Veracyte, Inc.

Good day and thank you for standing by. Welcome to the VeriSight third quarter 2024 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 one one on your telephone and you will hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Shayla Gorman, Senior Director of Investor Relations. Shayla, you have the floor.

Good afternoon, everyone, and thank you for joining us today for a discussion of our third quarter 2024 financial results. With me today are Mark Stapley, Verisight's Chief Executive Officer, and Rebecca Chambers, our Chief Financial Officer. Verisight issued a press release earlier this afternoon detailing our third quarter 2024 financial results. This release and a 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 we 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. Additionally, 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 10-Q and 10-K. 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.

Thank you, Shayla, and thanks, everyone, for joining us today. Q3 marked another record quarter for Verisight. I couldn't be more proud of our team and of their hard work on behalf of the patients we serve. Q3 revenue totaled $115.9 million, growing 29% year-over-year. This was fueled by testing revenue, which grew an incredibly robust 34% compared to the prior year period, driven by strong volume and ASP improvements, both of which continue to outpace our expectations. Q3 represents our ninth consecutive quarter of 25% or greater testing revenue growth, demonstrating clearly the durability of our testing portfolio. Throughout this year, we have shared our confidence that Affirma and Decipher will continue to deliver outsized revenue growth over the next number of years, bridging to our long-term strategic growth drivers, and the trends we observed this quarter reinforce that we are on a solid trajectory. Starting with Decipher, we delivered a record 21,250 tests during the third quarter, up 36% year-over-year, with growth across all NCCN localized risk categories. With the updated NCCN guidelines in place, our incredibly productive urology sales force, consisting of around 50 reps, is driving adoption through awareness and education on the test utility and market-leading clinical evidence. DeCypher's clinical validity and utility has already been demonstrated in approximately 85 clinical studies, and over 120 additional publications have focused on data from DeCypher Grid, our research-use-only platform. In the third quarter alone, there were 14 publications, abstracts, and presentations utilizing Decipher Prostate or data from GRID. Generating clinical evidence for Decipher remains a top priority for us to drive further guideline inclusion, durable reimbursement, and increased test differentiation in this under-penetrated market. To that end, in early October, new data was presented at ASHRAE 2024, the annual meeting of the American Society for Radiation Oncology from the Van Damme trial. Data from this prospective clinical trial shows that the Decipher Prostate Genomic Classifier accurately predicts aggressive prostate cancer among African American men with early stage disease. This population is over 70% more likely to be diagnosed with prostate cancer, and more than twice as likely to die of the disease compared to non-African American men, according to the American Cancer Society. Despite this, few prospective studies have specifically sought to examine the disease at a genomic level in such patients. The Van Damme findings confirmed that use of the genomic test in this population could potentially enable better treatment decisions and outcomes, helping to reduce outcome disparities, something which our industry needs to embrace. Enrolling diverse patients in our clinical trials is key to this effort, and we proactively try and ensure the inclusion of often underrepresented populations which is something we are passionate about. We look forward to sharing more on our philosophy and approach in our ESG report, which we plan to publish later this year. Another important study was recently presented at the ESMO 2024 Congress in Barcelona, where new data from Stampede, a phase three randomized multi-center, multi-armed clinical trial supported by Cancer Research UK, was shared. This study was focused on the metastatic population, an incidence group that has risen by about 5% each year since 2014. Studies have shown that adding the chemotherapy docetaxel to standard of care androgen deprivation therapy can improve outcomes for some patients with metastatic prostate cancer. However, the benefit varies from patient to patient, and docetaxel can negatively impact quality of life for many patients. Today, physicians can use tumor volume as a blunt tool to identify who will likely benefit from the drug. The stampede findings demonstrated quite profoundly that Decipher may be a more precise tool to distinguish patients who will receive the greatest benefit from docetaxel and those who won't. This could help patients avoid unnecessary toxicity while helping to determine the best treatment path for those who will benefit the most. This is the first major study highlighting the significant utility of Decipher as the only predictive gene expression biomarker for metastatic patients. that could positively impact care and quality of life for men living with advanced disease. With the recently finalized LCD covering Decipher's use in the metastatic setting, we believe we have the only prognostic gene expression test able to address the entire prostate market, including metastatic patients. We are currently underway with the next step of enabling Medicare reimbursement for this additional indication by following the technical assessment process which we expect will be finalized in late 2024 or early 2025. With sales training planned for Q1, we are excited about Metastatic as a potential growth driver for 2025 and beyond, as we expect to see revenue for this indication start to ramp in the back half of next year. With the expansion of Decipher into this broader patient population, as well as significant greenfield opportunity ahead for our test in localized disease, we expect to see continued meaningful growth for the foreseeable future, driven by both market penetration and share expansion.