Earnings Call Transcript - PSNL Q3 2025

Operator, Operator

Good afternoon, and welcome to the Personalis Third Quarter 2025 Earnings Conference. Please note that this event is being recorded. I will now hand you over to Caroline Corner of Investor Relations. Please go ahead.

Caroline Corner, Investor Relations

Thank you, operator. Welcome to Personalis' Third Quarter 2025 Earnings Call. Joining today's call are: Chris Hall, Chief Executive Officer and President; Aaron Tachibana, Chief Financial and Chief Operating Officer; and Rich Chen, Chief Medical Officer and EVP, R&D. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements within the meaning of the U.S. securities 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 our 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. Personalis undertakes 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.personalis.com, under the Investors section and includes additional details about our financial results. Our website also has the 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. With that, I would like to turn the call over to Chris.

Chris Hall, CEO

Thank you, Caroline. Good afternoon, everyone, and thank you for joining us. Q3 was another step forward in our Win-in-MRD 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 3 dossiers under review by MolDX as we continue to target 2 coverage decisions in 2025. Our clinical evidence from recent Phase III programs and the CATE trial launch shows how ultrasensitivity 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 ultrasensitive 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 quarter, which was above the high end of our estimate. 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 have delivered more than 13,000 tests to help patients. We're providing an updated range for full year revenue in the $68 million 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 remains 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 lung cancer coverage, meaning we now have 3 dossiers under review with MolDX. We remain confident in our data and continue to target coverage for 2 indications by the end of the year, though exact timing is dependent on MolDX review. Our progress this quarter is a direct result of the execution of the key pillars of our Win-in-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, ultrasensitivity 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 Tempus, 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 for the rest of the year now shifts to responsibly scaling our operational and commercial foundation. Additionally, we are strategically expanding our in-house sales force to complement the Tempus 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 NeXT Personal data from AstraZeneca's Phase III studies. First, in neoadjuvant lung cancer, data from the NeoADAURA Phase III trial was presented at the World Conference on Lung Cancer that demonstrated the superiority of NeXT Personal in the neoadjuvant setting. NeXT Personal showed significantly higher baseline sensitivity for ctDNA 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 median lead time of 5 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 ultrasensitive approach for earlier intervention. These studies demonstrate how our biopharma partners are utilizing ultrasensitive MRD testing with NeXT Personal to better understand response to therapy in their Phase III 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 multicenter trial is a step towards establishing clinical utility for ctDNA-guided treatment in high-risk HR-positive HER2-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 ultrasensitive 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 derisk their pipelines, reach critical go/no-go decisions sooner and enroll the right patients for their studies. We believe this leads to improved financial performance for our customers, cementing the value of our ultrasensitive approach. As a result, the underlying demand for NeXT Personal clinical trials has never been higher. We capitalized on this demand by signing 2 major prospective clinical trials this quarter. As mentioned before, our MRD biopharma revenue is set to grow approximately 300% year-over-year. As we wind up the year, Personalis is executing with precision on a winning strategy. Just 2 years ago, we launched NeXT Personal and started our journey to redefine the MRD market with an ultrasensitive approach. We made tremendous progress in this time, having built a network of over 700 physicians and numerous collaborators and biopharma partners adopting NeXT Personal. 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.

Aaron Tachibana, CFO

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 VA MVP due to fulfilling most of the task order received in 2024 within the first 2 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 decline from Moderna was $6.1 million and was partially offset by the increase in NeXT Personal MRD revenue from several biopharma customers and accounted for more than 1/3 of the total biopharma revenue in the quarter. We are pleased with the adoption of NeXT Personal 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 achieved 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 noncash expense related to the warrants issued to Tempus 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 revised our guidance and now expect total company revenue in the range of $68 million to $73 million as we reduced the range from the prior guidance of $70 million to $80 million. Revenue from pharma tests and services and all other customers in the range of $50 million to $54 million, for which the range was reduced from the prior guidance of $52 million to $58 million. Population sequencing plus enterprise customers in the range of $16.5 million to $17 million, an increase from the prior guidance of $15 million to $16 million. Revenue from clinical tests reimbursed in the range of $1.5 million to $2 million, which is reduced from the prior guidance of $3 million 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, Operator

Our first question is from Thomas Flaten with Lake Street.

Thomas Flaten, Analyst

Chris, you mentioned in the last quarter call, there 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?

