Veracyte, Inc.

Good afternoon, ladies and gentlemen, and welcome to Verisight's first quarter 2022 financial results 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 will need to press star then one on your touchstone telephone. If anyone should require assistance during the conference, please press star then zero to reach an operator. As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to Shayla Gorman, Verisight's Director of Investor Relations. You may begin.

Good afternoon, everyone, and thanks for joining us today for a discussion of our first quarter 2022 financial results. With me today are Mark Stapley, Verisight's Chief Executive Officer, Rebecca Chambers, our Chief Financial Officer, Dr. Tina Nova, President of our U.S. CLIA business, and Dr. Julia Kennedy, Global Chief Scientific Officer and Chief Medical Officer. VeriSight issued a press release earlier this afternoon detailing our first quarter 2022 financial results. This news release, along with a business and financial presentation, is 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 risks and uncertainties and the company can give no assurance 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 files with the Securities and Exchange Commission, including Verisight's most recent Forms 10Q and 10K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release, accessible from the IR section of Verisight's website. I will now turn the call over to Mark Stapley, Verisight's CEO.

Thanks, Shayla. And thanks, everyone, for joining us today. I am delighted to share an update on our strong first quarter results, which included revenue of $67.8 million, an increase of 85% year-over-year. We announced our new organization in January, and it is clear that this new structure is already enabling our team to execute and deliver impressive results. FerroSight's success is built upon our ability to answer important clinical questions and that enable physicians to make better informed care decisions, helping patients avoid unnecessary surgeries or other interventions, and accelerating time to appropriate treatment. Our tests address eight of the 10 leading cancers by U.S. incidence, as well as interstitial lung disease, or ALDs, and have benefited over 350,000 patients to date. I recently had the privilege of speaking with one of these patients, Mr. Keith Boyle. Keith is an idiopathic pulmonary fibrosis patient in Southern California whose story demonstrates the challenges in diagnosing ILDs including IPF and the important value our Invisia test provides. IPF is one of the most serious types of ILD and is often very difficult to diagnose with high resolution CT imaging alone. This can lead to delayed diagnosis and treatment. In 2017, Mr. Boyle had a persistent cough which led him to a medical clinic marking the beginning of his diagnostic journey. After an initial incorrect diagnosis of pneumonia, Keith saw five pulmonologists and underwent additional tests and misdiagnoses over a span of 18 long months. Finally, his new pulmonologist at UCLA, an early user of Invisia, offered him our test. Keith was aware of Invisia and had been eagerly awaiting its launch, so this was welcome news. Invisia confirmed an IPF diagnosis, giving Keith and his family the clarity they so desperately needed. I asked Keith why this clarity was so important. He was extremely clear in his response. It not only validated his use of antifibrotic treatment, treatment that can be damaging in some other pulmonary conditions, but it also enabled him to join a lung transplant list, a list that he is still on to this day, hoping that at some point he will benefit from this important surgery. Keith is doing well at the moment and is enjoying extensive travel with his wife, Lorna. We wish them both well and thank them for allowing us to share Keith's story. With patients like Mr. Ball in mind, we were encouraged to see that an updated clinical practice guideline highlights the role of our Invisia genomic classifier in the diagnosis of IPF and other ILDs. Additionally, a review article and separate commentary on the Invisia classifier appear online in Annals ATS. All three articles are published in official publications of the American Thoracic Society and reinforce the intended clinical value of our test, which is to enable physicians to make a confident diagnosis of IPF without the need for invasive surgery. Having a confident IPF diagnosis can help patients like Keith Boll obtain the treatment they need in a timely manner. We look forward to continuing to engage with the pulmonology community to advance understanding of the role our tests can play in patient care. and to further reinforce the evidence supporting the testability to positively impact patient outcomes. Turning now to our first quarter results, we continue to execute well against our near and long-term corporate imperatives. Our deciphered prostate test again outperformed our expectations as we continue to gain significant traction in a competitive market that we estimate is only about 20% penetrated. We believe our continued growth has benefited from key publications, particularly of clinical utility data from a randomized phase three trial, which were presented at the recent ASCO-GU symposium and confirmed a key role for the test as a prognostic that can help physicians and patients make personalized treatment decisions in the intermediate risk setting. We are looking forward to the ASCO meeting in Chicago next month, where additional clinical utility data will be shared, characterizing the Decipher Prostate Test usage and association with treatment decisions for men with prostate cancer in both the post-biopsy and post-surgery stage. The findings are based on data for the Decipher Prostate Test, which were linked to the National Cancer Institute's Surveillance Epidemiology and End Results, or SEER, program. Additionally, at the upcoming American Neurology Association meeting, our KOL partners will share data that provide new insights into the genomic underpinnings of prostate and bladder cancers. These data are derived from analyses of our extensive and growing Decipher grid database, which contains genomic profiling information from over 100,000 clinical samples used in the development and commercial use of our Decipher prostate and Decipher bladder tests. Turning to Affirma, our most established and highest volume diagnostic test, We were pleased with our test growth of