Invitae Corp (NVTA) 2023 Q3 法說會逐字稿

Good afternoon, and welcome to the Invitae Third Quarter 2023 Financial Results Conference Call. My name is Carla, and I will be your operator for today's call. (Operator Instructions)

下午好，歡迎參加 Invitae 2023 年第三季財務業績電話會議。我叫卡拉，今天我將擔任您的電話接線生。 （操作員指示）

Thank you, operator, and good afternoon, everyone. Thank you for participating in today's call. Joining us today are President and CEO, Ken Knight; and our new CFO, Ana Schrank. Before we begin, I'd like to remind you that various remarks that we make on this call are not historical, including those about our vision and business model, future financial and operating results, future products, services, our product pipeline and the timing, expectations of future growth, reduction in burn rate and discussions with our stakeholders and operational improvement and cost reduction efforts.

謝謝接線員，大家下午好。感謝您參加今天的電話會議。今天與我們一起出席的有總裁兼執行長 Ken Knight；以及我們的新財務長 Ana Schrank。在我們開始之前，我想提醒大家，我們在這次電話會議上發表的各種評論都不是歷史性的，包括關於我們的願景和商業模式、未來財務和經營業績、未來產品、服務、我們的產品線和時間、未來增長的預期、降低燒錢率和與利益相關者的討論以及運營改進和降低成本的努力。

Certain points we make will constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act. It is difficult to accurately predict demand for our services, and therefore, our actual results could differ materially from our stated outlook. Statements on future company performance assume, among other things, that we don't conclude any new business acquisitions, investments, restructurings or legal settlements. We refer you to our most recent 10-Q and 10-K in particular to the section titled Risk Factors for additional information on factors that could cause actual results to differ materially from our current expectations. These forward-looking statements speak only as of the date hereof.

我們提出的某些觀點將構成《私人證券訴訟改革法案》安全港條款所定義的前瞻性陳述。很難準確預測對我們服務的需求，因此，我們的實際結果可能與我們所陳述的前景有重大差異。有關未來公司業績的聲明假設我們不會達成任何新的業務收購、投資、重組或法律和解。請您參閱我們最新的 10-Q 和 10-K，特別是標題為「風險因素」的部分，以獲取有關可能導致實際結果與我們當前預期存在重大差異的因素的更多資​​訊。這些前瞻性陳述僅代表截至本文發布之日的觀點。

To supplement our consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States, or GAAP, we monitor and consider several non-GAAP measures. We encourage you to review our GAAP to non-GAAP reconciliations, which are available in the press release and in the appendix of the earnings slide deck, both of which you can access by visiting the Investors section of the company's website at ir@invitae.com. Today, Ken will provide an update on recent events and operational news during the quarter. Ana will cover the financial details and key metrics as well as our 2023 guidance. We will then conclude the call with Q&A. With that, I'll turn the call over to Ken.

為了補充我們依照美國公認會計原則 (GAAP) 編製的合併財務報表，我們監控並考慮了幾項非 GAAP 指標。我們鼓勵您查看我們的 GAAP 與非 GAAP 對帳表，這些對帳表可在新聞稿和收益幻燈片的附錄中找到，您可以透過造訪公司網站的「投資者」部分（ir@invitae.com）來存取。今天，Ken 將介紹本季的最新事件和營運新聞。 Ana 將介紹財務細節和關鍵指標以及我們的 2023 年指導。然後我們將以問答形式結束通話。說完這些，我會把電話轉給肯。

Thank you, Hoki, and welcome everyone who joined us today. Q3 was another productive quarter for us, where we met or exceeded consensus estimates and key performance metrics. Our pursuit of higher-quality revenues and lower unit costs resulted in continued gross margin expansion. We have improved our non-GAAP gross margins for 9 consecutive quarters and hit 52.4% this quarter, which represented a 250 basis point sequential expansion from Q2 2023. Operational improvement efforts and expense control have resulted in a reduction in ongoing cash burn of approximately 60% in the first 9 months of 2023 versus the same period last year. We are on track for our full year 2023 cost reduction commitments.

