Good afternoon and welcome to the Personneles Third Quarter 2025 Earnings Conference. All participants will be in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please key in star and then zero on your telephone keypad. Please note that this event is being recorded. I will now hand you over to Caroline Corder of Investor Relations. Please come ahead.

Thank you, Operator. Welcome to Personnel's third quarter 2025 earnings call. Joining today's call are Chris Hall, Chief Executive Officer and President, Erin Tashibana, Chief Financial and Chief Operating Officer, and Rich Chan, Chief Medical Officer and EVP R&D. 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 the U.S. security laws. For example, any statements regarding trends and expectations for our financial performance this year and longer term, cash runway and liquidity position, revenue expectations and timing, size and booking of orders, products, services, technology, expansion of clinical volume, reimbursement goals, the outcome and timing of reimbursement decisions, expectations for existing and future collaboration activities, cost expectations, market size, and our market opportunity and business outlook. 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 recent filings, including the risk factors described in our most recent filings. Personnel Center takes no obligation to update these statements, except as required by applicable law. Our press release with our third quarter 2025 results is available on our website, www.personnel.com, under the Investors section and includes additional details about our financial results. Our website also has a list of latest SEC filings, which we encourage you to review. A recording of today's call will be available on our website by 5 p.m. Pacific time today. With that, I would like to turn the call over to Chris.

