NEW YORK – Personalis reported after the close of the market on Thursday that its second quarter revenues rose 23 percent year over year, driven by a 74 percent increase in revenues from the analytical services it provided to the US Department of Veterans Affairs Million Veteran Program (VA MVP).
For the three months ended June 30, the cancer genomics company reported revenues of $19.5 million, up from $15.8 million a year earlier, and beating the average Wall Street estimate of $16.3 million.
VA MVP revenues rose to $14.8 million in Q2 2020 from $8.5 million a year earlier, while revenues from biopharmaceutical and other customers fell 36 percent to $4.7 million from $7.3 million in the prior-year quarter.
"We were able to report record revenues once again this quarter, with our team delivering strong execution across both our population sequencing and biopharma businesses, despite the impact from the COVID-19 pandemic, and we continued to see strong ordering levels from both our existing and new customers," Personalis CEO John West said in a statement. "In addition, our recently announced liquid biopsy product will be available to order immediately."
The company said that 32 customers had placed orders for its NeXT immune repertoire characterization platform as of June 30, with six of those customers placing their orders in the second quarter.
On a conference call with analysts following the release of the earnings, West said that the oncology side of the company's business was negatively affected as some prospective clinical trials that are being led by some of Personalis' biotech customers had to be slowed or stopped because of the pandemic. He also noted that revenues from one of the company's leading biobank customers fell 98 percent in Q2 from Q1.
In order to make up for some of those losses, the company ramped up revenues from its NeXT platform instead, West said, and was able to achieve a sequential revenue increase from biopharma and all other customers. Further, he added, revenues from pharma customers increased by more 20 percent sequentially, offsetting the dip in revenues from biobank and biotech customers, and leading to quarter-on-quarter growth in the oncology business.
He also noted that many biopharma samples were delivered later than expected, so Personalis was not able to process all of them for revenues in Q2. However, that puts the company in a good position for Q3.
Personalis also said that it completed sequencing of the 75,000 whole human genomes under its contract with the VA MVP. West also said that the company sequenced 14,000 genomes in Q2, an increase of 70 percent from the number of genomes it sequenced in Q2 2019.
In June, Personalis was able to bring its liquid biopsy team back to the lab, West said. The product is now available for customer orders as a complement to the company's tissue biopsy offering. Both the tissue and liquid biopsy products are designed for biopharma customers and provide data on 20,000 genes, according to West. The addition of the liquid biopsy product will enable comprehensive monitoring of cancer patients across 20,000 genes at multiple time points.
The liquid biopsy product tracks mutations in a single tumor and tracks the development of new mutations, West said. It may provide early detection of secondary cancers that develop under treatment pressure. It's designed to be used with the tissue biopsy product, so the company expects early sales to be to existing tissue biopsy customers.
The company's net loss for Q2 widened to $9.3 million from $5.9 million a year earlier. But its loss per share narrowed to $.29, calculated on 31.7 million weighted average shares outstanding, compared to a net loss of $.89 per share, calculated on 6.6 million weighted average shares outstanding, in Q2 2019. Analysts had expected a loss per share of $.34 for Q2.
The change in the number of weighted average shares outstanding was a result of the company filing its initial public offering in June 2019. The IPO of more than 9.1 million shares netted Personalis approximately $140.8 million.
Personalis' Q2 R&D costs rose 44 percent to $6.5 million from $4.5 million a year earlier, while its SG&A expenses rose 40 percent to $7.7 million from $5.5 million.
The company ended the quarter with cash and cash equivalents of $25.0 million, and short-term investments of $80.2 million.
For the longer term, West said Personalis is aiming to broaden the liquid biopsy product line to include personalized tests for specific patients' tumors. This version is expected to launch in 2021.
The company has also started talking with a number of biopharma companies for possible development of companion diagnostics.
Due to uncertainty surrounding the COVID-19 pandemic, Personalis decided not to provide guidance, and said it will give an update during its third quarter earnings announcement, to the extent practicable, based on available information at that time.
Personalis' shares rose nearly 2 percent to $22.04 in Friday morning trading on the Nasdaq.