謝謝你，Hoki，歡迎今天加入我們的所有人。第三季度對我們來說又是一個富有成效的季度，我們達到或超越了普遍預期和關鍵績效指標。我們追求更高品質的收入和更低的單位成本，從而持續擴大毛利率。我們的非公認會計準則毛利率已連續 9 個季度提高，本季達到 52.4%，較 2023 年第二季度環比增長 250 個基點。營運改善工作和費用控制使 2023 年前 9 個月的持續現金消耗與去年同期相比減少了約 60%。我們正在按計劃實現 2023 年全年成本削減承諾。

Revenues for the quarter were $121.2 million, an increase of approximately 4% year-over-year on a pro forma basis and an improvement from the second quarter, which saw roughly 1% pro forma growth. Rare Disease led the way with 44% year-over-year revenue growth, followed by women's health with 21% growth. Oncology saw a 7.5% year-over-year pro forma decline, influenced by lower fee-for-service revenue as we work to rebuild that pipeline and impacted by commercial insurance payment headwinds for hereditary cancer. Oncology this year a 3.3% sequential revenue growth from Q2 2023 and was bolstered by an 11% volume growth for hereditary cancer in our U.S. market on a pro forma basis. Regarding the commercial payment headwinds, we have devoted significant resources to tackle this issue to improve payment collections, and we are seeing progress.

本季營收為 1.212 億美元，以備考基礎計算年增約 4%，且較第二季（約 1% 的備考成長）有所改善。罕見疾病領域營收年增 44%，位居榜首；其次是女性健康領域，營收年增 21%。腫瘤科的銷售額比去年同期下降了 7.5%，這受到我們努力重建該管道導致的按服務收費收入下降以及遺傳性癌症商業保險支付阻力的影響。今年腫瘤學收入較 2023 年第二季度環比增長 3.3%，這得益於我們美國市場遺傳性癌症銷量按備考基礎增長 11%。關於商業支付方面的阻力，我們投入了大量資源來解決這個問題，以改善付款收集，並且我們看到了進展。

In the second quarter, we reported a negative impact of approximately $5 million to the revenue line, and that number decreased to about $2.2 million in Q3. We believe that we are going to continue to see positive results in the fourth quarter and into next year. We are encouraged by these improvements and also recognize there is still much work to do on our journey. Today, you will see growing concern language in our 10-Q. Since our realignment in July 2022, our entire team has been executing on the initiatives and actions needed to improve the health of the business. Those efforts have been productive and will continue. We are creating plans that will, over the next 12 months, further reduce operating cash burn and improve the company's liquidity. This is a top priority, and we are actively engaging with our stakeholders in seeking constructive feedback and solutions.

在第二季度，我們報告的收入受到了約 500 萬美元的負面影響，而第三季度這一數字下降至約 220 萬美元。我們相信，我們將在第四季和明年繼續看到積極的成果。這些改進讓我們感到鼓舞，同時也意識到我們的旅程上還有很多工作要做。今天，您會在我們的 10-Q 中看到越來越多的擔憂語言。自 2022 年 7 月重組以來，我們整個團隊一直在執行改善業務健康所需的措施和行動。這些努力卓有成效，並將繼續下去。我們正在製定計劃，在未來 12 個月內進一步減少營運現金消耗並提高公司的流動性。這是首要任務，我們正在積極與利害關係人合作，尋求建設性的回饋和解決方案。

Our Board of Directors has formed a special committee to focus on addressing our capital structure needs. With our Board, we are exploring a number of options, which could include raising capital, addressing our debt, selling certain assets and continuing operational improvement and cost reduction efforts. Moving to Slide 6. I want to highlight a few of our recent wins. In the third quarter, we secured the first of its kind SBA authorization for our common hereditary cancer panel. We are proud of this accomplishment as Invitae was able to establish a new category of device based on our technology and methodology. We submitted a de novo application in 2021 using this panel as an example of a method-based approach to validation. It was a voluntary submission and our goal was to guide the agency's understanding through the submission and review processes. As such, the FDA worked closely with us to review the test and are supporting data, which led to this market authorization.

