Conference Transcript - BLLN 2026-06-02

Andrew Brackman, Analyst — William Blair

Hi, everyone. Good afternoon. Thanks for joining us here on the first afternoon of the William Blair Growth Stock Conference. If you don't know me, my name is Andrew Brackman. I'm the equity research analyst covering the diagnostics vertical for us here at William Blair. We're very happy to have Billion to One and the CEO and co-founder Ozan Atai join us this afternoon. Their first time at the William Blair Growth Stock Conference after IPO-ing successfully in November. we'll run about 30 minutes in terms of sort of prepared remark presentations here and then we'll head up to the breakout in jenny a following this lastly for a full list of research disclosures please visit williamblair.com with that i'll turn it over to ozan thank you andrew thank you for

Ozan Atai, CEO

having us here um clicker so i don't do prepared remarks we'll see how this goes um i have a few new slides that might be interesting for all of you so at billion to one we are redefining what is possible with molecular diagnostics with a technology that achieves a single molecule level sensitivity and precision and we have four pillars of differentiation that we believe make billion to one a different category of molecular diagnostics company with our technology platform We have, with our technology platform, we revolutionize what is possible. And our patented QCT technology enables single molecule level sensitivity and precision. We have, with this technology, we have built category-defining products, both in prenatal and oncology, and grown exponentially. We have scalable rapid growth. Our revenue has grown exponentially, even as we scale past $400 million of annualized revenue run rate, and our 2025 full year revenue was 100% growth over our full year 2024. But we are still scratching the surface of what is possible in these cell-free DNA markets. With our technology, we are solving a fundamental problem in cell-free DNA, building category-defining products, products that are not just incrementally better, but that are so much better that it changes what is possible with these tests. And we are significantly growing and getting adoption in a market that is sized to be $100 billion. So we believe that there is so much more growth that we can have over the next few years or even next few decades. We also have been able to combine this rapid growth with superior gross margin profiles. We have achieved 70 plus percent gross margin profiles, even with sub-scaled ASPs and using only a fraction of our total lab capacity. As we continue to scale, we are seeing significant opportunity for further ASP growth, as well as significant reductions for COGS per test. This is truly remarkable to achieve this level of gross margin, especially as we are building and launching new tests that initially do not have growth coverage and reimbursement. But the thing that I am most proud of, the thing that is, I think, truly differentiated in our company is that we have been able to achieve gap profitability and positive cash flows with only 10% of the accumulated deficits of our public competitors. we have a culture of fiscal discipline efficient operations incorporating AI and from day one we have optimized for what is best for the company in the long term rather than short-term gains in the market share and it allowed us to build a differentiated company that is not just growing rapidly but it is also generating significant profits going into these pillars one by one You know, our revolutionary technology platform really changes, determines the next paradigm in molecular diagnostics, similar to how 1990s were defined by, you know, PCR for infectious disease testing and hotspot mutations, which was then supplanted by 2000s. with the first human genome project and early sequencing efforts that resulted in more testing to be done for genetic testing, BRCA1 and 2 are early examples here. In 2010, as sequencing costs decreased, it has been possible to do more and deeper sequencing. Deep sequencing allowed prenatal and oncology cell-free DNA tests to be done from blood. And we consider these tests to be first-generation tests. But the fundamental problem in cell-free DNA, you know, as you go into lower limits of detection, as you go into more difficult, complex problems, has never been about deeper sequencing. sequencing, you start with very little cell-free DNA and you have to amplify that millions to billions of fold using PCR and other methods. And these methods incorporate a lot of errors that are indistinguishable from what was originally in the sample. So the fundamental limitation in cell-free DNA is the noise, it's not the signal, it's not deeper sequencing. and it is what our technology solves we have been able to achieve single molecule next generation sequencing which is designed to unlock the full potential of cell-free DNA we do this with a simple but elegant idea we realize that the biggest problem here is the noise that is added by the amplification and sequencing process and remember every molecular diagnostics goes through this especially if it is cell-free DNA it is you know 20 30 cycles of exponential amplification millions to billions of fold which add these errors that are indistinguishable from what was originally in the sample this is also why there are so many tumor-informed MRDs because if you sequence the tumor to begin with you know exactly what is in the tumor so you can ignore all these errors that are being introduced by the amplification and sequencing process that is why it is a very easy