Personalis, Inc. Q4 FY2021 Earnings Call

Good day, ladies and gentlemen, and welcome to the Personalis Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to hand the conference over to your first speaker today that is Caroline Corner, Investor Relations. Please go ahead.

Thank you, operator. Welcome to Personalis' fourth quarter 2021 earnings call. Joining me on today’s call are John West, President and Chief Executive Officer; and Aaron Tachibana, Chief Financial Officer. All statements made on this call that do not relate to matters of historical facts should be considered forward-looking statements within the meaning of U.S. securities laws. For example, any statements regarding trends and expectations for our financial performance, new orders, products, services and technology. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with the SEC, particularly the risk factors described in our 10-K for fiscal year 2021 to be filed today. Personalis undertakes no obligation to update these statements, except as required by applicable law. Our press release for the fourth quarter and full year 2021 results is available on our website, under the Investors section and includes additional details about our financial results. Our website also has our latest SEC filings, which we encourage you to review. A recording of today’s call will be available on our website by 5:00 p.m. Pacific Time today. Now I’d like to turn the call over to John for his comments and fourth quarter business highlights.

Thank you, Caroline. Personalis continues to grow, particularly our oncology business. In Q4, revenue from our oncology business was $15.4 million and grew 102% over the same period of the prior year. In addition, new orders and customers in Q4 were once again higher than the amount of revenue reported for the quarter, which gives us confidence that we can grow our oncology revenue by more than 50% in 2022 over 2021. Our pharmaceutical customers are increasingly seeing the value of our platform and incorporating it into their clinical trial designs right from the start. Our customer base has broadened substantially over the last year, and we're doing business with most of the top 10 global pharmaceutical companies, which we define by their annual revenue level. Additionally, we have more than 60 customers that have ordered services for our NeXT Platform. We recently also received our first customer order for NeXT Personal from a top global pharmaceutical customer and have started to receive samples as part of that pilot. Our partnership with Natera also continued to grow in Q4 and allowed us to process approximately $5 million of clinical samples in the quarter. We have continued to make progress in Asia. In Shanghai, China, we have now hired about 10 employees and we are working on our internal laboratory qualification protocols. Today, we have received a significant dollar value of orders from pharmaceutical customers, who are pursuing local regulatory approvals. We expect to begin working with these customers within a few months and be in a position to potentially recognize revenue from some of these customers by the second half of 2022. In Japan, we also have several large international pharmaceutical companies that are now ordering NeXT, further validating our opportunities in Asia. We believe our NeXT Platform provides biopharmaceutical customers with the most comprehensive analysis of tumor burden and biomarker identification available today and a better understanding of each cancer patient's genetic profile. We believe that both tissue and liquid biopsies together can provide a more complete view leading to optimal therapy and treatment decisions. Both our tissue and liquid biopsy based offerings provide data on all of the approximately 20,000 human genes. Tissue samples give us access to RNA and to the immune cells, which have infiltrated a patient's tumor. By analyzing liquid biopsy samples, we're able to provide information about a patient's tumor across multiple time points from small blood samples. At Personalis, we've designed two liquid biopsy products for two different applications. NeXT Personal has been optimized for maximum sensitivity, particularly for when the amount of tumor DNA and blood plasma is very low, such as in early-stage cancer, after surgical resection or in patients with complete response to therapy. The largest segments of this population are those who have or have survived breast and prostate cancer. To detect potential cancer recurrence, we look in a patient's blood plasma for the mutational signature of their tumor, but these two cancer types have such low mutational burdens that they can be difficult to detect. We realized early on that we may be able to overcome this liquid biopsy sensitivity problem by leveraging our considerable high volume, whole genome sequencing experience. Using tissue whole genome sequencing, we can identify 20 times more somatic variants to serve as the basis for personalized cancer assays. By looking for tumors known mutations at up to 1,800 positions spread over the genome and being able to select cancer variants that have a low level of background sequencing errors, we gain tremendous sensitivity. Our internal data now confirms this approach can result in analytical sensitivity down to approximately a few parts per million. This sensitivity advantage may translate into much earlier detection of a patient's cancer recurrence. Once residual disease or recurrence is detected, questions may arise about how best to treat a patient. NeXT Personal also provides DNA sequencing coverage by variants which may indicate drug therapy options, response to therapy or emergent resistance to therapy. We consider this approach, not just tumor informed, but comprehensively tumor