Thank you, Caroline. Good afternoon, everyone, and thank you for joining us. Q3 was another step forward in our NNMRD strategy. We delivered 4,388 clinical tests, a 26% sequential and 364% year-over-year growth, and now have 700-plus physicians ordering next personal. We also submitted lung cancer for coverage, and we now have three dossiers under review by Moldex as we continue to target two coverage decisions in 2025. Our clinical evidence from recent Phase III programs and the CATE trial launch shows how ultra-sensitivity can detect progression several months before imaging and provide greater confidence in a negative result. While biopharma project timing continues to have variability, the underlying MRD demand is strong, clinical adoption is compounding, and our cash position gives us the flexibility to execute. For those listening in for the first time, Personalis is a leading company helping partners, patients, and doctors see more in cancer samples. Our ultra-sensitive NEXT personal test is capable of detecting approximately one single fragment of tumor DNA in a million. This is not merely an improvement. It is a clinical necessity that allows us to detect recurrence months ahead of standard imaging and provides more confidence in a negative result. The market is growing rapidly for these types of tests and is expected to mature into a $20-plus billion opportunity for which we are exceptionally well-positioned to command a strong share. We're also a leader supporting biopharma companies with our discriminating platform, and that is used to analyze cancer tumors and identify new biomarkers. Our platforms are used to build personalized therapies and allow physicians to personalize treatment for cancer patients. Now turning to our Q3 results, we delivered $14.5 million in revenue in the corner, which was above the high end of our estimates. Our progress this quarter is best highlighted by our clinical volume. We reported 4,388 tests this past quarter, representing a 26% growth over the previous quarter. To put that in context, it's worth pausing to note we did just 945 tests in the third quarter of last year, and our performance this quarter reflects a 364% year-over-year growth. And cumulative to date, we've delivered more than 13,000 tests to help patients. We're providing an updated range for full-year revenue in the $68 to $73 million range. The uneven biopharma spending environment we discussed last quarter has persisted, creating continued variability in the timing of large project-based work. While the underlying demand for our strategic MRD offerings remain exceptionally strong, this quarter, the biopharma volatility is compounded by logistical delays we believe are unique to this quarter and are impacting the timing of samples for several large projects. This increases the variability of our Q4 biopharma revenue. As a result, we are prudently adjusting our full-year guidance to reflect these updated project timelines. This adjustment does not reflect a change in underlying demand for our technology and offerings, but rather the lumpy and unpredictable nature of our legacy translational research business. And while we manage the variability with discipline, our strategic focus remains squarely on the key drivers of long-term value, clinical adoption and reimbursement. On that front, we continue to execute strongly. We advanced our goals this quarter by submitting an additional indication for coverage lung cancer, meaning we now have three dossiers under review with Moldex. We remain confident in our data and continue to target coverage for two indications by the end of the year, though exact timing is dependent on Moldex review. Our progress this quarter is a direct result of the execution of the key pillars of our Win an MRD strategy. Now, let's walk through the updates. The first pillar is accelerating clinical adoption. The oncology community is voting with their orders. We continue to see impressive sequential growth in clinical test volumes. We now have over 700 physicians ordering next personal, and this growing base of physicians understands that when it comes to residual disease, ultra-sensitivity matters. Our retention is high, and the growth we are seeing is a direct result of next personal providing greater confidence in a negative result and the ability to detect recurrence earlier than any alternative. The clinical volume growth is the single most important leading indicator of our future high-margin revenue ramp as reimbursement comes online. This momentum is being driven by our partnership with Tempest, which continues to exceed our expectations. The collaboration has been so effective that we've already achieved the primary volume target we set for the entire year. When we set our targets at the beginning of the year, our goal was to grow 30% to 40% each quarter, ending the year with around 4,800 quarterly tests. We've effectively reached that milestone a quarter early, and having achieved our goal ahead of schedule, our focus the rest of the year now shifts to responsibly scaling our operational and commercial foundation. Additionally, we're strategically expanding our in-house sales force to complement the Tempest team to ensure we are fully prepared to capitalize on the inflection point of Medicare coverage. The second pillar is driving reimbursement and adoption through clinical evidence. We are proud of the latest NextPersonal data from AstraZeneca's Phase III studies. First, in neoadjuvant lung cancer, data from the Neo-Adora Phase III trial was presented at the World Conference on Lung Cancer that demonstrated the superiority of NextPersonal in the neoadjuvant setting. NextPersonal showed significantly higher baseline sensitivity for CT DNA detection compared to a leading gene-mutation-based test, offering physicians a more accurate assessment of disease burden and the ability to monitor treatment response. The data also showed that our test was prognostic for outcomes across treatment arms. Second, in the adjuvant EGFR-mutated lung cancer, further data from the Phase III Laura trial was presented at ESMO, which showcased the utility of NEXT Personal for treatment monitoring. Our assay demonstrated a medium lead time of five months in detecting MRD progression ahead of imaging and standard expert review. Lead time is a difference maker for patients, underscoring the value of an ultra-sensitive approach for earlier intervention. These studies demonstrate how our biopharma partners are utilizing ultra-sensitive MRD testing with NEXT Personal to better understanding response to therapy in their phase 3 studies. In addition to these results, we are excited to announce the launch of the CATE clinical trial with the Yale Cancer Center and the Translational Breast Cancer Research Consortium. This prospective multi-center trial is a step towards establishing clinical utility for ctDNA-guided treatment and high-risk, HR-positive, FIR2-negative breast cancer. This study is designed to generate evidence that will help integrate NEXT personal into the standard of care, empowering oncologists to move from surveillance to preemptive treatment based on our ultra-sensitive detection. The third pillar is leading with biopharma partners. Our technology offers our partners a powerful way to improve their clinical trials. The use of our next personal technology allows them to de-risk their pipelines, reach critical go-no-go decisions sooner, and enroll the right patients for their studies. We believe this leads to improve financial performance for our customers, submitting the value of our ultra-sensitive approach. As a result, the underlying demand for next personal and clinical trials has never been higher. We capitalize on this demand by signing two major prospective clinical trials this quarter. As mentioned before, our MRD biopharma revenue is set to grow approximately 300 percent year over year. As we wind up the year, personalis is executing with precision on a winning strategy. Just two years ago, we launched NextPersonal and started our journey to redefine the MRD market with an ultra-sensitive approach. We made tremendous progress in this time, having built a network of over 700 physicians and numerous collaborators and biopharma partners adopting NextPersonal. I want to thank our shareholders, partners, and employees for their dedication and commitment to the mission as we redefine the standard of care for cancer patients. With that, I will turn it over to Aaron to review our financial results.

