SOPHiA GENETICS SA (NASDAQ:SOPH) Q3 2023 Earnings Call Transcript

Ross Muken: So I think respectively in terms of disclosure, right, there’s rules in IFRS around certain thresholds. So you can assume we haven’t broken that threshold as a percentage for a given year not necessarily for a given quarter. So we’re quite happy with biopharma performance this year. In the quarter it was up triple digits and it was a meaningful contributor sequentially as we had kind of guided to and expected. And so we’ll obviously have to revisit sort of our revenue disclosures for next year assuming the current trajectory continues. But overall, we are quite happy with our execution and performance and it was a nice driver of some of the strong growth in the period. And I think if we look to next year, certainly our activity levels and the breadth of activity we have across our 3Ds of pharma remain quite robust and we look forward to being able to update you on that going forward. But overall, we’re quite happy with biopharma’s execution.

Kyle Boucher: Got it. And then maybe it’s a bit too early to say. But starting out in ’24, should we be sort of in that 30% to 35% constant currency growth rate in line with your long-term range or could any of these new partnerships begin to drive upside to that sort of long-term range over the next few years?

Dr. Jurgi Camblong: So Kyle, as you well know, we have a very predictable model, right, on our forward-looking performance given the nature of our business in the clinical market, which is a consumption-based business where the net dollar retention of our customers is pretty good. And so this already gives us indeed a strong baseline probably above 30% to grow year-on-year. And as just you highlighted as we are now penetrating the biopharma segment, this gives us room to eventually grow at a faster pace.

Ross Muken: Yes. And just to be clear, so again we’re not giving any formalized guidance today for 2024. But I think in total, as Jurgi mentioned, given the high recurring nature of our business and our high levels of visibility which we’ve spoken about before, we obviously feel like we executed well this quarter and have executed well for this year. We sold strong new logos all of this year and our net dollar retention has been accelerating and so you can assume we’re set up well as we enter next year. But obviously we’re always mindful of the macro environment and all of the different changes that are happening and so we’re trying to be vigilant. Hence, we did have some cost actions as well that we announced today. But I think in total, we’re feeling quite good given the macro challenges around us and feel like we can continue to deliver on what we’ve committed to on a long-term basis.

But obviously we’ll update you more formally next year as we report our fourth quarter.

Operator: And we do have another question comes from the line of Mark Massaro with BTIG.

Mark Massaro: Congratulations on the top and bottom line beat in the quarter. It’s also nice to see the addition of BioReference Labs. Could you just speak — I think you guys alluded to it, but it sounds like they’re initially going to use the MSK-ACCESS products for liquid biopsy. I guess can you just give us a sense for which types of applications BioReference might use over time? Is it the idea that they’ll start with 1 application, but perhaps look at some of the other DDM applications as they start with the first one?

Dr. Jurgi Camblong: Mark, thank you for congratulating us as well on our performance. Indeed we both beat the top line and the bottom line. And on the bottom line, I think the performance we had with EUR 11.8 million loss this quarter versus EUR 19.3 million loss year-on-year in Q3 2022 demonstrates that definitively our technology can scale and that with the investments we’ve been doing over the last year so we can continue delivering strong results. On specifically BioReference, so as you know, our strategy is a land and expand model. So we like to land first our customer on initial application to build the experience of the platform and the trust and this opens up often other opportunities. I will let Ross give you a sense of what would come eventually later.

Ross Muken: Mark, obviously you highlighted sort of what we clearly intend to do with BioReference and frankly, other large labs here in the U.S. And so they saw a really unique opportunity to be able to take on a market leading premier liquid biopsy capability in MSK-ACCESS and so that was sort of the initial talking point, right, with them around adoption. I think to the degree they get that up and running internally and we’ll obviously work with them hand-in-hand to get that to market in some of their key geographies as quickly as possible. We will continue to discuss other applications within the platform. I think certainly, and I’m not speaking specific to BioReference, but in general with the conversations we’re having with some of the large laboratories, we are seeing still quite a lot of interest in CGP so in the impact product as well as others that we support on our platform.

And so we would expect that conversation to continue. We’re also discussing with quite a number of players the ability to use our Ginger algorithm for HRD on top of their existing HRD. And I would say as well there’s quite a lot of interest in our myeloid capabilities where we are market leading. And so again we’re obviously very excited about this relationship. We view them as a great long-term partner and validation for us. And this quarter we had nearly 80% growth in the U.S. business in the NORAM business and obviously this will help set us up well for next year to continue that momentum.

Mark Massaro: Excellent. I know in the past you guys have talked about MRD, minimal residual disease. Can you perhaps provide an update on how you’re thinking about potentially approaching the market, whether it’s initially in hem or solid tumor? And if it is in hem, which application you’re targeting and roughly when you think you could roll out?