informed. Our ultimate goal is not just to detect cancer but to provide key information over the entire course of the patient's disease. We believe this can be better for patients, more informative for pharmaceutical customers and a larger business opportunity. We believe NeXT Personal can be a leading technology for some very large market opportunities and expect to have more to say about this and customer wins in this area in a few months. Our whole exome liquid biopsy product is optimized for late-stage cancers, where the amount of tumor DNA in the blood plasma is higher and tumors may be increasingly complex. For that application, we believe the rich information from an exome can provide deeper insights. We believe that our liquid biopsy based products will contribute increasingly to revenue in 2022 and beyond. Personalis’ technological and scientific leadership has led to strong adoption by pharmaceutical companies who use our services to analyze the response of cancer patients in their clinical trials. We believe that these same advantages can be important for all cancer patients, not just those in clinical trials. As a result, we're taking steps to build the clinical diagnostic business for therapy selection and monitoring. We believe that the combined market potential of these opportunities is approximately $30 billion in the United States. I would now like to comment on our recent progress in some of our planned milestones regarding our clinical diagnostic efforts. First, we are continuing to build our regulatory clinical and reimbursement capabilities. We have been hiring employees with clinical and medical experience within a diagnostic setting, and we'll continue to hire and invest in this area. Also in support of our new diagnostic business, we'll be incorporating FDA compliant protocols within our new facility, which we are targeting to move into during Q3 of this year. Second, we are completing a validation study for our NeXT Dx Test, which is our tissue based diagnostic offering based on our NeXT platform to apply for New York state regulatory approval. We also plan to submit data to the MolDx tech assessment process and hope to receive a favorable reimbursement ruling for MolDx during the second half of 2022. Third, we believe it's essential to work with world class medical institutions. To that end, we announced a collaboration with the Mayo Clinic in Q4 and recently announced one with the Moores Cancer Center at UC San Diego Health. In these collaborations, we provide clinical diagnostic testing and research sequencing and analysis services using our tissue based NeXT Dx Test. We have begun to test clinical patient samples and are excited about the opportunity to work with these renowned cancer centers. If we achieve a favorable reimbursement decision for our NeXT Dx Test from MolDX, as discussed earlier, we may also recognize revenue in the future from some of these collaborations. Given the advanced nature of our NeXT Dx Test, we believe it is a good fit for high-end cancer centers, which have a dual mandate for both clinical care and research. If these key opinion leaders have a positive experience using our tests, we are optimistic that this will also support broader use of our platform by other clinicians in the future. Although we still have work to do, we believe that we will be well positioned for entry into the clinical diagnostic market using our comprehensive tissue based NeXT Dx Test by Q2 to Q3 of this year. In addition, we're also planning an LDT version of our liquid biopsy based NeXT Personal test. We expect clinicians who begin using our NeXT Dx Test may later also use our NeXT Personal test, since the two can provide complementary information. We expect that the path to reimbursement for our NeXT Personal LDT will begin via assessment by the Palmetto and MolDx program. We will continue to provide updates about our clinical diagnostic progress as we go forward. Next, I would like to comment on our population sequencing business. In September 2021, we received a task order from the VA MVP of approximately $10 million, which was significantly less than in prior years. At that time, we expected the reduced order amount would be followed by a formal RFP process and a potential new contract to be awarded sometime late in Q3 of 2022. However, recent discussions with our contacts at the VA MVP indicated that there will not be an RFP process in 2022. Accordingly, we are not planning to receive any new orders from the VA MVP this year. We're expecting to recognize any revenue beyond the current order and contract. Given the current strong growth we have already experienced in our oncology business and the large opportunity we see there, we plan to focus almost entirely on cancer as we go forward. We continue to add to our Board of Directors to complement our strategic direction and priorities. Olivia Bloom will join our Board of Directors effective March 1. She currently serves as Geron Corporation’s Executive Vice President and Chief Financial Officer. Geron is a clinical stage biopharmaceutical company focused on hematologic myeloid malignancies; welcome, Olivia. In summary, in Q4 and all of 2021, we continue to execute extremely well in growing our oncology business, despite the ongoing pandemic, which has made things more challenging. Our team has done a terrific job in overcoming these challenges. Customer adoption of NeXT has been excellent, and our pipeline of compelling new products is rich for both the biopharma and clinical diagnostic test markets. We have a strong balance sheet with capital to invest in our growth initiatives and believe this puts us in a strong position for both near and long term growth. With that, I will now hand it over to Aaron for our financial results.

