Personalis Inc
NASDAQ:PSNL
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
1.15
6.34
|
Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Earnings Call Analysis
Summary
Q2-2024
Personalis reported robust second-quarter 2024 revenue of $22.6 million, a 35% increase from the previous year, driven by high demand in its biopharma sector. A new ultrasensitive MRD test, NeXT Personal, launched recently, shows promise in early cancer detection and therapy monitoring. With significant revenue contributions from partnerships with Moderna and Tempus, and a forecasted annual revenue between $79 million and $81 million, the company expects continued growth. Operating expenses reduced, resulting in a narrowed net loss of $12.8 million. Gross margins improved to 35.6%, with plans for further enhancement. The company's strong cash position is expected to sustain operations through the first quarter of 2026.
Good day, and welcome to the Personalis Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the call over to Caroline Corner, Investor Relations. Please go ahead.
Thank you, operator. Welcome to Personalis' Second Quarter 2024 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 facts should be considered forward-looking statements within the meaning of U.S. securities laws. For example, any statements regarding trends and expectations for our financial performance this year and longer term, cash runway, revenue expectations and timing, reimbursement goals, price and booking of orders, products, services, technology, clinical milestones, the outcome and timing of reimbursement decisions, expectations for existing and future collaboration activities, health expectations, 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 most recent filings with the SEC, 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 second quarter 2024 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 our 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. Now I would like to turn the call over to Chris for his comments and second quarter business highlights.
Thank you, Caroline. Good afternoon, everyone, and thank you for joining us. I'm very proud of our team at Personalis as we continue to fight cancer and help patients with our novel technologies. For those of you joining one of our calls for the first time, welcome. Personalis is one of the leaders in the fast-growing MRD testing market. MRD stands for minimal residual disease and involves using blood, which is commonly called a liquid biopsy instead of imaging or invasive biopsies to monitor therapy and to detect cancer recurrence after treatment.
The MRD market is expected to mature into a $20 billion market. And with our first of its kind ultrasensitive MRD test, Personalis has emerged as a leader in this space. Our technologies are able to spot cancer when there's only about one fragment of tumor DNA circulating in 1 million DNA fragments in the blood. Our platforms are used by many of the world's top biopharma companies to improve clinical trial results by new ways to personalize treatment and power a new generation of therapies.
Earlier this year, we laid out our strategy to drive Personalis to $100 million in revenue in 2025. Now this operational milestone has at its core 3 growth engines and its effect has been to shift us into a higher growth mode. In the second quarter, we achieved revenue of $22.6 million, up 35% year-over-year. This growth was driven by our biopharma business, which grew 117% year-over-year, led by strong demand for our tumor profiling product that is used to create personalized cancer vaccines for patients as well as increasing demand for our MRD product NeXT Personal. Our strong Q2 revenue also helped us to increase our guidance for the full year by $3 million, and we now expect full year revenue in the range of $79 million to $81 million. We're particularly pleased to have been able to deliver this top line growth while also making improvements to both our cost and margins as Aaron will cover shortly.
I'll now review progress this quarter on our growth -- 3 growth engines. The first growth engine Win-in-MRD is the most important as we focus on turning personals into a clinical diagnostic powerhouse. As I noted, MRD testing uses a liquid biopsy to find evidence of minimal residual disease or cancer recurrence and to monitor therapy effectiveness. We laid out our Win-in-MRD strategy 6 quarters ago, and we've been executing on its 4 pillars. One, focus on cancer types where an ultrasensitive approach can unlock significant value for patients, payers and partners. Two, drive reimbursement by developing robust clinical evidence and partnering with the top global collaborators; three, leverage our deep relationships to accelerate adoption by biopharma partners empower our revenue growth by the use of NeXT Personal and clinical trials, and 4 commercialize NeXT Personal with a partner-centric model.