problem to solve that is why all these companies develop tumor-informed MRDs that is also why this is something that we don't do because our technology actually is designed to solve the noise problem without having to look at the tumor so we add design and add these artificial synthetic DNA molecules that are all single molecule into the sample before any amplification and sequencing happens these artificial synthetic molecules amplify along with the sample it allows us to know where the errors are being introduced so that we can remove them from the data that we get from sequencing it's a little bit like using noise cancellation headphones in electronics if you know exactly what the noise characteristics are you can remove that noise and be left with the pure signal whereas you know deeper and wider sequencing is just you know increasing the volume which is also going to increase the noise so we believe that computing molecular diagnostics are significantly limited in prenatal you know this has been the case has been limited to chromosomal level changes in oncology even in late stage cancer of patients limited by the sensitivity. This is why tissue is still seen as the gold standard but with a truly sensitive liquid biopsy technology you know sometimes you are able to find not just what is in the tumor because tumor is still looking one section of that tumor sometimes you are able to report results that are not even found in tissue biopsies. With Unity, which is where we first went into, we redefined what it means to do a non-invasive prenatal test. This was a competitive commoditized market with so many competitors, you know, more than a thousand sales reps across them. And we went into it without having resources and we have become the second largest prenatal lab and continuing to grow faster than any other lab in molecular diagnostics with with unity we did not want to solve what others were working on when other companies were focused on aneuploidies and micro deletions you know millions of base wear changes we developed the technology to be able to look at recessive conditions conditions like cystic fibrosis sickle cell disease that are caused by a single base layer change these conditions are very important to screen for I would argue that they are more important to screen for even than the traditional NIPT conditions because for these conditions you can actually change the treatment paradigms and the outcome of the babies but today problem is a lot of the a lot of these conditions actually more than half of these conditions are not being detected due to the difficulties of testing the father you know misattributed paternity and missing paternal screening means that only about 35 percent of these important single gene conditions are getting screened despite the fact that billions of dollars are spent to screen for them in every pregnancy we increase this by without requiring the partner DNA directly detecting the causal variant from cell-free DNA at a single base pair resolution. It detects three times more effective pregnancies than traditional carrier screening methods that rely on partner testing. So one real-world patient case I think really highlights how this can be extremely impactful and what we are seeing here is incredible because a great diagnostics does not just change the information that you are getting a great diagnostics can even change treatment paradigms you know just a few years ago this would have been unthinkable you know patient here unknown carrier status you know for the patient for patients carrier unity determines that this is a high risk for cystic fibrosis diagnosis was confirmed via amniocentesis And the insurance company actually approved trikefta on the pregnant mother in utero for the baby. Prenatal therapy initiated at 27 weeks. And not only the ultrasound findings resolved, this baby did not go to NICU. Which again, otherwise the ultrasound findings wouldn't get resolved. They would have been in NICU. This baby even passed newborn screening. We are seeing every week cases of cystic fibrosis babies that are getting treated in utero every week. We are hearing these cases where these babies are passing newborn screening. Some of them have no symptoms of cystic fibrosis, no pancreatitis, some with full vas deferens. Like incredible outcomes for these babies changing the entire treatment paradigm of cystic fibrosis you know just five ten years ago you know most people with cystic fibrosis would have a lifespan of 30 35 years now they are having you know normal lives but the other thing that i want to highlight here is that we were the first to launch single gene non-invasive prenatal tests for these recessive conditions but we didn't stop there we launched the first RHD NIPT that still today actually equitably serves all of the U.S. populations. The other tests don't work for African American and Asian populations. We launched the first fetal antigen NIPT which already changed the medical guidelines. You know this is for fetal maternal blood incompatibility and we have launched in Q1 the first FNAT NIPT for platelet incompatibility between mother and the fetus so after changing the guidelines for fetal antigen testing for allo immunized patients in the us you know we have continued to expand our lead here and continue to move the field forward by adding things that are not available through any other laboratory and most recently in q2 we launched unity confirm which you know many key opinion leaders agree with us that it is the innovation of the decade in prenatal genetics this has always been seen as the holy grail