Thank you, John. And good afternoon, everyone. We had another great quarter and continue to accelerate oncology revenue growth. During my prepared remarks, I will provide detail about our financial results for the fourth quarter and guidance for the full year of 2022. Total company revenue for the fourth quarter of 2021 was $20.7 million, up 3% from $20.2 million for the same period of the prior year. Oncology, biopharma, and all other customers accounted for revenue of $15.4 million in the fourth quarter, representing a 79% sequential increase from the prior quarter and a 102% increase over the same period of the prior year. The increase in oncology revenue was driven by strong adoption of our NeXT platform, which accounted for approximately 85% of the oncology revenue in the quarter. Customer orders remain strong in the fourth quarter and exceeded reported revenue levels, which gives us confidence that our biopharma revenue will continue to increase in the future. Additionally, as we ramp our MRD liquid biopsy offering for both biopharma customers and as a clinical diagnostic test in the future, we expect revenue growth to further accelerate due to the multiple time points, or in other words, the number of tests per patient. For the fourth quarter, the VA MVP revenue of $5.3 million was 58% lower compared to $12.6 million for the same period of the prior year. The VA MVP unfulfilled orders were $7.6 million at the end of the fourth quarter. Based upon current estimates, we expect the unfulfilled orders to convert to revenue during Q1 through Q3 of 2022. For the full year of 2021, total company revenue was $85.5 million, up 9% from $78.6 million in 2020. For oncology, biopharma, and all other customers excluding the VA MVP, accounted for revenue of $39.8 million for the full year of 2021, representing a 77% increase from $22.5 million in 2020. The oncology revenue growth was driven by strong adoption of our NeXT platform. For the VA MVP, revenue was $45.7 million for the full year of 2021, which was 19% lower than in 2020. Gross margin was 38.7% for the fourth quarter, compared with 30.1% for the same period of the prior year. The year-over-year increase of 860 basis points was primarily due to operating leverage from the 102% increase in oncology test volume, customer mix, and lab efficiency improvement. Over the next couple of years, we do expect some gross margin variability due to headwinds from investments and new capabilities such as dedicated production lines for FDA-approved offerings, providing diagnostic tests, while we work to increasingly secure reimbursement, adding more capacity in our new facility, expanding in China and others. Longer term, we expect our gross margins to increase as we achieve scale and our oncology revenue becomes a larger portion of total revenue. Operating expenses were $28.2 million in the fourth quarter, compared with $19.4 million for the same period of the prior year. R&D expense was $14.5 million in the fourth quarter, compared with $6.5 million for the same period last year. SG&A expense was $13.7 million in the fourth quarter, compared with $10.9 million for the same period last year. The increase in R&D expense was for new product development, hiring employees to build our clinical and medical infrastructure and sample test expenses for clinical validation work. Our R&D expense level will continue to increase over the next year as we expand collaboration work, the clinical validation to secure reimbursement for our NeXT Dx and NeXT Personal tests. The increase in SG&A was due to commercial expansion and continuing to enhance our infrastructure. Net loss for the fourth quarter was $20.2 million compared with a net loss of $13.3 million for the same period of the prior year. The net loss per share for the fourth quarter was $0.45, and the weighted average basic and diluted share count was $44.8 million compared with a net loss per share of $0.34 and a weighted average basic and diluted share count of $39 million for the same period of the prior year. Now on to the balance sheet. We finished the fourth quarter with a strong balance sheet with cash and short-term investments of $287.1 million. In the fourth quarter, we used $18.2 million of cash due to the net loss, working capital needs and capital equipment purchases. With the full year of 2021, our cash usage was approximately $78 million and increased from the $42 million in the prior year due to investments made for growth initiatives, such as new products, building our diagnostic test business, establishing our lab in China, and others. We expect our 2022 cash usage to increase to approximately $140 million, which includes a one-time investment of approximately $45 to $50 million for construction and setup of our new facility. This amount is net of $15 million for tenant improvements from the landlord. We believe that we are in a healthy position with more than two years of cash on the balance sheet, which will allow us to invest in our growth initiatives that will enable long-term revenue growth. Now I’d like to turn to guidance. With our recent revenue shift and focus weighted towards oncology and the development of our clinical diagnostic test business, we believe it’s time to focus on the longer-term revenue opportunity and therefore plan to move to annual guidance. However, I will provide some color into what we are seeing thus far in Q1. Similar to Q3 of 2021, when the Delta variant created some headwinds, we are experiencing similar delays with sample receipts from customers that we believe is related to Omicron. These headwinds may create some delays for the timing of revenue this quarter; however, we do not expect the revenue to be lost. In addition to sample delays, we have continued to experience supply chain tightening for some consumables, our mitigation plans, including adding buffer stock and multi-vendor sourcing when possible. Although the pandemic continues to make things a bit more challenging, we are extremely optimistic about our longer-term opportunities to drive oncology revenue growth. For the full year of 2022, we expect total company revenue to be approximately $67 million. We expect oncology revenue from biopharma and other customers to be approximately $60 million, a year-over-year increase of 51%. Net loss is expected to be in the range of $110 million to $115 million.