Now to delve into the first pillar, we previously explained how we're developing evidence to support NeXT Personal's clinical usage and reimbursement in lung cancer, breast cancer and IO therapy monitor. The data across multiple studies now indicate we're able to see cancer recurrence earlier, and this holds out the promise that those patients can seek treatment sooner with potentially better outcomes. The clinical studies that have been done to date indicate we can detect cancer many months ahead of imaging. The data also suggests that patients who are classified as MRD negative, meaning our test doesn't detect circulating DNA from the tumor largely do not experience recurrence. Having more confidence than a negative result may allow a doctor to de-escalate patients from unnecessary therapies and procedures potentially avoiding toxicities and ultimately saving the health care system money.
Our focus on these indications is intentional, and our data is demonstrated that NeXT Personal can win in these markets. To elaborate a bit on our approach, lung cancer and breast cancer shed very little DNA in the blood, so cancer is difficult to detect without an ultrasensitive approach. Lung and breast cancers can be aggressive when they recur, so early detection is critical. For patients on IO therapy, we believe the potential decision to switch treatment requires the insights from monitoring that are provided by our ultrasensitive test. These factors make breast cancer, lung cancer and therapy monitoring the ideal indications for us.
In October of 2023, we launched the first commercial ultrasensitive MRD test into the clinic. NeXT Personal is being marketed alongside our Medicare reimbursed tumor profiling test, NeXT Dx, which is used to help put patients on appropriate therapy. We started our commercial journey with just 10 doctors in an early access program, and we've been adding incrementally. As we previously stated, our intention is to gradually add more doctors into the program until we receive reimbursement.
Our quarter-over-quarter growth continues to be healthy as we delivered 561 clinical tests in the second quarter, a 66% increase from the 338 results delivered in the first quarter of this year. In addition, Tempus commenced their commercial launch of NeXT Personal late in the second quarter, and we expect this to fuel additional growth. Early feedback has been that clinicians are seeing a leap in actionability from our approach. If you remember, we report circulating tumor DNA in the blood down to 1 part per million, which means that if there is just one fragment of tumor DNA circulating in about 1 million DNA fragment in the blood, we expect to see it and quantify it. This is a leap forward in the field. The extra analytic sensitivity we report on with our NeXT Personal test unmask a region that has previously been hard to see consistently. We call that region the ultrasensitive MRD range. About 30% of the ctDNA positive samples in our clinical testing have been in this ultrasensitive range. That is a jump in the actionability of MRD testing and means physicians can see cancer recurrence earlier, have more discrimination and monitoring therapy and have more confidence that patients with negative ctDNA results are, in fact, cancer-free.
Indeed, we've had many anecdotes related from our early access doctors that the ultrasensitive range is allowing them to see cancer sooner and intervene with the patient to get them the management they need, and also to consider deescalating therapy when our test determines patients are negative for ctDNA. For example, a female patient from the Northeast receiving therapy for breast cancer tested positive with our NeXT Personal test. Our physicians saw low traces of cancer and the ultrasensitive range for over several months. And luckily for this patient, the detected levels trended downwards until the patient's cancer finally became undetectable. Continued monitoring can potentially help inform taking patients like this off therapy in the future and provide reassurance to both the doctor and the patient.
Moving to our second pillar, we're focused on building and publishing clinical evidence to gain reimbursement and continue to work with many of the top thought leaders around the world. In previous calls and during the ASCO webinar, we talked about the importance of our work with 2 of the leading cancer centers in Europe, Royal Marsden and breast cancer and Vall d'Hebron and immunotherapy monitoring. Both of these collaborators have provided access to studies that are broad and comprehensive. In the case of Royal Marsden and the Institute of Cancer Research in the U.K., which are one of the leading global institutions in breast cancer the study included patients across the major breast cancer subtypes including HER-positive, HER2 positive and triple-negative breast cancer in patients were followed in the study for a medium of 6 years. The study results were highlighted at ASCO during a podium presentation and the results were compelling. NeXT Personal detected early-stage breast cancer a medium of 15 months before imaging scans for patients for Vall d'Hebron, or VHIO.