Thank you, Chris. I will discuss our third quarter 2025 results and then cover guidance. Total company revenue for the third quarter was $14.5 million, representing a 44% decrease compared with $25.7 million for the same period of the prior year. The decrease in revenue was driven by the expected decline of $4.6 million from Natera as we wind down this business, a $4.2 million decline from the BAMBP due to fulfilling most of the task order received in 2024 within the first two quarters of this year, and a $2.5 million decline from biopharma customers. Biopharma revenue was $13.2 million in the quarter, representing a 16% decrease compared with $15.7 million for the same period of the prior year. This decline was primarily due to the prior year, including a significant amount of revenue from Moderna's Phase III melanoma trial that concluded enrollment late last year. The third quarter of 2025 year-over-year revenue declined from Moderna with $6.1 million and was partially offset by the increase in NextPersonal MRD revenue from several biopharma customers and accounted for more than one-third of the total biopharma revenue in the quarter. We are pleased with the adoption of NextPersonal that is taking place, and it highlights the solid execution of our win in MRD strategy. For clinical revenue, we recognized $0.4 million of revenue from our NEXT-DX and NEXT-Personal molecular tests, compared with $0.3 million for the same period of the prior year. Gross margin was 13.2% in the third quarter, compared with 34% for the same period of the prior year. The year-over-year decrease of 20.8% was expected and primarily due to the 44% lower revenue volume, which reduced the amount of fixed cost absorption and also an increase in clinical test costs in advance of reimbursement. The third quarter impact from our investments in unreimbursed clinical test costs was approximately 18%, and excluding those expenses, gross margin would have been approximately 31%. We are being prudent by balancing test volume and margin dilution. And looking a bit further out in time, we expect the investments in test volume to put us in position to achieve a higher level of revenue once reimbursement is obtained. Longer term, we expect total company margins to expand beyond 50% once we have obtained reimbursement coverage for more than a few indications, and we also achieve greater revenue scale. Operating expenses were $25.2 million in the third quarter compared with $23.1 million for the same period of the prior year. Most of the year-over-year increase was attributed to selling expenses related to our clinical test volume growth. The third quarter R&D expense was $12.2 million compared with $11.7 million for the same period of the prior year, and SG&A expense was $13 million compared with $11.4 million for the same period of the prior year. Net loss for the third quarter was $21.7 million compared with $39.1 million for the same period of the prior year. The prior year's net loss included a $26 million non-cash expense related to the warrants issued to Tempest that were exercised in the third quarter of last year. Now on to the balance sheet. We finished the third quarter with a strong balance sheet with cash and short-term investments of $150.5 million and no debt other than some small equipment loans. The cash usage from operations and capital equipment additions for the third quarter was $23.4 million. We expect to use approximately $75 million for the full year of 2025 and end the year with more than $130 million of cash on our balance sheet. The cash usage estimate has remained the same throughout the year, while our revenue estimate at the midpoint has declined by approximately 17% from the original range. This is a critical proof point of our financial and operational discipline. It demonstrates that as market conditions have shifted, we have proactively managed over $14 million in spending to fully offset the revenue variance, ensuring we continue to fund our most important strategic investments while holding our bottom-line cash commitments to our investors. Now I'd like to turn to guidance. For the full year of 2025, we revived our guidance and now expect total company revenue in the range of $68 to $73 million, as we reduced the range from the prior guidance of $70 to $80 million. Revenue from pharma tests and services and all other customers in the range of $50 to $54 million, for which the range was reduced from the prior guidance of $52 to $58 million. Population sequencing plus enterprise customers in the range of $16.5 to $17 million, an increase from the prior guidance of $15 to $16 million. Revenue from clinical tests reimbursed in the range of $1.5 to $2 million, which is reduced from the prior guidance of $3 to $6 million, reflecting that the company has not yet received reimbursement approvals underpinning the previously higher estimate range. Gross margin in the range of 22% to 24%, no change from the prior guidance, and reflects investments in clinical test volume in advance of reimbursement. Net loss of approximately $85 million, no change from the prior guidance, and cash usage of approximately $75 million, with no change from the prior guidance. We look forward to updating you on our progress during the next conference call in a few months. And with that, I will turn the call back over to the operator to begin the Q&A session. Operator.

Thank you.

At this time, we will be conducting a question and answer session. If you have a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. If you would like to remove your question from the queue, please press star 2. For participants using speaker equipment, it may be necessary to pick up your handset we're pressing the start keys while we pull for questions.

Our first question is from Thomas Flayton with Lake Street. Please go ahead with your question.

Thank you.

Hey, Chris, you mentioned in the last quarter call that were a couple of very large customers kind of on the cusp of coming online with you. Could you give us an update on those?