of non-invasive prenatal testing because the problem is today if you get an nipt and 80 percent of pregnant patients in the country get you know gets an NIPT and uninvasive prenatal tests for aneuploidies but if it is a positive result the ppvs of these tests are not you know 80 90 100 percent for some of the conditions it can be as low as 50 percent or lower which means that you are left with an impossible choice as a pregnant mother you are counseled that there is a let's say 50 chance that your baby is affected because of NIPTs there are not even that many specialized physicians now who even do these invasive testing and best case scenario after waiting six seven eight weeks you are going to see a specialist who might be three four hours away where they are going to do an invasive testing to get a sample directly from the baby you know from the amniotic fluid to confirm whether it was affected or not 70% of patients decline invasive testing and they have throughout their pregnancy this fear of the unknown this uncertainty this anxiety that they have to live it it's truly terrible and this is the problem that we solved here this has been seen as you know the the end point of screening you If we can capture an intact trophoblast, intact fetal cell, directly from maternal blood, we would be able to do whole genome sequencing on it. We wouldn't have a mixture of maternal and fetal. It would be pure. But this is a much more difficult problem. Cell-free DNA tests that we talk about will have 5-10% of the DNA coming from the fetus. Here we are talking about less than one in a billion cells coming from the fetus. So we developed this technology and it is only available if a patient on the front line has used our NIPT test. So we don't think of this as a revenue driver. We think of this as a big differentiation that solves this critical unmet need for the patients for the providers and that that will drive the frontline adoption of our screening test because it's only available for those who have been tested with our tests in North Star we are redefining liquid biopsy for cancer care you know we have two tests both of them are for late stage cancer patients a therapy selection test that determines what mutations are in the tumor just from a blood sample and a response monitoring test you know after the therapy starts to determine whether the patient is responding to therapy or not at single molecule precision determining quantifying the changes in tumor burden so that we can know months ahead of scans whether the therapy is working or not you know we know that we have come to this field much later than other companies and that is why we realized that for us to be successful here we need to do something that has not been done before so we have done a prospective head-to-head comparison with other competitors and this was unbiased we asked physicians across the country to use whatever tests that they are using for liquid biopsy of choice and on the day that they are drawing those patients to send us a blood sample as well research sample same day same patient physician choice of competitive lab and same blood draw sent to us on the same day and we detected 50% more actionable alterations for SMVs and more than 100 percent for copy number variants. This is not a 5 to 10 percent difference. This is a dramatic difference that every physician within their clinic can actually easily feel. You need to only run five tests side by side to be able to get better therapies for at least one of your patients. So that is why we have been growing very fast in our oncology business. you know I sometimes get this question you know okay you found more alterations you know does this change anything 69 percent of missed alterations by other tests were clinically actionable and this makes a big difference this is a real world patient impact real world case patient in their 30s diagnosed with stage 2 rectal cancer provider ordered tissue NGS test we don't do any tissue testing we believe that you know that is an easy thing to do and we don't do easy things so tissue NGS tests results are negative they couldn't find an actionable alteration so they are deciding to proceed with chemotherapy but for this particular cancer patient and cancer type you know if they proceed with chemotherapy the outcomes are not very promising the provider doesn't believe this particular provider didn't really believe in liquid biopsy it was actually a nurse practitioner who convinced the provider that you know we should try everything for this patient and she had heard about North Star recently so she said you know can can I send a North Star select test provider said sure the test comes in and we actually determined that this patient is MSI high which is so much more difficult to detect in liquid than tissue and we did this unlocked the opportunity for immunotherapy and in clinical trials it has been shown close to 100 percent cure with stage 2 rectal cancers who are getting immunotherapy so this patient went from having a very poor prognosis to essentially getting cured because we found something that was not even found in tissue. So I hope I convinced you that we have the most sensitive liquid biopsy out there. We have done an unbiased head-to-head. We actually do those unbiased head-to-heads over the country all the time now, just to prove it in individual clinics and health systems. But we realize that there is another problem with liquid biopsies. White blood cells can actually contribute to cell-free DNA, and that can look like a tumor-derived mutation. And it turns out that one in four