The work is in pan cancer and included greater than 120 patients across 18 different cancer subtypes. The study show the NeXT Personal could be potentially used to predict immunotherapy response for patients. Similar to what we are seeing with our breast cancer studies, our test is detecting traces of cancer well ahead of imaging scans. These Royal Marsden results in the VHIO studies for immunotherapy monitoring join our Tracer X work in lung cancer to form the backbone of our efforts to gain Medicare reimbursement. Investigators in all 3 of these studies Royal Marsden, VHIO and Tracer X are working to submit manuscripts to peer-reviewed journals, which is a key step for us ultimately to submit for Medicare reimbursement. Once those manuscripts are published, we can then submit the individual dossiers for each of the indications to Medicare.
There were 2 other data sets at ASCO that highlighted NeXT Personal are also worth noting. One was a study with Dana Farber for HER2-positive patients that showed NeXT Personal was correlated with outcomes in patients receiving neoadjuvant therapy. Neoadjuvant therapy is given to these patients before surgery to try to shrink the tumor before the cancer is removed. In the second study, this one with Duke, deepen the data indicating NeXT personal could be used to predict immunotherapy response.
The third pillar of our NeXT Personal strategy is to leverage our biopharma relationship to drive the use of NeXT Personal and clinical trials. We're engaged with the most -- excuse me, with most of the world's top biopharma companies and have continued to generate excitement around our NeXT Personal test most recently from discussions at ASCO. Customers want and need an ultrasensitive approach to ensure that the most appropriate patients enter into clinical trials. For example, we believe that our ultrasensitive assay means that patients testing negative are much most likely to have a recurrence. Our biopharma customers can then expect that these patients are less likely to benefit from a therapeutic intervention, holding out the promise that NeXT Personal will be an excellent approach to optimize biopharma trials. We have booked millions of dollars of revenue from biopharma customers from MRD projects to date and expect the growth to accelerate.
Now move on to the fourth and final pillar. Commercializing NeXT Personal in the clinical market using a partner-centric model. In December, we announced our key partnership with Tempus to commercialize NeXT Personal in the clinics with oncologists and recently, Tempus announced the launch of our products to their customers. To quickly review, we expect to leverage Tempus' 200-plus salespeople channel to co-commercialize NeXT Personal accelerate growth. Personalis will be responsible for processing samples in our lab, obtaining reimbursement and invoicing health insurance payers and patients under the arrangement, while paying Tempus fair market value for the commercial services they provide to us. Overall, the deal is worth approximately $30 million for Personalis should all milestone payments be triggered, and then Tempus fully exercises their watch. We expect this to allow us to ramp up commercial efforts quickly with minimal additional cash investments.
We're now on the Tempus' requisition, and we're processing samples sent to our lab. The goal for the balance of the year is to purposely grow our efforts together, learning how to work seamlessly as partners, integrating our business systems and refining our message to oncologists. This way, we're set to drive accelerated growth together on the backside of reimbursement approval. The Tempus relationship is working extremely well to date. Our cultures and our teams work well together, and we're confident that we're creating something great for doctors, patients and payers. While we made strides with our first growth tension, our Win-in-MRD strategy to establish NeXT Personal as a leading MRD test. We've also made progress with our second growth average tension, leveraging our ImmunoID NeXT platform to deepen relationships with biopharma customers who use the offering to pioneer new therapies.
Our biopharma business grew 117% year-over-year, and we had solid performance across our product portfolio. Customers primarily use our ImmunoID NeXT platform in 2 ways. First, they leverage our platform to power translational research and find new biomarkers and insights that can enable their drug discovery efforts. Second, companies in the personalized cancer vaccine or the PCV market use our platform to create a molecular fingerprint of a patient's tumor to develop personalized therapy. We previously told you about our partnership with Moderna, in which Moderna is utilizing our platform in their mRNA cancer program. Moderna and its partner, Merck enrolling patients, and our collaboration with Moderna is an important driver of revenue for us in 2024 and 2025. We have several other partners that work in this space as well.