Chris Hall, CEO

Yes, they both come online. One of them was a big driver of our Q3 numbers. I don't know if you noted that almost 1/3 of our revenue now came from MRD this last quarter. That was directly driven by one of those customers. And the other one had some revenue in this quarter and then it will bleed into Q4. So those are still on track, and we are still growing MRD revenue 3x this year and the demand for our MRD technology has been super high, and it's been a really, really good quarter. One of the things we also noted, and we can't announce the names of them yet, but we've signed 2 large prospective clinical trials that will start to kick in and be serviced over the next 2 to 3 years with biopharma customers. So we've continued this year to make really, really promising progress with biopharma customers in terms of MRD adoption.

Thomas Flaten, Analyst

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

Chris Hall, CEO

We have encountered some issues with samples at customs. Currently, our revenue primarily comes from biopharma customers, which involves large cohorts and significant studies. Therefore, if we experience one or two setbacks, it can lead to considerable variability in our results. We've faced difficulties in getting samples across the border, and it's unclear if this is due to the government shutdown or other factors. There have been challenges in transporting these samples, with one cohort being turned back, and we are working to retrieve it. To mitigate potential issues, we've decided to widen our projections at the lower end in case the samples do not arrive in time for Q4, which would result in a shift to Q1. While we typically encounter some difficulties with sample delivery, we haven't faced customs problems like this before. We suspect that the shutdown may be causing staffing shortages and incomplete paperwork, leading to delays. We remain hopeful that everything will eventually arrive, but we want to exercise caution by adjusting our forecast.

Operator, Operator

Our next question is from Mark Massaro with BTIG.

Mark Massaro, Analyst

Yes, great to see the progress. I just wanted to start, and I apologize if this is nitpicky. The NeXT Personal growth was just a hair shy of your previously communicated 30% to 40% a quarter growth coming in at plus 26%. 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.

Chris Hall, CEO

I appreciate it, Mark. At the beginning of the year, we aimed for a growth of 30% to 40% with a target of reaching around 4,800 tests, and we are close to that goal. I wouldn't say we deliberately controlled demand, but we have been very cautious in managing our investments. We're spending significantly in anticipation of reimbursement while also building demand, usage, and key opinion leaders. This strategy has brought us closer to where we aimed to be. Yes, we were careful this quarter, similar to what Tempus has mentioned regarding reimbursement. The third quarter tends to be challenging in terms of flat volumes, with the second and fourth quarters typically being stronger for the clinical business. We didn’t adjust by adding more resources, but we will stay mindful of how to manage this in relation to demand. Overall, we believe we are in a strong position and will reach our intended goals by year-end.

Mark Massaro, Analyst

I noticed that you revised the forecast for clinical revenue for Q4. Can you share what gives you confidence in that area? Additionally, could you provide a general overview of your discussions with MolDX? Is this still under active review, given that you mentioned expecting two by the end of the year?

Chris Hall, CEO

We currently have three projects in progress and have had productive discussions with MolDX. These discussions involve both verbal communication and a process of written inquiries. We believe we are in a very encouraging position with all three projects advancing well. Our expectation is to complete two of them this year, although there may be some variability in timing since we do not control MolDX's final timeline. We greatly appreciate the thoroughness and attention to detail that MolDX exhibits in their work, which may lead to additional questions and dialogue. However, we feel confident in our current standing and regard it positively. When we initially set these targets a couple of years ago, they were quite ambitious. Since then, we’ve made significant progress and minimized risks. This quarter's acceptance of a lung study paper was a major achievement, and having all three projects accepted and progressing through peer review is exactly where we aim to be. Overall, we're in a favorable position, and our conversations have been constructive and optimistic.

Mark Massaro, Analyst

Great. If I could ask one last question regarding MRD biopharma, I would appreciate some of the metrics you provided. There's clearly a lot of demand, although it starts from a low base. Can you discuss the feedback you’re receiving from biopharma about reducing to 1 part per million and how that is perceived regarding some of these lower shedding cancers? Also, could you share your thoughts on the outlook for 2026 and 2027?