Thank you. Our first question comes from Derek Broene of Bank of America. Your line is open.

Hi.

Hi, Derek.

Thank you for the question. Hey, this is John on for Derek. On the biopharma side, the long-term gross drivers are obviously your proprietary products, but in the shorter term, the partnerships like the one with Natera have proven incremental to say the least. Could you speak to the durability of the relationship? I’ve heard that Natera has commented on the quality of your work, but curious about the ramp in the durability of volume from Natera given that the company’s commented on its in-house capability.

After that, I haven’t heard their comments on their in-house capability. I expect them and they sequence lots of things. Natera came to Personalis some years ago and looked to leverage the capabilities, not just our abilities to sequence, but the advantages of our NeXT exome, which are substantially broader than a standard exome. Our expectation is that this could be a pretty long-term relationship with Natera. We look forward to continuing to work with them. In time, I think investors should be looking at Personalis growth in our own products, including in particular our NeXT Personal product, which we’ve talked about some on the call today.

Got you. And then just one more for me. Could you – it’s great to hear that you’ve hired 10 employees and you’re making progress. Could you comment – I think you’ve commented in the past that 5% of non-customer samples were processed in Shanghai versus the rest of California. Could you comment on that volume mix there?

I’m not sure I quite understood that the question that in general, we find that the advantage of us having initiated a lab in China is not only the volume that we have inside China and the orders that we get there, but they’re often part of international clinical trials where actually the majority of the samples are from outside China. And so we already see this in the orders we’ve received that the dollar value of the samples that will actually be processed in Shanghai is significantly smaller than the dollar value of all the other samples that will be processed from the rest of the world from the same clinical trial. So it’s certainly kind of a halo effect with the halo is actually pretty substantial.

Got you. Got you. And do you – we’ve seen some issues rise with the CDMOs and the CROs in China. Are there any political risks that you see with your business at all?

Yes, I mean, certainly the United States has a complicated relationship with China. Frankly I'm optimistic; there are a lot of smart people in China wanting to do a lot of good things and it’s important for China to continue to advance with advanced pharmaceuticals that have, in many of which have been developed in the West, but they’re sensibly running clinical trials inside China to make sure that those drugs are well-suited to people with a different genetic background, for example. So, I think that there’s an underlying motivation that makes sense for there to be continued adoption of Western pharmaceuticals in China – trials to confirm that those are appropriate and pharma companies will continue to need services like ours to support those clinical trials. So I think it’s a sort of a macro level; separate from this, there can be issues. I think there’s a pretty substantial reason for the pharmaceutical business to continue to work there. And frankly, in the past, I’ve had great relationships with people in laboratories in China, great scientists there and the pharmaceutical people we’ve met there have also been super.

Got you. Thank you.

Our next question comes from Tejas Savant of Morgan Stanley.

Hey John, Aaron, thanks for taking my question. This is Edmund for Tejas. Just to start off, hey, on the MVP, RFP process and not having one in 2022. I was wondering if you guys were able to get to the point of the conversation to have some visibility on 2023.