The third engine of our growth is growing our Personalis inside approach as we service enterprise customers. And these relationships, partners adopt our platforms and technologies to power their solutions. For example, Natera has leveraged our Exxon platform as a part of their MRD product to help them scale while they work to build in-house capabilities. As planned, they've reached the point where they can now run the product in their lab, and we expect to wind down our work with Natera by the end of 2024, and we have no intention to extend the current commercial arrangement. With other strategic parts of our business accelerating quickly, PCV, biopharma MRD projects, and our clinical diagnostic business, the additional capacity will shift to support those critical parts of our business. I should also note, we're having other discussions exploring scaling up enterprise work in 2025.
A second important enterprise relationship is the VA. The VA utilizes our whole genome sequencing capabilities to power the Million Veteran Program, a national research program looking at how genes and lifestyle affect health in veterans. We've helped power this program with the VA for over 10 years. The VA informed us this quarter that they plan to renew the contract another year, and we expect to receive a new purchase order by the end of September.
Before I turn it over to Aaron, I have a couple of important corporate updates. First, we recently completed an agreement with Myriad Genetics to cross-license partner states covering tumor-informed approaches to detect minimal residual disease, or MRD. Both companies value tumor-informed approaches for cancer patients and have developed deep foundational partner states in the field and each sees the benefits of an ultrasensitive approach is key to making MRD testing to standard of care. The agreement we entered in to help solidify each company's freedom to operate in the MRD market and broadens access to the benefits of MRD testing for cancer patients. Personalis and Myriad are each pioneering tumor-informed genome scale approaches to power ultrasensitive MRD test, enabling cancer recurrent and detection early and more refined therapy monitoring and alternative approaches.
Additionally, we settled our litigation with Foresight, which resulted in us granting them a license to our MRD patents. This is a great outcome for Personalis. One, our IP that we've developed over many years is valuable. We were able to show that, and we'll be paid royalties moving forward. And secondly, we can focus on running our business and putting litigation cost behind us. Both the cross-license agreement with Myriad and the settlement should give investors' confidence in the value of our IP, the strength of its protection and our ability to create value from it. With that, I'll now turn it over to Aaron to review our financial results.
Thank you, Chris. Total company revenue for the second quarter 2024 was $22.6 million, an increase of 35% compared with $16.7 million for the same period of the prior year. The increase in revenue was driven by higher volume from biopharma and personalized cancer vaccine customers, which was partially offset by declines from the VA, MVP. Biopharma revenue grew 17% compared to the same period last year, and the growth was primarily from ImmunoID NeXT. In addition, we recognized $0.1 million of clinical revenue from our NeXT DX tumor profiling test. Gross margin expanded to 35.6% for the second quarter compared with 28.7% for the same period of the prior year. The year-over-year increase of 6.9 percentage points was primarily due to product cost reduction and operating leverage from the 35% increase in revenue.
Over the last 1.5 years, our focus has been to reduce the product costs and to reduce lab operations expenses to drive margins higher. Recall that just a few quarters ago, our gross margin was only 19%, so we are making very good progress. Also, we had over 4 percentage points of unreimbursed clinical test costs during the second quarter. Otherwise, gross margins would have been closer to 40%. One of our top goals is to continue expanding gross margin. As we go forward, we expect margins to continuously improve with scale, although there could be some quarter-to-quarter variability due to fluctuations in volume and reimbursed clinical test costs and other factors.