我們的董事會已成立一個特別委員會，專注於解決我們的資本結構需求。我們與董事會正在探討多種選擇，包括籌集資金、解決債務、出售某些資產以及繼續改善營運和降低成本。轉到投影片 6。我想強調一下我們最近取得的一些勝利。在第三季度，我們獲得了首個針對常見遺傳性癌症小組的 SBA 授權。我們為這項成就感到自豪，因為 Invitae 能夠基於我們的技術和方法建立一個新的設備類別。我們於 2021 年提交了一份從頭申請，並以該小組為基於方法的驗證方法的範例。這是一次自願提交，我們的目標是透過提交和審查流程來指導該機構的理解。因此，FDA 與我們密切合作，審查測試並提供支持數據，最終獲得了市場授權。

Meeting the agency's stringent requirement is a testament to our product and to our labs, processes and quality. Importantly, this decision sets the bar for expected performance and the associated data required for future regulatory approval of similar products. As for the next step, our teams are working through the implications of offering an FDA-authorized assay as it relates to our operations, development and potential commercial benefits. We also believe that this decision serves as a proof point that we will remain very well positioned should the regulatory landscape surrounding laboratory developed tests change in the future.

滿足該機構的嚴格要求證明了我們的產品以及我們的實驗室、流程和品質。重要的是，這項決定為預期性能和未來類似產品監管批准所需的相關數據設定了標準。至於下一步，我們的團隊正在研究提供 FDA 授權檢測方法對我們的營運、開發和潛在商業利益的影響。我們也相信，這項決定證明，如果未來實驗室開發測試的監管環境發生變化，我們仍將保持非常有利的地位。

In the third quarter, we also reached 4.4 million patients served across a diverse spectrum of clinical areas. Of these patients served, 64% are available for data sharing. We continue to believe that this breadth of patient data will further strengthen our variant interpretation capability, and we are well positioned to provide the highest quality of clinical interpretation at an industry-leading scale. And as I already mentioned, our efforts to improve revenue cycle management and cash collections also continued to gain traction during the quarter. Finally, we recently had an exciting update in which we received clear approval on our submission for our enhanced personalized cancer monitoring assay.

第三季度，我們也為各臨床領域服務的患者達到 440 萬人。在這些接受服務的患者中，64% 可以共享資料。我們始終相信，如此廣泛的患者數據將進一步增強我們的變異解釋能力，並且我們有能力以行業領先的規模提供最高品質的臨床解釋。正如我已經提到的，我們改善收入週期管理和現金收集的努力在本季度也繼續取得進展。最後，我們最近收到了令人興奮的最新消息，我們提交的增強型個人化癌症監測檢測獲得了明確批准。

On to Slide 7. The enhanced PCM assay is expected to benefit our customers and patients as well as our business. And all migration steps required for the chemistry and internal processes have been completed seamlessly. We are running the enhanced assay going forward, and here are a few of the benefits. We have reduced the number of steps in the PCM workflow, burden the materials and labor costs. The process now lends itself to automation enabling scale in supporting our future growth. From a performance perspective, we were able to lower our limit of detection, potentially improving lead times. This enhanced assay is able to achieve the same sensitivity as the prior version with less cell-free DNA, enabling us to test samples that may have previously been rejected.

轉到投影片 7。增強型 PCM 檢測有望使我們的客戶和患者以及我們的業務受益。化學和內部流程所需的所有遷移步驟均已無縫完成。我們將繼續進行增強型檢測，以下是其部分優勢。我們減少了PCM工作流程中的步驟數量，減輕了材料和人工成本。該流程現已自動化，從而能夠擴大規模以支持我們未來的成長。從效能角度來看，我們能夠降低檢測極限，從而有可能縮短交貨時間。這種增強型檢測方法能夠以更少的遊離 DNA 達到與先前版本相同的靈敏度，使我們能夠檢測先前可能被拒絕的樣本。

As part of the submission, we have also validated whole exome sequencing as a stand-alone comprehensive genomic profile to permit reporting of tumor profile, enabling us to add new products to our oncology menu. And finally, we are confident that the enhanced chemistry addresses the primary matters arising from the ongoing Natera litigation, providing us an even more differentiated solution.