almost 10% during the quarter and our ability to impact more patients. We also added over 50 new accounts in Q1, further penetrating the long tail of endocrinologists who had not previously utilized Afirma. Our ongoing investments in our flagship product will ensure that we are able to continue to engage even more physicians. Moving to our lung portfolio, in addition to the new ILD guidelines, we're encouraged by early signs of recovery for our Invisia test, which saw a 27% increase in volume compared to the first quarter of 2021. In lung cancer, our team has done a tremendous job to prepare the perceptogenomic atlas test for launch. Having carefully evaluated the optimal utilization of this test, to address the unmet clinical needs for lung cancer patients where time to result in precious tissue sample are key factors, and to optimize reimbursement, we have made the decision to explore novel channel opportunities for PGA that leverage its unique sample type, tissue from diagnostic bronchoscopy directly into our preservative. This channel opportunity will take a number of quarters to evaluate, so we hope to share more about this at a later date. On the IBD side, we are looking forward to the ESMO breast cancer meeting this week in Berlin. Researchers there will present consensus findings from the PROCURE trial, demonstrating European breast cancer experts' beliefs regarding the role of gene expression profiling tests, including Procigna, to inform treatment decisions among women with early-stage breast cancer. We also delivered very strong quarterly growth in Biopharma, in tandem with further solidifying offerings for Biopharma partners, which are intended to leverage our robust multi-omics on immuno-oncology capabilities, along with our extensive clinical data. At the American Association for Cancer Research, or AACR, meeting last month, we introduced our new VeriCyte Biopharma Atlas, which we believe is uniquely positioned to help advance the next generation of precision medicine in oncology. This novel metastatic pan-cancer database is designed to be populated by leveraging our best-in-class assays to provide insights that help inform drug development efforts for participating companies. This template offering is modeled on bespoke programs that are already in place with major biopharma partners. Of note, we are particularly excited by some of the novel immuno-oncology insights that we are uncovering through our biopharma and academic partnerships and look forward to revealing more in several abstracts being presented at ASCO and through other exciting publications that we anticipate in the coming months. Moving to our longer-term growth drivers, we remain very optimistic about our perceptor nasal swab test for patients who are facing a potential lung cancer diagnosis. As the largest cause of death amongst all cancers by far, lung cancer is a disease that particularly affects smokers or former smokers and one that can often be successfully treated when caught early. While a highly sensitive imaging approach, low-dose CT, under an existing screening recommendation, is very effective at identifying patients with potentially cancerous lung nodules, physicians need a more objective, accurate tool to determine next steps for those patients. This is where nasal swab comes in. Already clinically validated, our test can be used to assess patient risk non-invasively alongside the CT imaging standard of care to help avoid unnecessary procedures for low-risk patients, while accelerating time to treatment for high risk patients. We believe that nasal swab could help drive earlier identification of lung cancer amongst the 15 million people in the US alone who are eligible for annual screening, and the 1.6 million annually who present with an incidental lung nodule. We believe that the LDCT screening paradigm is here to stay, given its high sensitivity, proven reduction in mortality rates, inclusion in USPSTF guidelines, and relatively low cost to the healthcare system. We encourage further screening for patients who qualify under guidelines beyond the very low 6% that we believe are currently being screened. With diagnostic tools like our perceptor nasal swab, we anticipate that more and more physicians and their patients will achieve greater confidence in annual screening. We look forward to the presentation of new data at the American Thoracic Society meeting this month, which evaluate the ability of the perceptor nasal swab test to accurately assess lung cancer risk among current and former smokers with lung nodules, regardless of their smoking burden history. Meanwhile, I'm pleased with the progress we are making with enrolling sites for our clinical utility study and with our headway to date on our path to reimbursement. We are also making solid progress in our efforts to expand our IVD testing menu on the NCounter analysis system to fuel our global expansion for years to come. Our IBD development and R&D teams are working closely together to launch our Invisia test as an IBD on the NCounter instrument in 2023, followed by our Decipher prostate and percepto-nasal swab tests in each of the subsequent years respectively. As we build this menu on the NCounter, we will be creating opportunities for labs in many countries to make these tests available to their patients. Meanwhile, our commercial and market access teams are working hard to pave the way for reimbursement of these tests country by country, and our scientific teams continue to build the body of evidence needed to support both reimbursement and adoption, leveraging the work that is already done for the U.S. market via our centralized CLEAR lab model. This is a perfect illustration of the flywheel effect that is enabled by our novel CLEAR and IVD-based strategy. Finally, we are advancing the manufacturing transition of our IVD kits, beginning with ProCigna, to our facilities in Marseille. We are tracking ahead of our year-end goal of handling our own inventory management and global customer fulfillment. By the end of next year, we expect to be fully manufacturing the kits in France, enabling us to benefit from the end-to-end management of the supply chain for these kits. In summary, Q1 was a great quarter, marked by strong execution by our team. We're excited about our progress and where we are heading. With that, I will turn the call over to Rebecca to review our financial results for the quarter and expectations for 2022.