Operating expenses were $24.9 million in the second quarter compared with $30.1 million for the same period of the prior year. Most of the year-over-year decrease was attributed to actions taken to reduce headcount in 2023. R&D expense was $13 million in the second quarter compared with $17.9 million for the same period last year, and SG&A expense was $11.9 million compared with $12.1 million for the same period last year. Net loss for the second quarter was $12.8 million compared to $24 million for the same period of the prior year. The second quarter net loss included a $3 million noncash gain related to fair value accounting of the outstanding warrants issued to Tempus. This nonstandard income was a result of the decrease in fair market value of the warrants at June 30, 2024, compared with the fair market value at the end of last quarter. And for clarification, the accounting implications for the warrants have no bearing on the cash value they are exercised in the future.
Now on to the balance sheet. We finished the second quarter with a strong balance sheet with cash and short-term investments of $87 million. During the quarter, we used $8.4 million to fund operations, and we have more than 1.5 years of cash on the balance sheet, which is expected to last through the first quarter of 2026. Now I'd like to turn to guidance. For the third quarter of 2024, we expect total company revenue in the range of $21 million to $22 million, revenue from pharma tests, enterprise sales and other customers in the range of $17 million to $18 million, and revenue from population sequencing of approximately $4 million. And for the full year, we increased our guidance and now expect total company revenue in the range of $79 million to $81 million, an increase from our prior guidance of $76 million to $78 million.
Revenue from pharma test, enterprise sales, and other customers in the range of $71 million to $73 million, an increase from our prior year guidance of $68 million to $70 million, and this estimate includes revenue from Natera of approximately $21 million to $22 million, of which $5 million to $6 million is expected in the second half of the year. Population sequencing revenue to be approximately $8 million; non-GAAP net loss of approximately $75 million, a decrease from our prior guidance of $77 million and excludes any income or expense related to the outstanding warrants issued to Tempus. And cash usage is expected to be approximately $60 million, a decrease from our prior guidance of $62 million. 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. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator instructions]. One moment, please, for your first question. Our first question is coming from Yuko Oku from Morgan Stanley.
This is Madison on for Yuko. Congrats on the quarter. I have a 2-part here. Just first one, I was wondering, should Moderna's PCD eventually secure FDA approval, I was wondering if you could remind us what the potential upside could be on that? And are you specked into the product or is it possible that another sequencing vendor could also start to sequence for Moderna once approved?
Madison, thanks for the question. In terms of the Moderna relationship, we are ecstatic about how this has been operating. Again, we've been partners with Moderna since 2016 to 2017. In terms of where this goes upon commercialization, that's something for Moderna to talk about. We're not really talking too much about the upside or the opportunity, we just know that it is a huge opportunity for us, we're excited about it, but that should come from the Moderna folks to talk about. In terms of the offering, so again, today's samples are taken from patients and the patient samples are sent to Personalis, we profile them and we send back this rich informative set of data back to Moderna. So, they can then customize a vaccine or a therapy for that individual patient. In terms of, again, the relationship, we believe we have a very, very solid relationship and Moderna values our platform. So, in terms of the longer-term prospects, we feel very confident about this going into the future.
Got it. Okay. That's good to hear. And then -- just on with Tempus launching their own MRD solution, I was wondering how you make sure that they are incentivized to also market NeXT Personal. Like was the kind of incentive structure there put in place for the product so that they gain equal commercial push from the sales force?
Yes. No, great question. I mean, first of all, just backing up, while we're on the Tempus requisition, like we're growing the number of Tempus sales reps that are selling the product over time and aggressively to be able to gain the volume. So, it's like right now, we're starting the journey and moving it up slowly. Tempus' product is a blood base, it's not the same type of product. It's a tumor-naive product, ours is a tumor-normal product. They position it in a colorectal cancer, we're persistent at long breast and IO therapy monitoring. So, the products are positioned a little bit differently. And I think it's actually really, really great to have both products under the same proof, because the truth is, for some patients, you're not going to have the access to the -- you're not going to have access to the tissue and you're just going to have access to the blood. And so, I think if you just step back and think about it, Tempus is uniquely the company that stitched together both a tumor-naive and a tumor -- and a tumor-normal approach under one roof and they're really set up to accelerate growth in the marketplace with a comprehensive offering. So, we actually think the 2 products work together really well and I think that's how Tempus is viewing it and is set it nicely.