Yeah, they both come online. One of them was a big driver of our Q3 numbers. I don't know if you noted that almost a third of our revenue is directly driven by one of those customers. And the other one had some revenue track, and we are still growing MRD revenue three times this year. One of the things we also noted, and we can't announce the names of them yet, but we've signed two large kick-in and B-Serve continue this year to make really, really promising.

That's great. Great. And, Kristen, your prepared comments today, you said something about a logistical delay specific to this sector. Could you clarify what you meant by that?

Um, yeah, so we, you know, we, we, um, we've had some samples run into problems at customs. I mean, one of the, the, one of the challenges with the businesses it's constructed now is that it's almost all revenue from biopharma customers, and those are based on large cohorts. And so, and larger million dollar plus studies. So one or two things, you know, having some hiccups or some can cause us some, a lot of variability. We've had some challenges getting samples across the border. We don't know whether that is due to the government shutdown, honestly, Thomas, or whether that's something else. We know there's been some. We've had one sample cohort be turned around. So we thought it was really prudent to just make the range wider, to run them in Q4 in that case. We said it was unique to this quarter.

Thanks for taking the questions.

Our next question is from Mark Mazzaro with BTIG.

Hey, guys. Thank you for taking the questions. um uh yeah great to see the progress um i just wanted to start and i apologize if this is nitpicky the um the next personal growth was just a hair shy of your previously communicated 30 to 40 percent a quarter growth uh coming in at plus 26 um i'm just curious if that is largely due to you metering or tempering demand ahead of reimbursement? Or did you see anything in the field that might have surprised you? Obviously, this is a competitive space, so I was just curious. Or if there are some other timing elements, any clarity there would be helpful.

No, I appreciate it. Thanks for flagging it, Mark. You know, when we said 30% to 40% at the beginning of the year, the goal was, you know, to end the year in that 4,800. You know, we're largely there. So I wouldn't say we metered per se, but we definitely were very careful to manage the investment here. I mean, we're investing as we want it to be. And so, yeah, we were thoughtful this quarter. I think, you know, Timber says with them, third quarter is always a tougher quarter mark in terms of volume being, you know, flat, Q2 and Q8 quarters in the clinic. We didn't know.

And I think you, you know, you lowered the guidance on the clinical revenue contribution here in Q4, and I just want to ask, gives you confidence that maybe if you could characterize your conversations with Moldex just a little bit at a high level, is this still an active review? Because I think you talked about still expecting two by year end.

It is. It is. I mean, we still have, we have three in now. We've had productive conversations with Moldex. You know, those are always a combination of some voice, but also there's a back of questions. And we find that to be, we're in a very encouraging spot. But we have, and we are expecting, you know, we have all three moving along and they're all moving along really well. And so we continue to feel like we're on track, Mark, to get two of those done this year. You know, there can always be some variability because the, you know, we don't control Moldeck's final clock, and one of the things that I think we all admire they do is the seriousness for which they do it and really understand, you know, studies. And so there could be more questions that cause more back and forth. But we think where we are right now, and based on where we are, we think we're in a really good – you know, I would note that when we threw this out there a couple years ago, it was a really ambitious target. And, you know, as we've come down to the spot, we've made tremendous progress and we really de-risked it. And it was a really big deal this quarter to have one, now to have all three accepted.

Great. And if I could ask one last one, maybe as it relates to MRD biopharma, I would love to appreciate some of the metrics you provided. Obviously, there's a lot of demand. You know, admittedly, it's off of a low base. But can you just talk about what feedback you're hearing from biopharma with respect to going down to one part per million and how you think that's resonating on some of these lower shedding cancers? And just give us a sense for how you're thinking about 2026 and 2027, if you can.

Yeah, no, thanks for asking. I mean, I think it's more than just the lower shedding cancers, honestly, Mark. What we hear from biopharma companies is there's really three things they want, but there's a focus on two. First of all, they want to fail faster on earlier stage trials. And the key to that is being able to see quickly whether or not there is a signal because of the drug. And getting down and being able to see something to one parts per million, the 40% of our positive results are inside that range. So they can just see it faster. that's key right now for them and where they can use it. Later stage projects, getting to success faster means we can get the drugs in the hands of patients quicker. And again, when you can see the recurrence months ahead of imaging or any other approach, that's really powerful in order to, quite frankly, be having the kind of sleep we weren't perfect.

