Invitae Corporation

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Invitae third quarter 2021 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will have a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star 1. I would now like to turn the call over to Ms. Amy Hatzok. Please begin.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us for our third quarter 2021 financial results call. Joining us today are Sean George, our CEO, and Roxy Nguyen, our CFO. We're also joined today by two leaders within our oncology group, Vishal Sikri, President of Invitae Oncology, and Dr. Rakesh Patel, a founder of MedNeon, and now serving as Invitae's Chief Medical Officer, Digital Health. Before we begin, I'd like to remind you that various remarks that we make on this call that are not historical, including those about future financial and operating results, plans and prospects, focus of our business strategy, plans to integrate and manage businesses we acquire, market opportunities, future product services, our product pipeline, and their timing, demand for and reimbursement of our services, and investments in our infrastructure and operations. These statements constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act. It's difficult to accurately predict demand for our services, and therefore actual results could differ materially from our stated outlook. Statements on company performance assume, among other things, that we don't conclude any additional business acquisitions, investments, restructurings, or legal settlement. We refer you to our most recent 10Q, in particular the section titled Risk Factors, for additional information on factors that could cause actual results to differ materially from our current expectations. These forward-looking statements speak only as of the date hereof. As you listen to today's conference call, we encourage you to have our press release available, which includes financial results as well as key growth metrics and commentary on the quarter. To supplement our consolidated financial statements prepared in accordance with the generally accepted accounting principles in the United States, or GAAP, we monitor and consider several non-GAAP measures. We exclude from our non-GAAP operating results as applicable, among other items, amortization of acquired intangible assets, acquisition-related stock-based compensation, post-combination expense related to the acceleration of equity grants or bonus payments in connection with the company's business combinations, adjustments to the fair value of certain acquisition-related assets and liabilities, including contingent consideration and acquisition-related income tax benefits. We exclude from our non-GAAP cash flow as applicable changes in marketable securities, cash received from equity financings and debt, and cash received from exercises of warrants. Non-GAAP measures may include cost of revenue, gross profit, operating expense, including research and development, selling and marketing, and general and administrative other income expense, net as well as net loss and net loss per share, and cash burn. We encourage you to review our GAAP to non-GAAP reconciliations, which are available in the press release and in the appendix of the earnings slide deck. With that, I'll turn the call over to Sean.

Thank you, Amy. Before we get started, I want to emphasize that toward the end of our call, Roxy will be outlining a set of key business metrics we will be using going forward as a dashboard for our business model success. As our platform is developed and our business expands from testing services into other areas, we've been working to provide smarter, more relevant measures in addition to those used traditionally in life science sectors. We'll refer to those several times on this call and we'll rely on that new dashboard heavily going forward. To headline the quarter, revenue grew more than 65% over last year's Q3 period, which, with all things considered, keep us comfortably within our longer-term growth targets, and number of patients we serve grew by 89% over last year's third quarter, up about 3% over this year's second quarter. During the summer months, we typically experience some seasonality, as you can see on the charts, but this year's slowdown was a bit more pronounced and longer-lasting than the past couple of years. it is difficult to determine how much of that was unusual seasonality and how much of that was COVID-related. We are seeing some pickup in recent weeks, but are being cautious with our guidance for the remainder of the year in case those impacts persist. Reflecting on the long-term view, as you can see, the year-over-year top-line growth across the platform demonstrates our continued progress toward meeting the immense unmet demand for the use of genetic information in healthcare. The takeaway here, aside from any short-term revenue fluctuation, is that we are tapping into something unique at Invitae. Since the advent of genomic medicine now 20 years ago, we are in the midst of a fundamental shift in not only medicine, but in how we view our health and wellness, family planning, disease management, and aging. In view is a time when many diseases will have a well-understood risk that can be minimized and even staved off, and if or when they arrive, can be rendered a chronic condition to be managed for years or even decades. But that future is only a reality with genetic information derived through testing early and often. And the benefits will be accelerated with the tracking, storing, analysis, and understanding of health and health-related data for individuals, families, and populations. While the investment to make that future a reality is large and the timelines long, the value that can be created is immense. We believe that the ability to identify those at risk for disease, detect and diagnose the onset of those diseases earlier, Use that information to guide preventive measures or targeted treatment and monitor the success of that treatment will be the standard of care for individuals throughout multiple stages of life. The company that can deliver that standard will be transforming very large and durable markets in healthcare. Furthermore, those large durable markets are all increasing in size. In each of these four primary life cycle areas, fundamental drivers of adoption over the next two to three years are quickly coming into focus and will create the need for our services that we believe far eclipse the ability of today's system to better treat or even outright prevent disease. Much of the tailwind is coming from the rapidly expanding biopharma pipelines full of genetically targeted therapies. Some is coming from a better understanding of the improvement to outcomes and cost utility of using this information. Some is coming from changing perceptions and attitudes about the role of the patient in their own health care and engagement from those paying for it. and much of it is coming from the exponentially growing volumes of evidence that this shift is a shift to better medicine. For example, a study being presented today at the American Heart Association meeting that found broad genetic testing identified clinically relevant variants for one in five patients suspected of having a heritable cardiovascular condition, two-thirds of whom were projected to have clinical management implications and more than 10% of which would have been missed using a narrower testing approach. A little over a week ago, I read a Washington Post article about how a 34-year-old marathoner, new mom to a 10-month-old son, dropped to the pavement at mile 8 of the race, thankfully kept alive by medically trained spectators that happened to see it. Her father died of a heart condition at 53, and but for a brief call-out to that fact, really nothing to note about the role of how genetic information could be used to prevent such a narrow escape. That will change, we believe, rapidly. And as an example, the market for the use of genetic information in cardiovascular and cardiopulmonary disease could be as large as that for oncology, which can give insight to our formula for growth. We are building a platform that can help our customers move through risk assessment, screening, prevention, or therapy selection and ongoing monitoring. And that platform will help that individual make the most informed decisions about their health, as well as generate the real world data and network connections needed to put effective next steps in their hands. Today, our business can be measured by the progress along that front in oncology, reproductive health, pediatric and rare disease, and in addition, we've recently broken out the part of our business that utilizes patient-owned data and patient connections generated every step along the way. In the future, we will be adding more information that we can provide for the patient at each stage, more capabilities to our data platform and partner network, as well as adding new disease areas or stages of life, such as cardiovascular disease I mentioned a few minutes ago. As I mentioned before, and very importantly later in the call, Roxy will lay out the key business drivers and financial metrics that we'll be using to measure our overall progress against our model. I'm hoping that using these as signposts we will be able to map for everyone the journey from where we are today to the future we are certain is coming. Given just how much is going on at Invitae in a given month of the year, it's not possible to cover it all on our quarterly calls. But we'd like to at least give a little more insight into the nearer-term drivers of our business, so each quarter we'll spend a little more time on one of our key areas of revenue growth. This month, we'll focus on our oncology platform, which is especially relevant since the products and services coming online from that group will be important drivers of revenue and margin growth in the coming years. Vishal Sikri leads our oncology business, and I've asked him to provide some additional clarity on the product plans and clinical trial activity that underscores our potential to walk our customers from risk to hopeful remission in the near future. I've also invited Dr. Rakesh Patel, our Chief Medical Officer for Digital Health, to join us today. Rakesh is an oncologist and was a practicing physician for more than 17 years before becoming an entrepreneur. co-founding the MedNeon digital health platform, which Invitae acquired in the second quarter of this year. Brock will outline how those products and studies dovetail with our digital health platform to benefit patients, physicians, families, and the broader healthcare ecosystem. I'll hand it over to you first, Vishal.