Next question on the line will be coming from Mark Massaro from BTIG.
This is Vidyun on for Mark. So, I just wanted to touch on NeXT Personal reimbursement. Just remind us how you're thinking about a potential crosswalk or that's still there for pricing, just the way you think that will land and any potential upside as it relates to potential ADLT status?
Yes. Great question. I mean, we built all of our economic models, assuming we get similar to what other players have been reimbursed in the marketplace. But there's a couple different shots on goal to drive that higher. One is that the test and of itself is it's a more resource-intensive test than an exo-based test and Medicare reimburses based on that. So, we think that's one way just fundamentally that the test should be priced higher because it's a more resource-intensive test to run, which is how these tests ultimately are priced. And secondarily, there is a shot to get ADLT status, so we're working on manage. But the expectation we've set is that we're tracking to have gross margins greater than 60% even if we don't achieve any of those things, we're set up well, and the Tempus' relationship brings sales and marketing costs down in that 20% to 25% range and so we built the economics from there, and then the rest of it will just drive the numbers to be more lucrative before able to achieve higher reimbursement.
Perfect. And then just a follow-up on Moderna, has sort of exceeded expectations. Can you just remind us, I think they've expanded the number of indications they're looking at on PCB. So maybe just touch on that and then also your longer-term outlook on the pharma side of the business.
Sure. Thanks, Vidyun. So, in terms of the Moderna relationship, remember, they're in the Phase III clinical trial right now with melanoma patients. They had great success in Phase II. In terms of the volume that we're seeing today, a lot of that is because of the Phase III trial. So, the number of patients in the Phase III trial significantly outpaced what you'll see in Phase I or Phase II. In terms of other cancer types, yes, they are focused on additional cancer types as well, right? But in terms of talking too much in terms of specifics, that's something, again, that should come from them that they are working on and others as well.
Next question will be coming from Thomas Flaten from Lake Street.
Chris, you mentioned in an earlier response kind of gating the Tempus efforts here in the near-term. Can you talk to us a little bit about exactly how you're going to do that? How many reps are you going to bring on? And how are you going to pace those reps, so you don't overburden the system with too much volume when you're not getting paid? Any color there would be super helpful.
Yes, yes. So, we've started out with a small number of Tempus reps that are actually trained in marketing and talking about the product. And the plan is to grow that over time so it's a graduated approach that enlarges the resources put out to sales process as we go. If you remember, there's actually some volume gate also built into the agreement so that Tempus has agreed not to exceed certain numbers on a year-to-year basis, and we've all been sort of aligned around that. The part of the challenge here is how to show increasing clinical traction with doctors and investigators so that they're using the product and they feel comfortable, at the same point in time managing the burn rate in running those tests because you want to be at a spot where the run rate of running test is good enough so that the revenue really explodes when you're able to get reimbursement because you've already got a running start. So, we're trying to walk that tight rope and we've structured the agreement and the commercial rollout plan with Tempus to achieve that. We think and believe we're on our way to executing in a way that's consistent with that.
Got it. And you mentioned in your prepared remarks the publications for each of the key data sets in breast and IO and lung. Any visibility into timing of that? And I guess the follow-on to that would be, what are your expectations now around submission of dossiers to CMS?