Yes, I’d say it’s – our understanding is that the MVP is unclear how they’re going to go forward. They have a lot of samples, and it would be certainly there is an opportunity for them to sequence those samples. But I think they’re doing some rethinking of things. I think, in terms of Personalis investors should be focused primarily on our oncology business. If there are opportunities with large-scale sequencing, we’ve certainly probably done more whole genome sequencing than almost anyone in the United States. And so if those opportunities come up, they may incrementally help us from a sort of essentially a financing standpoint, but I think our focus will be on the oncology business, particularly with the excitement we’re seeing around the NeXT Personal platform, that’s where we’re going to be putting a lot of our energy here. And I think that’s what investors should focus on.

Understood. And I guess coming to a kind of a regional perspective on COVID impacts, and I guess what you’re seeing in China, some of your peers have mentioned pockets of weakness in Asia and given your expansion efforts in Asia and particularly China’s zero COVID tolerance policy. I was wondering if you can provide some color on what you’re seeing on the ground in terms of more recent impacts.

Yes, that’s a good question. I’d say we’re just beginning to get going with those folks. We’re doing internal validation efforts at this point and working towards being able to begin processing samples from customers. But we – there's not yet at the full set of regulatory authority approvals for the trials we, Personalis isn’t one that applies it’s our customers who have to apply to the Chinese regulatory authority, HGRAC. As they get through that process, I expect that then we’ll start to see sample flow and maybe get feel for whether there’s some of the issues that you brought up where our sense is that we will probably be starting mostly with retrospective samples from retrospective clinical trials. So those samples would already exist. They’d still have to be shipped to us, but it’s a little different from having to have enrollment in live clinical trials. Usually this kind of business starts on the retrospective side. And then as you kind of build up some working relationships, it can transition into more and more involvement in prospective clinical trials. I would think that retrospective trials would be less affected by COVID-related issues than prospective ones.

Understood. Thank you very much for the time.

Great. Thank you.

Our next question comes from Kevin DeGeeter of Oppenheimer.

Hi. Thanks for taking my questions. Can you just follow up on population sequencing more generally, John? Are there opportunities outside of the U.S., or are you primarily focused on building new business relationships on the oncology and non-population sequencing side?

Yes, I think it’s a good question. We’ve certainly been interested in that up to this point. I think what we’ve been hearing is that the population sequencing projects that have been most advanced and let’s say if you looked at the UK, for example, the applications that they found tended to divide into people who had rare inherited diseases and people who had cancer. What we found is that I think for more cases where there are rare inherited diseases, there will certainly be ongoing testing for that kind of thing. It’s less of a population sequencing issuance and becomes more for people who are severely affected by those diseases. Then it becomes more of a diagnostic test for them. I think the big opportunity that’s been coming out of those, and we hear this out of the UK and other countries as well, is the interest in cancer. As people look at cancer, when people started working on population sequencing, which is now almost a decade ago, a lot of it was tumor line sequencing. Then began to be tumor sequencing, but generally of just one time point with a cancer patient. What we’re seeing is with the capability to leverage cell-free DNA. And now, in particular, with the ability to use tumor informed assays that are so much more sensitive we’re seeing a lot of interest in expanding the efforts which maybe they came out of population sequencing to start with, but a lot of the same people are actually transitioning their efforts into cancer-related efforts. We’ve had people that we’ve spoken to initially on the population sequencing programs who have said, ‘Well, actually, maybe we’re not going to do so much from a population sequencing standpoint, but could we talk about your cancer effort?’ Some of those conversations that started on the population sequencing dimension have actually ended up migrating into pretty nice opportunities more in the oncology space and particularly with the breakthrough capability of NeXT Personal. The ability to look down to lead detection sensitivity is exciting to a lot of people. Some of those people in those programs have a lot of samples and would like to move forward with some of those things. We’ll have to see how that goes, but I don’t think it’s a loss of that area. What we’re seeing is that the people who are in the population sequencing programs themselves are often looking for the most clinical relevance, and for many of them that clinical relevance is turning out to be in cancer, which aligns well with what we’re focusing on. So, hopefully that gives you an idea of where that’s going.

