Veracyte(VCYT) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported first-quarter revenue of $96.8 million, a 17% increase compared to the prior year period, driven by a 25% growth in the testing business [17][31] - Total testing volume reached approximately 33,500 tests, reflecting a 16% increase year-over-year [31] - Non-GAAP gross margin was 68%, down approximately 70 basis points year-over-year, while testing ASP was approximately$ 2,900 [34][32] Business Line Data and Key Metrics Changes - Decipher Prostate tests delivered 16,500 units, achieving a new quarterly volume record, with growth from both new and existing providers [5][17] - Afirma reported approximately 14,000 test results, with a 14% revenue growth compared to the prior year [21] - Biopharmaceutical and other revenue was $3 million, down 51% year-over-year due to overall spending constraints across the industry [33] Market Data and Key Metrics Changes - The American Cancer Society estimates approximately 300,000 new cases of prostate cancer in 2024, indicating a growing market for Decipher [11] - The company aims for 80% penetration in both Prostate and Fibroid Cancer Molecular Tests, indicating a significant market opportunity [9] Company Strategy and Development Direction - The company is focused on global expansion through a robust IVD strategy and solving new cancer challenges via its diagnostics platform [25][58] - The acquisition of C2i genomics is expected to enhance the company's offerings in Minimal Residual Disease (MRD) testing [12][29] - The company plans to launch its first MRD test for muscle-invasive bladder cancer in the first half of 2026 [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of Decipher, citing strong market penetration and the impact of updated NCCN guidelines [39][49] - The company raised its total revenue guidance for 2024 to$ 402 million to $410 million, reflecting an improved outlook for its testing business [36] - Management acknowledged challenges in enrollment for the NIGHTINGALE trial but remains optimistic about the market potential for the nasal swab test [27][42] Other Important Information - The company downsized commercial support for the InvisioTest but will continue to offer it to patients facing interstitial lung disease [26] - The updated NCCN guidelines for Decipher Prostate received a level 1b evidence rating, the highest for gene expression tests for prostate cancer [19] Q&A Session Summary Question: Growth rate for Decipher and market penetration - Management indicated that Decipher's growth is driven by market penetration, share gains, and overall market growth, with a 30% year-over-year volume increase and a 36% revenue growth [68] Question: Enrollment slowdown in NIGHTINGALE trial - Management noted that enrollment challenges are typical in large multi-site trials and are not indicative of market interest [42][43] Question: Biopharma-related activities and revenue potential - Management acknowledged a pipeline of new customers and projects in biopharma, indicating potential for future growth despite current constraints [77] Question: Demand for Afirma GRID and clinician interest - Management reported significant interest from academic settings and rural communities, indicating a positive trend for Afirma [81] Question: Medicare reimbursement impact on Afirma - Management clarified that while TERT testing provides some benefit, it is not expected to significantly uplift ASP due to limited patient selection [83] Question: Development strategy for MRD testing - Management expressed confidence in launching the MRD test for muscle-invasive bladder cancer by early 2026, emphasizing control over the necessary assessments [97]