Yes. Yes. So, a couple of things on that. I mean, all the data has been run and the data has now all been publicly out there. All the data looked awesome. I mean, it was great this quarter to see the breast cancer data, which created a really nice buzz in the community and in the IO therapy monitor is also a -- an oral presentation and it's got a lot of interest and excitement. And that joins the TRACERx data, so you've got multiple studies where the test is really showing that it adds great value. So, investigators are working on those papers now. They're being put together. They're all in different phases, but they're all sort of nearing the end of it. We don't actually control the submission of those. They write and drive those publications because they're in their name, but we're optimistic that those will be submitted soon. We'll submit to Medicare as soon as those are published. So, to be clear, like Medicare wants to see a peer-reviewed study in order to consider an application. So, that's the next step in the journey for us is to have those studies actually submitted and published. And that's what we're working on, and that's in the investigator's hands right now. Giving the average, Rich?
We're on track. It is looking great, and we're hopeful we can get these published soon.
Yes. Just one of the really great things about us from an executional standpoint is we are executing on a plan that we laid out more than a year ago about how this would all happen. And we have gotten the data -- we've gotten the study set up. We've gotten the samples in here; we've run the samples. The samples have been discussed in scientific meetings and the data has all been run and the papers are all happening exactly the way we had talked about doing in the plan that we had laid out. So, we've been executing in a really, really rapid pace, and I'm proud of the team for bringing it up to this point.
Our next question will be coming from Mike Matson from Needham.
This is Joseph on for Mike. A couple of questions here. Maybe I think you said 4%. There was a 4%, I guess, revenue headwind, when do you want to call it, from clinical tests that were reimbursement. Are these tests that you plan to go after for reimbursement or have you kind of already excluded this from Q3 revenue?
Yes. I mean, the costs are in the quarter, we certainly bill insurance companies for them, but we just don't expect to get paid for them because they're not medically necessary or in the case of Medicare, we don't at all. So, they weigh down gross margins. So, I think Aaron's point was if they hadn't -- if those hadn't been in there weighing them down, which is all part of the investment we're making into the growth, and I think we all appreciate what we're doing there, the gross margin would have been near 40%. So, we've made tremendous progress there, I think, is a larger point with the gross margin.
Yes, absolutely tremendous progress on margins and cash burn overall. I guess maybe just on cash burn, the reduction in the guidance for cash burn. I was just curious, is that coming from further, I guess, cost reduction initiatives or was this mostly coming from upside from raising the revenue guidance?
It's really from the revenue and the gross profit, right? Revenue went up $3 million, gross profit there as well.
Okay. Great. And then just maybe one more. You had mentioned the Duke data set being predictive. I assume this was ImmunoID of immunotherapy response. Just curious if you kind of see that use.
It's actually NeXT Personal, it's the MRD product.
Oh, I see. Okay. Okay. That makes perfect sense. But I guess the question then, do you see that use case mostly sticking with pharma or is there a potential to use that use case in the clinical setting for immunotherapy eligibility?
No, absolutely. Certainly, across the clinic, it's one of the large use cases for these MRD assays, because doctors -- it's tough -- you're stimulating the immune system, and so it's tough on imaging to see whether or not your therapy is working because you could have an immune response and the tumor looks like it's growing on imaging. It looks like the patient is getting worse, but indeed, the immune system and the drugs are working exactly the way you would think it would be, so you would be misled. And so, these blood tests are actually, I think, taking over for doing a lot of the heavy lifting in terms of monitoring. So, it's one of the key use cases. There are now 3 data sets supporting the use here. One is with UKE, which is melanoma, and another one with Duke, which is the gastric patients. And then the PHIO data set which is pan-cancer, that's really the key one and the other 2 support it. So, there's 3 data sets that are coming together to support the reimbursement for IO therapy monitoring. And it's one of the key use cases. Anything to add, Rich?
Yes. No, it's just like you said, 40% of all cancer patients are eligible for immunotherapy, but actually only 12% of patients actually respond. So, if you think about that, it becomes really critical to be able to understand whether these patients are actually having a response to immunotherapy. And so MRD is definitely one of the key tools now that they can use. And we're showing the data that is highly predictive of response, and so that's definitely one of the key indications.