Very helpful. And then just maybe a question as a follow-up on how do you think about exploring menu expansion into the clinical market and more into 2023, where there's traditionally some pretty obvious synergies with having broader menu and kind of more products in the back for a sales force themselves.

Yes, so the sound on your phone is a little challenging, but if I understand it, you're asking about potential for menu expansion of our offerings, particularly including the clinical side through this year and also into 2023. Yes, I'd say we see there have been quite a bit of menu expansion. I mean, it's all pretty much in cancer, but what we were doing in cancer up to this point has been mostly sequencing tumor tissue samples. For the majority of customers, those are one sample one-time point per patient. We do have some customers, who are doing multiple time point tissue samples per patient; that's probably not the most common thing. We introduced the whole exome liquid biopsy a while ago, but again, where we're seeing the excitement is on the NeXT Personal side, particularly looking at very early stage cancers. In the past, we had very little of our business in early-stage, but expanding from metastatic cancer into early-stage cancer is a significant increase for us, and expanding from one time point per patient to potentially up to ten time points per patient. The footprint in cancer is broadening out to earlier stage cancers and many more time points per patient. It’s not just about therapy selection at the beginning, but if there’s been surgical resection to detect that recurrence, but also once you see recurrence, very few MRD tests actually can provide guidance on what to do after they see recurrence of cancer. Part of our expansion includes not only having an MRD capability, but also getting information that would guide what drug to choose. If you are choosing a particular drug, do you see resistance mutations? Ultimately, if that happens, then what would be the appropriate second line therapy and to be simultaneously quantifying the tumor, so the physician has full information. So I think our footprint in cancer is broadening out a lot. It’s to earlier stage cancers and to many more time points per patients.

Our next question comes from Patrick Donnelly of Citi.

Hi, guys. Thanks for taking the question. John, maybe on NeXT Personal, nice to see that launch out there, getting your first order. Can you just talk about, I guess, the initial reception and then expectations as we get into 2022? What we should be looking for in terms of the ramp there? Just curious in terms of what the construct of the guide is with the guide included?

Yes. So we’re obviously not guiding separately for that product. I think the initial reaction we’re seeing from people, including people that I think we would consider key opinion leaders, I think you’ll see some pretty exciting involvement and programs there. The first thing people will do is a pilot. They may have samples, or in fact, the first order we received from a large pharmaceutical company came actually quite rapidly after we talked to them about the product, and it turned out they had samples available that they wanted to use for a pilot. Those have already arrived and we're already doing the pilot. This part is getting going, and I think we’ll see that from other customers. In general, we don’t have a lot of data on the mix of retrospective versus prospective uses here. I’d say that five years ago, our sense was that not that many pharmaceutical companies had been routinely collecting cell-free DNA samples in their clinical trials, but I think that's changed pretty substantially now. There has been a lot of recognition of the potential there. So I think there probably are a lot more banked samples. After the pilots, the follow-up will likely be retrospective orders where people say, ‘Boy, I have this project I already ran, but I need more sensitivity. Can we do this with NeXT Personal?’ Once they get past the pilot, those could be retrospective orders. Then as people gain confidence in the technology, I think you'll see it being written into clinical trials from the beginning. That’s a similar pattern we’ve seen with the NeXT platform.

Okay. That’s helpful. And then Aaron, you talked a little bit about sample receipts maybe from customers being a little delayed, supply chain tightening. It seems like it could impact Q1, encouraging to see you guys maintain that 50% plus pharma growth. Can you just talk about, I guess, a little bit of the cadence as we go through the year? That feels like anything lost in Q1 will be recaptured throughout the year, obviously by the full year guide. But just any cadence would be helpful in terms of how we think about modeling out the year.

Sure. Similar to what we saw in Q3 of last year, we are seeing Omicron slowing things down. It's harder for our customers to get a hold of the samples from their CROs and then get them shipped due to employees having some issues from an illness standpoint. So we're seeing that type of slowness. Our orders that we've received over the last 12 to 15 months have been phenomenal. We have the backlog, and the revenue will not be lost; it's just going to be delayed a few months. In terms of the cadence or the split here through the year, I would say more revenue is going to be in the second half of the year than the first half. I’m not going to give specific numbers, but in terms of ranges here, we probably could have done 15% to maybe 20% more revenue in Q1 had we not had the samples. So that's the type of delay we're seeing, and things are just going to get pushed out to the right.