作為提交的一部分，我們還驗證了全外顯子組定序作為獨立的綜合基因組圖譜，以允許報告腫瘤圖譜，使我們能夠將新產品添加到我們的腫瘤學菜單中。最後，我們相信，增強的化學反應能夠解決正在進行的 Natera 訴訟中出現的主要問題，為我們提供更差異化的解決方案。

Overall, we continue to have strong confidence in our ability to operate and most importantly, our ability to continue offering PCM to pharma partners and patients as we rebuild our fee-for-service pipeline. Longer term, we continue to see synergies between hereditary germline and sematic products. Study at the study concludes that the combination of the 2 data sets results in superior decision-making in cancer care. Our ability to do both types of testing on one platform anchors one of the most comprehensive offerings for a physician and patient considering treatment options for cancer. Before I hand the call over for the financial discussion, I'll note that we have added some fantastic talent to our executive leadership team since our last call.

總體而言，我們對我們的營運能力仍然充滿信心，最重要的是，我們在重建按服務收費管道的過程中，我們有能力繼續向製藥合作夥伴和患者提供 PCM。從長遠來看，我們將繼續看到遺傳種系和語義產品之間的協同作用。該研究得出結論，兩組數據的結合可以為癌症治療帶來更優質的決策。我們能夠在一個平台上進行兩種類型的測試，為考慮癌症治療方案的醫生和患者提供最全面的服務之一。在我將電話轉交給財務討論之前，我要指出的是，自上次電話會議以來，我們的執行領導團隊已增加了一些出色的人才。

Over the past few months, we announced the appointment of Robert Guigley as our Chief Commercial Officer, Ana Schrank as our Chief Financial Officer; and David Sholehva, as our incoming Chief Operating Officer. They each bring extensive and relevant experience, and I'm confident that they will deliver long-term value to our team. And with that, I will turn to Ana to discuss the financials. Ana?

在過去的幾個月裡，我們宣布任命 Robert Guigley 為我們的首席商務官，Ana Schrank 為我們的財務長；以及即將上任的營運長 David Sholehva。他們每個人都擁有豐富且相關的經驗，我相信他們將為我們的團隊帶來長期價值。接下來，我將與 Ana 討論財務問題。安娜？

Thank you, Ken. I'm pleased to be here to discuss our fiscal third quarter results, which, as you mentioned, reflects solid progress toward our goal of reducing cash burn. Revenue decreased 9% to $121 million, primarily due to the exit of certain product offerings, including the RUO kit and IVF products and certain international geographies as part of the realignment we announced in 2022. When excluding the impact of those exited businesses, revenue increased approximately 4% year-over-year and was roughly flat from last quarter. Looking at the revenue breakdown, oncology, including hereditary cancer and fee-for-service TCM testing offered to pharmaceutical partners generated $62 million. Women's health, including carrier testing services and noninvasive prenatal screening generated $27 million. $23 million was generated from our rare disease business, including neuro, cardio, pediatrics and other testing products.

謝謝你，肯。我很高興在這裡討論我們的第三季財報，正如您所說，這反映了我們在減少現金消耗的目標方面取得了堅實的進展。營收下降 9% 至 1.21 億美元，主要原因是作為我們 2022 年宣布的重組的一部分，某些產品系列（包括 RUO 套件和 IVF 產品）和某些國際地區的退出。若排除這些退出業務的影響，營收年增約 4%，與上一季基本持平。從收入明細來看，腫瘤學（包括遺傳性癌症）和向製藥合作夥伴提供的按服務收費的中醫檢測創造了 6,200 萬美元的收入。婦女健康，包括帶因者檢測服務和非侵入性產前篩檢，創造了 2,700 萬美元的收入。我們的罕見疾病業務創造了 2,300 萬美元的收入，包括神經、心臟、兒科和其他檢測產品。