I see. Okay. It makes perfect sense. I had read that comment as, I guess, testing for eligibility pretreatment rather than monitoring.
No, absolutely. It's monitoring. It's key and it's one of the big parts of the $20 billion -- estimated $20 billion market.
[Operator instructions]. Our next question will be coming from Arthur He from H.C. Wainwright.
This Arthur. Congrats on the quarter. I had a couple of quick -- I had a couple of quick ones. So first, regarding the total Monica test, the 561, how about the physician right now enrolled in the EAP? Does that number bumped also?
That's -- well, that includes all the tests that we got, which are from those physicians and some Tempus physicians that were added towards the later of the last quarter, so they're coming from that group. Now we did grow the number of physicians. We started with 10 and we've been slowly growing that out. And so, there are more physicians being added, not at a particularly great clip, but that's what that is.
Got you. And my second question is, so regarding the raiser guidance regarding revenue, it seems they're coming more from the pharma testing business. I'm just curious, is this driven more by the -- in your ID service or there's some interest in the NeXT Personal from the pharma?
So it's actually both. So, most of the revenue today is from ImmunoID NeXT, the pharmaceutical business has been very, very strong over the last few quarters in Q2 especially. The pipeline for NeXT Personal with our biopharma customers is growing rapidly and so we're going to start to see that start to take out over the next few quarters here as we go forward.
Got you. That's good here. And the last question is, so for the NeXT Personal, what's your plan when you're looking beyond the breast cancer, lung cancer and IO therapy monitoring? What's the potential beyond that?
We haven't really stated anything beyond that just yet, Arthur. So right now, we're focused on these cancer types. It's close to half of the market, it's going to give us plenty of things to keep us busy with over the next couple of years. So right now, we're hunkered down and focused on these cancer types.
Question from Dan Brennan from TD Cowen.
It's Joe on for Dan. So, it was really nice revenue performance in the quarter at $26 million, which is well on your way to the run rate to hit the $100 million in 2025 levels. So, as we get closer, can you just share some thoughts on how you're feeling about achieving this milestone, especially with Natera business rolling off. It'd be great if you could kind of walk-through expectations for different revenue buckets in terms of like MRD vaccines, enterprise and VI?
Sure. Great. Thanks for the question. In terms of looking ahead into 2025 we haven't given specific guidance as to the buildup. But the way to look at it, so in Chris's prepared remarks, he talked about the enterprise work with Natera ending by the end of this year. So, we can assume and you folks can assume that there's going to be 0 from Natera in 2025. We're going to have about $22 million in '24 from Natera. You could assume most of that is going to be offset by our biopharma increase. Biopharma will increase from not only ImmunoID NeXT, but also NeXT Personal. Again, the funnel is growing immensely, we're expecting that to start to take up here over the next few quarters. In addition, we're also engaged and looking for additional enterprise type of work, and so we're optimistic that there could be something in the horizon as well. The VA, MVP might be $7 million to $8 million. So, if you assume the current run rate there, it's going to be flat, all right? But most of the buildup for growth is going to come from biopharma.
And then it would be great just to get a little more color on the Myriad deal. Is what we're both Personalis are looking to get out of this agreement? And then maybe in the lens of like, it seems Personalis is kind of changing its IP strategy from one where you were previously enforcing your patents and now it seems like you're sharing your IP with Myriad and settling with Foresight.
Yes. I mean, I think it's all about patient access and having a model that is comprehensive and margin and helps all build the market. But in a way that actually you want to create value for the IP. So, in the case of Myriad, they have a lot of foundational work there and by doing the cross-license deal, we give each other -- we make sure that each other can move in a way that we both have freedom to operate, and I think that's really good for both companies and for shareholders, and for patients and doctors and is a way for us to be -- appropriately spending money. In the case of Foresight, there's some great IP and we end up with royalties there. And moving forward, we'll continue to find ways to bring value for the IP that we've developed.
There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.