Helpful. Thank you guys.

Okay. Thanks, Patrick.

Our next question comes from Max Masucci of Cowen.

Hi. This is Stephanie on for Max. Thanks for taking the question. Just wanted to follow up on some of the comments you've made for NeXT Personal. It's great to hear the traction that you've been getting. Do you expect NeXT Personal to be used more to guide therapy decisions in the adjuvant setting or for cancer recurrence monitoring in patients that are one to two years out from surgery for the clinical version of the test?

Yes. Our goal with NeXT Personal has been a little different from some of the other MRD products where people will talk about trying to detect recurrence earlier than radiology. It’s good to do that, but ideally you wouldn't be talking two years out. You would want the answer right away. Ideally, you would know if you do a test a few weeks after the surgery and if you have sensitivity down to parts per million for most patients, we expect we’ll have a pretty definitive answer. It doesn’t mean if you got a negative result, you shouldn’t check again in the future, but it should be more definitive. We’ve seen data from some early technologies where you see time point after time point where the test result is negative, and then 2.5 years out, recurrence is detected. That puts people in a tough spot. So, we want to be positioned to ideally get a definitive answer right after surgery. That actually changes the business model as well because if you have to test repeatedly until you detect something, that's lots of time points and lots of testing. That might sound better from a business point of view, but it's not great for the patient. So we hope to detect the recurrence early, and if it’s not detected, to guide the next steps in treatment. We have a fairly comprehensive approach to detecting not just the driver mutations but also potential escape mutations, as many targeted therapies suffer from that. So our strategy with NeXT Personal is to build capability to see both the driver mutations and the escape mutations earlier in the patient's trajectory, truly enhancing patient management.

Got it. Thank you. That's really helpful. And as a follow up, just wanted to touch on your partnership with the Mayo Clinic. Could you provide us some color on how that partnership has been progressing specifically in terms of generating clinical utility data? Did you experience any impact from the wave of Omicron cases?

Yes, I think it’s probably too early for us to talk about results from that. We do expect that it's been a positive relationship; Mayo Clinic is a fairly large institution, and they have a lot of people involved very actively in many aspects of oncology. So that takes some time. I think the scale of what we're going to see might be pretty encouraging, but we may want to defer commentary until later this year when we may have more to say about the Mayo Clinic. We are thrilled with the relationship.

Got it. Understood. Thanks for taking the questions.

Thank you. Appreciate your questions.

Our next question comes from Joseph Conway of Needham.

Hi guys. It's Joseph on from Mike. I guess quick question around Natera. Is the company sending you in terms of samples, certain type of cancer, certain type of patient, as you highlighted earlier, maybe certain type with a very low mutation frequency, or is it more or less just general overflow in terms of the samples that are being sent to you?

Just to be careful. Natera is an important customer for us, and generally, if you want information about what Natera is doing, you probably have to ask Natera. We are generally our policy not to comment on what our customers are doing without their authorization. Certainly, if Natera wanted to speak about that, that'd be great, but we have to be – we can't disclose things they haven't authorized us to disclose.

Sure. Okay. Absolutely. No worries. And then maybe just a general line, just looking ahead towards the rest of the year as Personalis tries to increase awareness of the NeXT Platform, NeXT Personal, NeXT Dx. I guess what do you guys have planned to drive awareness among KOLs? I guess, some of the conferences coming up here in the next six months or any publications planned?

Yes. We expect to be pretty active on that front. We are hopeful that we will begin to transition out of the COVID period of time. There are conferences coming up that are currently scheduled to be hybrid, part in-person and part online. We have a team of people who are there gung ho to go to the conference in person and be there; two years without a booth is a long time. We will get out there, meet customers, and talk to clinicians. We are definitely out to engage on that front. During this period of time, we have also been building a medical affairs team. We will have a commercial team staffing those kinds of things, but the medical affairs group is increasingly active in engagements with clinicians and key opinion leaders in addition to our commercial team focused on pharma customers. This will be a dual outreach to clinicians and companies that we need to work with.

Okay, great. That makes a lot of sense. Thank you.

Thank you.

All right. I'm not showing any further questions. Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.

Thank you.