Data and patient network revenue was approximately $9 million. This includes our sponsor testing programs, data management and a number of data partnership projects. As I mentioned earlier, pro forma revenue increased approximately 4% year-over-year and was roughly flat sequentially. We also exited our PGX testing during the third quarter, which did not have a material impact on revenue. For your reference, if we exclude PGX revenue, our third quarter year-over-year and quarter-over-quarter pro forma revenue growth would have been 40 and 30 basis points higher, respectively. Looking at the details of our revenue composition. Oncology revenue of $62 million improved sequentially, primarily due to higher fee-for-service PCM revenue this quarter compared to last quarter.

數據和患者網路收入約為 900 萬美元。這包括我們的贊助商測試計劃、數據管理和一些數據合作項目。正如我之前提到的，預計營收將年增約 4%，與上一季基本持平。我們還在第三季退出了 PGX 測試，但這對收入沒有重大影響。供您參考，如果我們排除 PGX 收入，我們第三季的年比和季比預測收入成長將分別高出 40 個基點和 30 個基點。查看我們的收入構成細節。腫瘤學收入環比增長 6200 萬美元，主要由於本季度按服務收費的 PCM 收入較上一季有所提高。

Compared to approximately $67 million of oncology revenue a year ago. The year-over-year decline was largely attributable to reimbursement pressure on hereditary cancer testing as well as weaker PCM revenue. As Ken mentioned earlier, we are working diligently to build back our pipeline. Women's health grew 21% to $27 million, led by our carrier screening product as well as continued improvements in APT. In our Rare Disease business, pro forma revenue grew approximately 44% year-over-year, driven by continued penetration of neurodevelopmental and pediatric panels and testing for rare cardiac conditions. Our data and patient network business declined by about $2 million year-over-year, primarily due to our focus to drive more profitable sponsored testing program.

相比之下，一年前腫瘤學收入約為 6,700 萬美元。年比下降主要歸因於遺傳性癌症檢測的報銷壓力以及 PCM 收入的疲軟。正如肯恩之前提到的，我們正在努力重建我們的管道。女性健康業務成長了 21%，達到 2700 萬美元，這主要得益於我們的帶因者篩檢產品以及 APT 的持續改進。在我們的罕見疾病業務中，預計收入將年增約 44%，這得益於神經發育和兒科小組的持續滲透以及罕見心臟病的檢測。我們的數據和患者網路業務年減約 200 萬美元，主要原因是我們專注於推動更有利可圖的贊助測試計劃。

Moving to Slide 11. Third quarter non-GAAP gross margin was 52.4%, which improved year-over-year compared to 45.9% in Q3 2022 and sequentially compared to 49.8% in the second quarter. Third quarter non-GAAP operating expenses were $122 million or 101% of revenue. While OpEx is still higher than we want, our continued cost control measures resulted in improvements compared to OpEx of $150 million in the third quarter last year, which was 112% of revenue and $158 million or 131% of revenue compared to Q2 of '23. On a GAAP basis, we incurred restructuring, impairment and other costs of $877.3 million related to impairments and losses on disposals of long-lived assets net. We ended the third quarter with $265 million in cash, cash equivalents, restricted cash and marketable securities compared to $596 million at September 30, 2022.

移至投影片 11。第三季非 GAAP 毛利率為 52.4%，與 2022 年第三季的 45.9% 相比有所改善，與第二季的 49.8% 相比有所改善。第三季非公認會計準則營運費用為 1.22 億美元，佔營收的 101%。儘管營運支出仍高於我們的預期，但我們持續的成本控制措施已帶來改善，與去年第三季的 1.5 億美元營運支出相比，這一數字為營收的 112%，與 23 年第二季相比，這一數字為 1.58 億美元，佔營收的 131%。根據 GAAP 基礎，我們發生了與長期資產處置減損和損失淨額相關的重組、減損和其他成本 8.773 億美元。截至第三季末，我們的現金、現金等價物、受限現金和有價證券為 2.65 億美元，而 2022 年 9 月 30 日為 5.96 億美元。