Chris Hall, CEO

Yes, thank you for the question. It's more than just the lower shedding cancers. What we hear from biopharma companies is that they are primarily focused on three key objectives, with emphasis on two. Firstly, they want to expedite the process of failing fast in early-stage trials, which hinges on quickly identifying whether there is a signal from the drug. Achieving the ability to detect down to 1 part per million is crucial, as 40% of our positive results fall within that range. This allows them to quickly assess and exit from early-stage trials, which is vital for them. Secondly, for later-stage projects, accelerating success translates to getting drugs to patients more rapidly. The ability to detect recurrences months in advance of imaging or other methods is extremely valuable for reaching conclusions sooner and increasing potential revenue. The third aspect is the effective enrollment of suitable patients in clinical trials, where an MRD assay is used to decide patient placement in treatment arms. Confidence in declaring a patient negative is essential to enhance success rates, and there have been past challenges in achieving this effectively. We have received very positive feedback regarding this. These are the three focal points. I would also note that biopharma companies are very discerning buyers; they thoroughly evaluate us with extensive checklists every time we undertake a new initiative. We conduct numerous pilots and bake-offs, and our success relies on our performance and our ability to build a global presence to meet their needs. Just two years ago, we launched this test, and now we are embarking on large prospective clinical trials with major biopharma companies, marking significant progress. I believe this will yield benefits in 2026 and 2027 and beyond. It’s a substantial opportunity for monetizing the tests, which will help us establish robust clinical evidence. We recently presented data at ESMO this year with AstraZeneca, highlighting the application of ultrasensitive testing in two clinical trials, reinforcing the innovative approach we are taking. We anticipate a continued growth in clinical evidence and revenue over the next few years.

Operator, Operator

Our next question comes from Dan Brennan with TD Cowen.

Daniel Brennan, Analyst

Sorry for joining a few minutes late. Is the government shutdown affecting MolDX in any way? Are they experiencing staff shortages? Is that a concern? I'm not sure if that was mentioned.

Chris Hall, CEO

We haven't seen any impact from the government shutdown so far. We've been in communication and there hasn't been anything noticeable. It's always a bit surprising what issues may arise during a government shutdown, so we can’t predict what might happen in the future. Currently, everything seems to be functioning well. It's worth noting that a private company has the contract to handle claims in their territory and also make decisions regarding molecular genetic testing, which many contractors look to for guidance, though not all do. Given that it's a private entity with a contract, it's not surprising that we haven't observed any impact from the situation.

Daniel Brennan, Analyst

Got it. No, thanks Chris. Can you just remind us about the standard cycle for filings? I know we met with another company that mentioned a cadence for how often these turns occur. When we had you in New York not long ago, you mentioned filing breast in April. Is there a typical schedule for this process? Are you currently in the second, third, or fourth cycle? Please walk us through the usual sequence of interactions and where you stand in that process.

Chris Hall, CEO

Yes. Rich is going to jump in.

Richard Chen, Chief Medical Officer

Dan, thanks for the question. Yes, there is. And the back and forth that goes on with MolDX usually goes in 2-month cycles. And so that usually results in a set of questions and responses. It's usually a great dialogue, good questions. And so we're kind of going down that journey, both on the breast cancer side, but now also on IO and so lung cancer.

Daniel Brennan, Analyst

Got it. And sorry, Rich, I missed it, like is there typically like you start it and then it goes 2 months and then either it gets approved or they go back and then it goes another 2 months? Is there like a certain finite end in each cycle or it can kind of persist that would give us a sense of where you guys actually sit?

Chris Hall, CEO

Yes. Typically, you submit the information, and they have 60 days to respond. They may come back with questions about the data, the test, the assay, its use, and your intentions. You can take as much time as needed to answer those questions, whether it's overnight or up to a month. Once you resubmit your answers, the 60-day clock starts again. They may have additional questions as they review the data, and there can be follow-up questions on your responses. This process resembles obtaining a permit from a city planning department, where questions arise regarding your submissions and your answers can lead to further inquiries. The timeline for responses is typically structured. We initiated this earlier in the year with breast cancer and anticipated it might take longer, but we are optimistic about moving forward, as this process is essential for engaging with the test and the analytic validity data. We also have ongoing projects for immuno-oncology and lung cancer, and we expect to receive feedback on all three by the end of the year. While the process may take its course, we feel hopeful about completing a couple of them this year.

Daniel Brennan, Analyst

Got it. Sorry, one more thing. Regarding your confidence this year, it seems to be based on historical precedent. There have been a few companies that received approvals. Was there an expectation for it to take 2 cycles, 3 cycles, or just 60 days? Or did you simply assess the precedents and decide to count forward? I'm curious, since it's November 4, and predicting government timing is always challenging. Even with MolDX being a private entity, it's tough to forecast the timeline.

