Veracyte, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Verisight Second Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker, Ms. Tracy Morris, Verisight's Vice President of Corporate Communications and Investor Relations. Please go ahead.

Thank you, Cherie. Good afternoon, everyone, and thanks for joining us today for a discussion of our second quarter 2021 financial results. With me today are Mark Stapley, Verisight's Chief Executive Officer, Rebecca Chambers, our Chief Financial Officer, and Bonnie Anderson, our Executive Chairwoman. Verisight issued a press release earlier this afternoon detailing our second quarter financial results. This news release, along with the business and financial presentation, are available in the investor relations section of our website at Verisight.com. Before we begin, I'd like to remind you that various statements that we may make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risk and uncertainties, and the company can give no assurance that they will prove to be correct. Further, we are not under any obligation to provide further updates on our business trends or our performance during the quarter. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Verisight filed with the Securities and Exchange Commission, including Verisight's most recent forms, 10-Q and 10-K. I will now turn the call over to Mark Stapley, Verisight's CEO. Thank you.

Thank you, Tracy, and thanks, everyone, for joining us today. Before jumping into our strong quarterly results, I would like to acknowledge and thank our outgoing CEO and incoming executive chairwoman, Bonnie Anderson. Bonnie grew VeriCyte from just a concept into a global genomic diagnostics company with a remarkable track record for bringing highly differentiated and clinically impactful tests to market that improve outcomes for patients all over the world at every step of their journey. I have enjoyed working closely with Bonnie over the last few months and am very excited to continue to partner with her and the team to grow Verisight into a global cancer diagnostics leader. This has been a very encouraging first quarter for me. Our team delivered outstanding growth as we continued to execute on our compelling strategic vision. We reported second quarter revenue of $55.1 million. an increase of 166% over prior years and 50% sequentially. Our total genomic volume at approximately 21,000 tests was up 215% compared to the same period last year and up 44% sequentially. This impressive outcome was driven primarily by our urology and thyroid businesses, where strong commercial execution was bolstered by increased access to our physician customers. We believe that our accomplishments during Q2 set us up nicely for the second half of 2021 and beyond. I would like to share an update on our progress during the quarter to drive commercial growth, evidence development, pipeline advancement, and global expansion, including the integration of the Decipher and Helio DX businesses. These are key areas that we are focused on as we build one global company under the Verify brand. Beginning with commercial growth, and specifically Affirma, Our commercialization efforts have centered on driving this product to become the standard of care in thyroid cancer diagnosis. We estimate that the test has helped over 100,000 patients avoid unnecessary thyroid surgery since its introduction in 2011. We continue to see strong, affirmer testing growth in Q2, with an approximately 120% revenue increase year over year, as the business recovered relatively quickly from the pandemic effects. and a nearly 10% sequential increase driven by customer growth and patient engagement. Adoption of the Decipher prostate test has been propelled by new Medicare coverage decisions received in late 2020. These managed care wins led, in part, to Decipher prostate revenue of more than $18 million in the quarter, a record for this product line. Additionally, in late Q2, we signed a new contract with a major national health plan to make the Decipher Prostate Test an in-network covered benefit for eligible patients among the plan's approximately 20 million members nationwide. Our pulmonology business also gained momentum in Q2. We added a number of new accounts, including several large institutions for the Invisia Genomic Classifier, which is used to improve diagnosis of interstitial lung disease, including idiopathic pulmonary fibrosis, Perceptor testing continues to recover, although more slowly, with our physicians still performing fewer lung cancer diagnostic bronchoscopies than prior to the COVID-19 pandemic. Our ProSigna breast cancer business continues to improve as well. We were pleased that Germany recently began reimbursing for ProSigna and are optimistic that other EU countries will similarly adopt coverage policies. The test reports intrinsic breast cancer subtypes in the EU, which can further inform treatment decision-making. Additionally, its ability to be performed locally means laboratories do not need to send patient samples overseas. Our next strategic growth driver is evidence development, where we also made significant progress across our portfolio of products. Highlights include the presentation of five Invisia abstracts at the American Thoracic Society, or ATS, annual meeting in May, from prominent institutions such as UCLA. These abstracts demonstrated the test performance and clinical utility of while also reflecting the test's growing traction among interstitial lung disease, or ALD, fault leaders. At the ASCO meeting, researchers shared new data on the deciphered prostate test, further demonstrating that its prognostic information can help physicians tailor treatment decisions for men with prostate cancer. These included an oral presentation describing findings from the ongoing prospective VANDAM study, Results confirm that our test predicts aggressive prostate cancer better than standard clinical risk factors and with the same accuracy in African-American men as non-African-American men. This is an important finding given previous data has shown African-American men to be more susceptible to aggressive forms of the disease. Additionally, in July, a retrospective analysis of patients in the Spartan study was published in JAMA Oncology, suggesting that the deciphered