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Personalis Q1 Revenues Drop 27 Percent

NEW YORK – Personalis reported after the close of the market on Wednesday that its first quarter revenues were down 27 percent year over year due to a dip in its population genomics business.

For the three months ended March 31, the Menlo Park, California-based population sequencing and cancer genomics firm booked $15.2 million in revenues compared to $20.9 million a year ago, beating analysts' average estimate of $14.4 million.

The company logged $11.7 million in revenue from its biopharma and other customers, a 53 percent increase over $7.7 million in the same period last year. Sequencing services revenue from Natera represented more than a third of that sum, or $4.1 million.

Revenues from population sequencing for the US Department of Veterans Affairs Million Veterans Program were $3.5 million in the first quarter, down 73 percent from $13.2 million in the prior year's quarter, as the company's business continues to move to oncology and other biopharma activities.

"We continue to be confident about our oncology revenue growth in the future due to the differentiation and strength of our offerings for both biopharma and diagnostic customers," CEO John West said in a statement, adding that the company is "making significant progress" on strategic priorities as it continues to build its clinical diagnostic team.

According to West, customer demand for Personalis' NeXT platform — a comprehensive tumor and immune sequencing approach — continues to grow, with the trend of new orders outpacing revenue continuing in Q1.

"Our pharmaceutical customers are increasingly seeing the value of our platform and incorporating it in their clinical trial designs right from the start," he said during a conference call with investors, with approximately two-thirds of the company's backlog from prospective clinical trials.

West also highlighted that Personalis began processing samples for the first order of its tumor-informed liquid biopsy assay, NeXT Personal, from a "large global pharmaceutical customer."

"We expect new orders for NeXT Personal to ramp throughout the year with a few million dollars or so, converting to revenue this year, with the potential for a significant acceleration in 2023 and beyond," he said.

Personalis' Q1 net loss was $28.2 million, or $.63 per share, compared to a net loss of $12.4 million, or $.29 per share, a year ago. Analysts, on average, had expected a lower net loss of $.58 per share.

The company's Q1 R&D expenses jumped 80 percent to $17.1 million from $9.5 million, while its SG&A expenses rose 49 percent to $15.5 million from $10.4 million.

Personalis finished the quarter with $91.6 million in cash and cash equivalents and $175.0 million in short-term investments.

According to Aaron Tachibana, Personalis' CFO, the company is managing and investing prudently, with "almost two and a half years of cash on the balance sheet."

"Given the current economic environment, we are prioritizing investments to ensure we can extend our cash runway as far out in time as possible," he said during the call.

The firm expects revenue for the full year to be in the range of $62 million to $67 million, with revenue from biopharma and all customers except the VA MVP between $55 million and $60 million. It projects a 2022 net loss of $110 million to $115 million.

"Beginning in early January of this year, we noticed a slowdown with customer sample shipments … and we've continued to see delays in sample flow in our current quarter," Tachibana said.

"Given that more than half of our biopharma work is now from prospective clinical trial projects, [this] is having a bigger impact on our near-term revenue than before, when most of our business was for retrospective projects," he said. While there are still unknowns, he added, Personalis is "cautiously optimistic" that this sector will resume sequential quarterly growth in the second half of 2022. 

In Thursday morning trade on the Nasdaq, shares of Personalis' stock were down about 8 percent at $5.51.