Chris Hall, CEO

Yes. There's variability. I mean remember, we put this go out 1.5 years ago, and we've come a long way to de-risk it. And as we've continued to stick with it, it's also based on the strength of the evidence. This is really, really good data. The TRACERx data is probably one of the largest, most comprehensive data sets in MRD, certainly in lung cancer. The data is just phenomenal. The IO study is 200-plus patients, 18 different types of cancer, a really nice signal there. and the breast cancer data has been really great also. And so we did it based on the strength of the evidence, what we would expect in the others. But just to back up, like the goal of whether it leads a little bit into next year happens this year, like none of this is make or break for the trajectory of where we are or what we're trying to do. And we feel like we've made tremendous progress over the last 3 to 4 months on this and de-risking it, and we feel really optimistic sitting here in November.

Daniel Brennan, Analyst

Got it. And maybe a final one. 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 that year 1 or year 2 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 Tempus, which is a huge commercial engine. But just any updates on how we might think about breast, for instance, since that ideally could be the first one since that's when you file the first, like how that might launch, how you might try to kind of help investors think about that piece of that launch?

Chris Hall, CEO

We believe we are in the early stages, and anticipate a very positive year following the reimbursement process. While we haven't provided specific guidance or numbers yet, we plan to fully activate Tempus and enhance their efforts with additional sales representatives to better cover the market in more targeted ways, building on what we've learned over the past few months. At a broader level, there is a noticeable excitement in the market as data begins to converge, demonstrating the added value of MRD testing. This value is evident for patients, doctors, and clinicians, with promising data from various vendors. The market appears to be gaining momentum, and different analysts suggest we are currently only about 5% penetrated. If we manage to double or triple the market share, we could secure a strong position.

Operator, Operator

Our next question comes from Subbu Nambi with Guggenheim.

Thomas VonDerVellen, Analyst

This is Thomas on for Subbu. Maybe a follow-up on the question earlier about the 2 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 per 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.

Chris Hall, CEO

I believe that as we engage with these accounts, there is over $5 million of potential within these large customers, and we anticipate that figure will increase. If we can capture 100% of the share in a significant biopharma setting where multiple oncology trials are taking place and MRD is being utilized, the value will exceed that amount. We are still in the early stages of this process, and it's important to note that penetrating these accounts takes time. However, we are making progress in this area.

Thomas VonDerVellen, Analyst

Okay, great. Can you provide some insights on the differences in order growth rates between newer accounts and more established ones within the pharma sector? Are you still observing acceleration in the mature accounts? Also, what is the typical run rate for those mature accounts?

Chris Hall, CEO

In biopharma, most of our energy is concentrated on the leading biopharma companies that invest heavily in clinical trials. We're focused on this group of customers, as we already have a presence in many of these areas. While there are opportunities with smaller biopharma and biotech companies, our main goal is to deepen our partnership and capture more business from our current clients. Additionally, I believe that advancements in ultrasensitivity create more opportunities for these clients to utilize MRD technology. Consequently, we're likely expanding the market as we lead the way with this new approach.

Aaron Tachibana, CFO

We're really optimistic about where biopharma is going to go as well. Over the last 2 quarters, the pipeline and funnel for MRD has grown rapidly. In addition, the orders that have come in for MRD projects have continued to grow. The challenges we've seen near-term have been on the translational research side. And as Chris mentioned in the prepared remarks, we have been seeing some delays on the sample receipt side, which has been a headwind to the biopharma revenue. But overall, we're optimistic about where this is going.

Chris Hall, CEO

Yes, we had two major customers, Natera and Moderna, that experienced declines this year. We anticipated this, particularly with Moderna ending its Phase III melanoma trial enrollment, which significantly impacted our numbers last year. Additionally, we were winding down our relationship with Natera this year. When you consider the loss of that business and where we expect to end up, we are still projecting a 40% growth this year, which is quite positive. The business is evolving, and the shifting mix presents certain challenges, but the growth remains strong, driven by our progress with MRD. I want to highlight that as we adapted to the new environment, we focused on managing our cash burn carefully and maintaining financial prudence. Our cash usage guidance remains unchanged this year as we concentrated on being smart with our expenses and investments amidst a challenging year due to the biopharma slowdown. We have been committed to maintaining financial discipline and ensuring we hit our cash burn targets while being responsible with investors' funds.

Operator, Operator

Our next question is from Mike Matson with Needham & Company.