solid tumor patients in their blood harbor at least one CH, clonal hematopoiesis alteration. This is a big problem. like if you think about it from a you know actionable perspective one in four patients might be treated by a drug that they have no possibility of responding because it is not derived from the tumor it's coming from the white blood cells and this can be particularly problematic in PARP inhibitors. So we have built a panel-wide CH filter that combines machine learning with ultra-sensitive Buffy code sequencing of CH-prong clinically actionable DNA repair genes recommended by clinical guidelines and we have achieved 99% accuracy more than 99% accuracy on CH calling for all clinically actionable variants so with this I think we went from being the most sensitive test to being most sensitive and most specific tests with With North Star response, after the therapy starts, at some point the patient might progress. So we have previously released this result that showed that in immunotherapy patients, just looking at the baseline to three-month change is a strong predictor of long-term outcome in these immunotherapy patients. We actually had, again, these are late-stage cancer patients and we are only looking at the first three months, get a separation of more than two years of overall survival. But we also, and this is new data that we presented at ASCO, now we went one step further and what we showed here is that the molecular progressive disease that we are looking at showed better performance than scans, than resist, and among the patients classified as non-progressors by scans, right, if the scan is saying stable disease, if you look at it with our test, we were able to classify them as either responding to therapy or non-responding to therapy. So this shows additional value that is you know not just that we are earlier than scans not just that we are better than scans it also adds value to scans and you know most importantly for moldx as well you know you have to show not just you know for the initial one because then you would only get reimbursed for the initial testing you want to be able to show that this is helpful for longitudinal So again, here we have released our NORD study data where we show that patients classified as progressing molecularly associated with significantly worse progression-free survival and overall survival. So what this means is that if the patient never sees an increase in tumor methylation score in the tumor burden, they do really well. But if they see an increase, those patients progress. So with these remarkable products that are quite differentiated, we have been able to grow rapidly with an exponential revenue growth from zero to 434 million annual revenue run rate in six years. Most recently in Q1, 84% year over year growth, which is driven by both the increases in tests that we receive as well as continued increasing contracting and coverage of our tests which increased our asps by 28 percent year over year and as we increase our asps and as our scale increase in our cogs come down we have achieved superior gross margin profile in q1 most recently we have achieved a 73 percent gross margin profile and with that gross margin profile we have been able to attain significant gap profitability you know you can see as a percentage of our revenues we went from being very highly negative to getting close to breakeven by the end of 2024 being breakeven positive and you know these are all gap profitability margins not adjusted 2025 five being gap profitable for the full year and in q1 this increase to 16 percent positive gap operating and net margins and we are just getting started you know we are investing in our business in our product lines as i showed you every quarter we are either launching a new product uh something that further differentiates our platform or new data set that show you know how strong our results are and we expect to continue to be able to do that in the future quarters and we believe that our technology platform our smngs platform will drive our continued and rapid growth in 100 billion dollar plus markets all these markets that i am listing here are markets where cell-free dna testing is fundamentally limited by the other technologies and the noise that they have them and that is why we believe that we can have differentiated more sensitive more specific products not just by you know five or ten percent because if you're a late comer that is never enough but by significant amounts so that we can come in and with even less resources we can capture them we are transforming healthcare one molecule at a time one patient at a time with a unique technology, a patented technology for the first time that achieves single molecule level sensitivity with single base layer resolution that allows us to build low Cox products that are differentiated, that are growing rapidly. We have built unique paradigm changing products. We have changed medical guidelines. We are changing treatment paradigms and we have seen exponential growth even as we reach scale but there's so much more room to grow in these very large markets but we have also combined all of this with a culture of extremely efficient operations productivity and ai and that allows us to achieve gap profitability at a much lower scale than any other company in molecular diagnostics that are you know public and profitable and our goal in the future in the next five plus years is to build a category-defining company and become the first molecular diagnostics company to enter the SMP500. So with that, happy to take any questions that you might have.