Fantastic.

Thanks very much. Thanks, Mark.

Our next question comes from Dan Brennan with TV College.

Thanks for the questions. Sorry, I joined a few minutes late. So is the government shutdown having any impact on Moldex? Are they short-staffed? Is that a factor? I don't know if you mentioned that.

We haven't seen it yet, honestly. We've been able to have the back and forth, and we don't see anything. I think all of us, you know, just honestly, I'm always surprised government shutdown. But right now, we haven't followed. Remember, it's a private company that's been crazy.

And then can you just remind us, I know we met with another company that also has some filings with Moldex, and they were referring to, like, standard cycles. So there's a cadence to how many turns this could occur. I mean, can you just remind us, I know when we had you in New York not long ago, just in terms of I think you filed breast in April, is there a certain normal cadence that occurs? Like, are you in the midst of a second turn or a third turn or a fourth turn? Or just kind of walk us through, like, what the normal sequence of back and forth is, if there's, like, a routine to that and kind of where you guys sit.

And sorry, Richard, I missed it.

Like, is there typically, like, you start it and then it goes two months and then either it gets approved or they go back and then it goes another two months? Is there, like, a certain finite end to each cycle or it can kind of persist that would give us a sense of where you guys actually sit?

Yeah, no, I mean, you typically, you do the, you send the submission in, Dan, and then there's a 60 days they have to get you the answer back. You may turn, and those are phrased as questions back to you typically about the data, about the test, about your intended use, et cetera. You're answering those questions. You can take as long as you want to answer, and then when you submit those, the clock.

Got it, right.

And there could be more questions that could be new. Yeah, there could be new questions that they could come up with as they continue to pour into the data and find new questions, or there could be questions upon the questions, right? And I think about to get a permit on what you've done, and there are time periods. We started it earlier in the year, and mid-breast, we thought that one would take on because that's really their first way to do data analytics.

Sorry, one more. And in terms of the confidence, this year, obviously, it was based upon, I guess, historical precedent. I mean, I guess, you know, you've got, you know, a handful of companies have gotten approvals. Was there like an expectation it would be two cycles or three cycles or the 60 days? Or you guys just kind of looked at the predicates and said, you know, if we count forward, I'm just wondering since it's, you know, it's November 4th. And it's always hard to predict, like, timing of the government, right? Or even if Moldex is a private entity, it's always hard to predict the timing.

There's variability. I mean, you remember we put this goal out a year and a half ago, and, you know, we've come a long way to de-risk it. And, you know, as we stick with it, it's also based on the strength of the evidence. The tracer X data, the data is just funny. The goal of whether it leads a little bit into next year or happens this year, like none of this is.

And maybe final one, like assuming when you guys do get approval, I know you've been asked this a lot, but now as you get closer to that and you've had more time and more experience in the field with clinical customers and some pharma customers, how would you think about, you know, like that year one or year two ramp now? Like, what would you point us to to look at? It would be, just to give us a sense, I mean, obviously you have Tempest, which is, you know, a huge commercial engine, but just any updates on how we might think about, you know, Breast, for instance, since that, you know, ideally could be the first one, since that's when you file the first, like how that might launch, you know, how you might try to, you know, kind of help investors think about that piece of that launch. Thank you.

I mean, we think that we're early stages here, and, you know, we haven't guided and really covered the market in nuanced ways, you know, to take hold. But what's happening at a high level in this market, and you can see this, the data is really starting to come together in so many different ways, that MRD testing provides incremental value to patients, doctors, clinicians. The data is looking great across multiple vendors. I think you all, different analysts, have said that we're probably 5% penetrated somewhere around that. So you can imagine if we double, triple the market.

Great. Thank you.

Our next question comes from Seb Dunandi with Guggenheim.

Hey, guys. This is Thomas on for Sibu. Thanks for taking our questions.

