Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sophia Genetics SA (SOPH, Financial) reported a re-acceleration in clinical volume growth, with a 17% year-over-year increase in analysis volume, excluding COVID-related volumes.
- The company achieved an adjusted gross margin of 73.1% in Q3 2024, reflecting continued improvement in cost management and operational efficiency.
- Sophia Genetics SA (SOPH) successfully reduced its cash burn by 39% year-over-year, demonstrating strong financial discipline.
- The launch of MSK Access on Sophia DDM has been well-received, with 18 customers adopting the application across five continents, indicating strong market interest.
- The company reaffirmed its full-year revenue guidance for 2024, projecting 4% to 7% year-over-year growth, showcasing confidence in its growth trajectory.
Negative Points
- BioPharma revenue declined significantly, contributing to an overall year-over-year revenue decline of approximately 2.5% for Q3 2024.
- The company faced temporary headwinds in key European markets, including France, Italy, and Spain, impacting growth in those regions.
- Gross profit for Q3 2024 decreased by 5% year-over-year, with a gross margin decline from 69.1% to 67.2%.
- Sophia Genetics SA (SOPH) experienced a churn of a large account in Latin America, affecting growth in that region.
- The challenging macro environment and budget constraints in the BioPharma sector have elongated sales cycles and made signing large contracts difficult.
Q & A Highlights
Q: Could you provide an overview of what Sophia Genetics is enabling with MSK Impact and Access, and what financial impact this could have in the coming years?
A: Jurgi Camblong, Co-Founder and CEO, explained that MSK Access is a decentralized liquid biopsy testing application that has gained traction globally, with 18 customers across five continents. Ross Muken, President, added that the application could ramp to about $100,000 per logo, with higher ASPs than the company average, indicating significant growth potential. The pipeline includes nearly 50 additional customers, suggesting strong future contributions to growth.
Q: How are pricing headwinds affecting your business, and are there any signs of stabilization?
A: Ross Muken noted that while there was modest pricing pressure in parts of Europe, particularly Spain, stabilization is occurring in France. Newer products with higher ASPs are expected to drive overall ASPs up, indicating that pricing remains a positive lever for the business.
Q: Can you update us on the progress of the scalable whole genome sequencing application in partnership with Microsoft and NVIDIA?
A: George Cardoza, CFO, confirmed that the application is on track for launch by year-end. The focus is on enhanced exomes and genomes to improve accuracy, aligning with trends towards more comprehensive sequencing in rare and inherited disorders.
Q: What gives you confidence that the headwinds in BioPharma can be overcome, and could they become tailwinds in 2025?
A: Jurgi Camblong stated that the revised strategy focusing on post-approval activities and market access needs has proven effective, with a growing sales pipeline. Ross Muken added that the company is in a better position now, with strong leadership and a robust pipeline, indicating potential stabilization and growth in BioPharma.
Q: How is the sales force structured to address oncology versus rare diseases, and is there a difference in focus?
A: Ross Muken explained that the sales force operates in a pod-based model, selling the full suite of applications. While there is a focus on oncology due to market dynamics, the sales force is equipped to address various customer needs across different segments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