Michael Matson, Analyst

So regarding Natera, there was a significant decline this quarter, which I believe was anticipated. Is there any revenue expected from them in the fourth quarter, or are they completely excluded from your numbers after this quarter? I also assume you're not expecting anything from them next year either.

Chris Hall, CEO

No, it's very small in the fourth quarter and also quite small in the second quarter. We started to see a decline in Q1 and Q2 with the anticipation that Q2 would be winding down. Since then, we've been involved in some cleanup and assisting with studies they need help on, as they likely want the same technology or platform. Overall, it has been very minimal. This is reflected in our numbers, where nearly all of our revenue this quarter came from biopharma. Most of that revenue stems from the diversity of our clients, indicating that we've built a varied set of biopharma customers, leading to a revenue base primarily grounded in pharmaceuticals. This will begin to shift as we obtain Medicare reimbursement and start incorporating clinical aspects, which should drive rapid growth alongside that. We've made significant progress in transitioning our revenue profile positively for the company, and that is evident in our current numbers. Consequently, Natera is essentially no longer a factor.

Michael Matson, Analyst

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

Richard Chen, Chief Medical Officer

Sure. The TRACERx study should be published in the next quarter sometime. So that's going to be great to have that come out, a really strong study, over 400 patients, non-small cell lung cancer. So it really will be a great summary of how strong the performance with NeXT Personal is in non-small cell lung cancer.

Chris Hall, CEO

In colorectal cancer, we are just beginning our journey. It will be one of our focuses for the upcoming year. However, the investigator needs to determine when to conclude the study and submit the data for publication, and that decision has not yet been made. Once that happens, we will proceed with the submission. Naturally, we cannot seek coverage until the data is accepted. Thus, we are still at an early stage in our progress on colorectal cancer.

Operator, Operator

Our next question comes from John Wilkin with Craig-Hallum.

John Wilkin, Analyst

I wanted to follow up on the molecular volume growth for the quarter. Earlier this year, you mentioned expecting 30% to 40% sequential growth, and you've explained some reasons for not meeting that target. However, considering the stock reaction, there may be concerns about the impact of other companies launching MRD tests in the market and other factors that might have contributed to the volume growth falling below expectations. Additionally, you mentioned this was discussed before you secured reimbursement. Could you elaborate on that and explain what may have affected the volume growth?

Chris Hall, CEO

On the clinical side, no. I think we've mentioned, and Tempus has indicated, that we want to be strategic in our approach. We haven't seen any slowdown; retention rates remain high, and we've added some new clients, although not at an aggressive pace as we've tempered our growth. However, retention has been excellent. Achieving nearly 30% quarter-over-quarter growth in a typically stable quarter is impressive. The figures are also increasing significantly.

Aaron Tachibana, CFO

Yes. So we were thoughtful. So with revenue only $14.5 million in Q3, John, we did pump the brakes a little bit on volume, primarily because we have to balance margin dilution and cash usage as well. 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 over a year ago were 30% to 40% quarter-over-quarter growth. And like Chris had said previously, we've already achieved the level that we had targeted at the end of the year, a quarter early. And so we didn't see a need to go overboard and push forward more volume in the third quarter and then drive margins even lower. So you have to appreciate what we were trying to do in terms of balancing cash burn and margin dilution as well.

Chris Hall, CEO

Yes.

John Wilkin, Analyst

That makes sense. I appreciate the clarification. Could you discuss any insights you've gained from your discussions with Tempus and the feedback from their sales team? I know they haven't shared much about MRD yet in anticipation of reimbursement, but have you received any early feedback or noticed any ordering patterns with the 700 ordering physicians you are currently working with?

Chris Hall, CEO

Yes, I believe one of the insights we've gained is that we were among the first companies to truly develop the concept of a one-stop shop, integrating ultrasensitive testing into a cohesive offering. This has proven to be a compelling value proposition. Physicians are looking to have all these tests, including hereditary testing, comprehensive genomic profiling, and minimal residual disease analysis, connected in their cases. We've received very positive feedback on the approach we've taken, and once customers start ordering, they tend to remain with us. It's notable that 40% of the positive results we provide are unique and distinct, reinforcing the value we deliver daily to these doctors. The feedback has been overwhelmingly positive, enabling us to continue our growth. Over the last couple of quarters, we've concentrated on understanding the logistics of our business and strategizing on how to secure more business within our accounts. Ultimately, our success will hinge on how deeply we penetrate within these accounts.

Operator, Operator

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.