Maybe a follow-up on the question earlier about the two large pharma customers, and then just relating that to pipeline. I think those were around $5 million each. Is that roughly the size you'd expect for customer going forward? Or in the future, do you expect that account size to increase alongside your scaling of the business? Any color on the pipeline would be helpful. Oh, I think, yeah, I think the, I mean, I think as you penetrate these accounts, there's more than $5 million of potential. Capturing in a large biopharma with multiple oncology trials, prospectively, being able to capture 100% of that share. But that's a journey in and of itself.

Okay, great. Thanks.

And then maybe just to follow up on, you know, within pharma, a newer account versus those more mature accounts, what's the difference in kind of order growth rate you're seeing? Are you still seeing acceleration among those mature accounts? And then maybe what's the typical run rate for some of those mature accounts?

Biopharma and biopharma. Yeah, and biopharma, MRG.

It opens up more opportunities for them to be able to do more.

Let's think about where biopharma is going to go.

Thank you guys very much.

Next question is from Mike Mattson with Needham & Company.

Yeah, thanks for taking my question. So just with regards to Natera, you know, so there was a big decline this quarter. I think it was expected. But is there any revenue expected from them in the fourth quarter? Or are they completely out of your numbers beyond this quarter? And then I assume it's not, you're not expecting any of next year either.

No, it's very, very small in the fourth quarter. It's pretty small in the second quarter. You know, we really started to bleed down in Q1 and Q2. And then we've just been doing cleanup or helping on some, but it's been very.

Okay, got it. And then just Tracer RX trial, any expectation on when that would be published? And then where do things stand on colorectal with getting a dossier put together for that in terms of the data, trials, et cetera, you would need there?

Sure. Rich is going to jump in, Mike.

Yeah, so the tracer has a really strong study, over 400, so really cool.

You know, we're just starting the journey. Investigators still have...

Okay, got it. As a reminder, to ask a question, please press star 1.

Our next question is from John Wilkin with Craig Helm.

So I wanted to just press a little bit more on the on the molecular volume growth in the quarter. I know you guys had you guided earlier in the year to expecting 30 to 40 percent sequential growth. And you kind of talked through some of the reasons that came in short of that. But I mean, just given the stock reaction, I think there might be some concerns out there that with a couple of other players launching MRD tests in the market, there could be other factors driving that kind of below that target range and given you had also given that before you had reimbursement so maybe you could just drill down a little bit more on that and talk through anything that was impacting the the volume growth i mean we i think we've said to clients but not at it toward the retention spend so we were

thoughtful so with revenue only 14 and a half million dollars in q3 john you know we did It breaks a little bit on volume, primarily because, you know, we have to balance margin dilution. And then the other point that Chris mentioned earlier was in the third quarter, typically you do have some seasonality. And the goals that we set out, you know, over a year ago were 30 to 40 percent. You know, like Chris had said previously, we've already achieved the level that we had targeted to be at the end of the year a quarter early. And so, you know, we didn't see a need to go overboard and, you know, push forward more volume in the third quarter and then drive margins even lower. So you have to kind of appreciate what we were trying to do in terms of balancing cash burn and the margin dilution as well.

Yep.

That makes sense. Appreciate the clarification. And then I'm wondering if you could talk through just anything you've been hearing from the field through your conversations with Tempest and what sort of feedback their sales team is getting. I know they haven't been talking too much about MRD yet, just in advance of reimbursement, but any early feedback you are getting and talk about any ordering patterns with the 700 ordering positions you're at now.

Yeah, I mean, I think one of the learnings is we were collectively, we were really the first set of companies to really pioneer along with the ultra set together. And I think that's been a really compelling value proposition. We've gotten really positive feedback about the customers. It's great to have a test where 40% unique and differentiated. And so the feedback has been, we've been able to.

Thanks a lot, guys.

Our next question is from Arthur He with H.C. Wainwright.

Hey, guys.

This is Arthur on for RK. So just a quick follow-up regarding the clinical test growth. Could you give us more color on how these growths be driven by? It's more from the increase in the physician numbers or new physician numbers, or it's more from the task number per physician getting increased to push the task number?

Yeah, I mean, a little bit of both, but, I mean, we've been really focusing on not so much trying to grow top line, but getting more. I think we've learned how to sell deeper within the...

Thanks for taking my question.

Ladies and gentlemen, with no further questions in the question queue, it brings us to the end of this event. Thank you for attending, and you may now disconnect your lines.