prostate test can identify those patients with locally advanced prostate cancer who are most likely to benefit from apalutamide, a second-generation androgen receptor signaling inhibitor, in addition to androgen deprivation therapy, or ADT. This is a population which consists of an estimated 165,000 men worldwide, for whom physicians have previously lacked genomic biomarkers. The Decipher Prostate Genomic Classifier is currently being investigated in seven NCI-sponsored Phase III prospective randomized controlled clinical trials, as well as 13 additional prospective trials, many of which require Decipher Prostate testing for study inclusion. This prominence in clinical trials is driven by the quality of the deciphered prostate test and the massive amount of genomic data we collect on every sample in our grid biorepository. Moving to activities to advance our pipeline, our third strategic growth driver, we make good progress in the quarter and remain focused on the launch of key new products. We are very excited to soon launch our perceptor nasal swab test to improve the early assessment of lung cancer, as we believe this is a large unserved market. Today, physicians lack objective tools to confidently guide care for patients with suspicious lung nodules. We were very pleased to present pivotal, multicenter clinical validation data at the ASCO meeting in June, showing that our non-invasive perceptive nasal swab test will enable doctors to tell their patients with suspicious lung nodules that they are low risk for cancer and can likely avoid further workup with very high certainty that they have not missed a cancer. At the same time, physicians can be confident in guiding patients who are high risk for cancer to further diagnostic procedures, while those classified as intermediate risk will remain a candidate for current standard of care. We believe this test has the potential to be a game changer in lung cancer early detection, particularly among the approximately 15 million people in the U.S. who are now eligible for annual screening. We plan to begin making the Perceptor Nasal Swab Test available to a limited number of sites in the fourth quarter, which will enable us to assemble the data needed to secure Medicare and private payer coverage, which we believe will be granted 12 to 24 months post-launch. Another key product in our pipeline is the Perceptogenomic Atlas, which is intended to help physicians make informed treatment decisions for the approximately 350,000 patients eligible for comprehensive genomic profiling each year. At the recent ATS and ASCO meetings, we presented data demonstrating that this test accurately detects known lung cancer gene variants using the same small biopsy samples that are used for diagnosis. This ability can simplify the physician's workflow and accelerate time to appropriate treatment, compared to other genomic profiling tests which use samples acquired post-diagnosis. We plan to finalize the perceptogenomic atlas in our CLIA lab by the end of the year, with the commercial launch shortly thereafter. and anticipate receiving Medicare and commercial coverage of this test within 6 to 12 months post-launch. We will offer our perceptive genomic atlas as part of our comprehensive lung cancer portfolio, which will also include the nasal swab and genomic sequencing classifier. Our next new product is the Decipher Bladder Test, a genomic subtyping tool that helps physicians manage treatment decisions for patients with bladder cancer. We recently received final Medicare coverage policies through the MOL-DX program including from Neridian Healthcare Solutions, which administers Medicare payments for our CLIA lab. This decision ensures Decipher Bladder is a covered benefit for the nation's more than 62 million Medicare beneficiaries. In the United States, more than 80,000 individuals are diagnosed with bladder cancer annually, approximately 44,000 of which will have the type of disease indicated in these policies. The test is available to order, and we plan to methodically drive the commercial launch during the third quarter, now that Medicare reimbursement is fully in place. We're also working on the Invisia genomic classifier enabled on the NCounter instrument for use in international markets. We unveiled data at the ATS meeting showing that clinical performance of the classifier, currently run in our CLIA lab on our RNA sequencing platform, is maintained when the test is adapted for the NCounter analysis system. Given our pending Helio DX acquisition, we are revisiting our end-counter launch priorities, focusing first on the manufacturing transition, while in parallel, we begin to advance other future products such as the Perceptor nasal swab and Decipher prostate test in the same way that we have advanced Invisia. As you know, we believe that our Helio DX acquisition and our key management hires have solidified the foundation for scaling our business globally. With Helio DX, we expect to gain IBD test development and manufacturing operations in Europe, giving us end-to-end control of our IVD product business. Further, with the addition of the Immunoscore colon cancer test, we will expand our scientific expertise into the emerging immuno-oncology field, as well as our reach into eight of the top ten cancers as defined by U.S. incidents. Bonnie is leading the acquisition, and the team has been diligently working on the integration planning, which is progressing well. We look forward to soon welcoming the talented HelioDx team to the Beresite family. We also made key hires to further strengthen our executive leadership team and position the company to scale globally. Rebecca Chambers joined us this month as CFO, Rob Brain in the CBO, and Bill Zondler as CIO. With these key appointments augmenting the existing talented executive leadership team and the addition of the experienced leaders from HelioDX, we are primed to advance our exciting global strategic vision. We are building a leading global diagnostics company that transforms care at every step of the patient's journey, from the early detection of cancer and other diseases to diagnosis and treatment. And with our strong second quarter results, we are well on our way. I'll now turn the call over to Rebecca to provide a detailed overview of our results.