top two, namely Gustave Roussy and the Royal Marathon. I'm also excited to announce that in LATAM, we expanded our relationship with DASA, the largest clinical diagnostic company in Latin America. DASA is adopting MSK access powered with SOFIA DDM for liquid biopsy testing. This will be the DASA's six Sofia DDM applications. We're excited to see these customers, in addition to the 35 new logos we landed in Q4 2023, begin ramping up usage of Sofia DDM during 2024. Speaking of 2024, let's move on to our priorities and outlook for the upcoming year. Similar to last year, I will highlight three primary growth drivers. I will then touch on how these growth drivers along with continued fiscal discipline, will allow us to achieve profitability in the next two plus years. First, we are excited to capitalize on the launch of our new liquid biopsy offering, including MSK access powered with Sophia DDM. We are pleased with the strong demand we are seeing in the market for this application and are excited by our sales pipeline for it, which is approaching double-digit millions. As an additional catalyst for the growth of our liquid biopsy applications, we recently announced a collaboration with AstraZeneca in which they will sponsor the deployment of MSK access on SOFIA DDM to customers across the globe during 2024. Our second growth driver for 2024 is the significant opportunity we continue to see in solid tumors. A major tailwind for us in the solid tumor space has been the increasing complexity of signatures. As signature detection becomes more complex, more sophisticated algorithms are needed. One example is our proprietary algorithm GINGER, which was recently published in Cell Reports Medicine for its unique ability to detect the HRD signature. Beyond HRD, we are also using other algorithms to help customers like Foundless Bio detect additional complex signatures such as extra chromosomal DNA, which are present in about 20% of cancer cases. Not only are we well-equipped algorithmically to address this growing demand in solid tumors, but we also have a strong portfolio of comprehensive genomic profiling applications to meet our customers' needs. This includes the upcoming launch of MSK Impact Powered with SophiaDTM. Similar to our work with MSK Access, we will decentralize MSK's CGP test, MSK Impact, and deploy it to customers worldwide. AstraZeneca joins us in the mission and will also contribute to the deployment of the application to customers across the globe. The third key priority for us in 2024 is continuing the trend of strong growth in the US. As mentioned earlier, we picked up significant momentum in the US in 2020. In 2024, we're looking forward to capitalizing on this momentum and leveraging market names to attract other U.S. customers to our network. Apart from the three growth drivers mentioned today, we're also delivering a series of targeted high-impact platform and application launches in 2024. We plan to launch new capabilities in IMHONC with an application to measure minimal residual disease for acute myeloid leukemia. We also plan to launch new features in rare and inherited disorders to serve our customers' needs on world genome sequencing and pharmacogenomics. From a platform perspective, we are launching a full modernization of SOFIA DDM as we move to web technology and microservices. We will also continue making upgrades to SOFIA CurPath and its multimodal capabilities in order to create even more value for our biopharma customers. Based on our current commercial pipeline, we are confident that these new launches will deliver long-term value to our business. In summary, 2024 is an exciting year. From our liquid biopsy capabilities to our world-class solitumor applications to the momentum we are building in the U.S., we are well-equipped for 2024 and as we continue on our path to profitability in the next two plus years. So with that, I will now turn it over to Ross, who will provide a more detailed look at our financial results, business trends, and guidance for the 2024 year.