We can probably point to 9 quarters of non-GAAP gross margin expansion. In the third quarter, the margin expansion was due to improvements in revenue management, successful efforts to drive costs out of the system via supply chain and other operational and process efficiencies. Third quarter ongoing cash burn, as defined on Slide 13, was approximately $64 million. This represents an improvement of 41% compared to the same period last year. The increase in sequential cash burn this quarter includes the impact of approximately $5 million in a semiannual interest expense payment, approximately $4 million related to a contract renegotiation another $4 million in acquisition-related payments, partially offset by around $3 million resulting from improved DSO.

我們大概可以指出非 GAAP 毛利率已擴張了 9 個季度。第三季度，利潤率的擴大得益於收入管理的改善、透過供應鏈和其他營運和流程效率成功降低系統成本。第三季持續現金消耗（如第 13 張投影片所定義）約為 6,400 萬美元。與去年同期相比，這一數字提高了 41%。本季現金消耗的連續增加包括約 500 萬美元的半年利息費用支付的影響，約 400 萬美元與合約重新談判有關，另外 400 萬美元與收購有關，但因 DSO 改善而產生的約 300 萬美元被部分抵消。

As Ken mentioned, we are actively assessing the operational and liquidity measures necessary to address the going concern language in our 10-Q. We are working closely with our stakeholders to understand the options that can help extend our cash runway and optimize our current balance sheet. Currently, we have sufficient liquidity to operate as usual and continue to service our customers, partners and financial obligations as we chart the path forward. Our third quarter key metrics are on Slide 14. The Revenue per patient is measured by total company revenue divided by the number of ordering patients for the quarter. In the third quarter, revenue per patient was $474 versus $459 in the prior period. This improvement was based on stabilized hereditary cancer payments as well as the company's billing and collection initiatives.

正如肯所提到的，我們正在積極評估解決 10-Q 中的持續經營語言所需的營運和流動性措施。我們正在與利害關係人密切合作，以了解有助於延長現金流量和優化當前資產負債表的方案。目前，我們擁有足夠的流動資金來照常運營，並在規劃未來發展道路的同時繼續為我們的客戶、合作夥伴和財務義務提供服務。我們的第三季關鍵指標在投影片 14 上。每位患者的收入是用公司總收入除以該季度的預約患者人數來衡量的。第三季度，每位患者的收入為 474 美元，而上一季為 459 美元。這項改善是基於穩定的遺傳性癌症支付以及公司的計費和收款措施。

Variable cost productivity continued favorable performance in the quarter as we found efficiencies in our cost of goods sold that helped to drive higher margin. Cash burn as a percent of revenue ticked up in the quarter for the reasons we mentioned on the prior slide. We are reaffirming guidance and anticipate 2023 revenue to be in the range of $480 million to $500 million and non-GAAP gross margin in the range of 48% to 50%. In 2023, as a result of the voluntary repayment of our term loan and the related prepayment penalty in the first quarter, reported cash burn will exceed ongoing cash burn. We are reaffirming our ongoing cash burn guidance range of $220 million to $245 million, which, as a reminder, was adjusted downward after the second quarter. Our cash burn target represents more than 50% improvement from 2022.

由於我們發現銷售成本的效率提高有助於提高利潤率，因此本季變動成本生產力持續表現良好。由於我們在上一張投影片中提到的原因，本季現金消耗佔收入的百分比有所上升。我們重申指導意見，預計 2023 年收入將在 4.8 億美元至 5 億美元之間，非 GAAP 毛利率將在 48% 至 50% 之間。 2023 年，由於我們在第一季自願償還定期貸款和相關的提前還款罰金，報告的現金消耗將超過持續的現金消耗。我們重申目前 2.2 億美元至 2.45 億美元的現金消耗指引範圍，提醒一下，該範圍在第二季後已下調。我們的現金消耗目標比 2022 年增加了 50% 以上。

Before I hand it back to you, Ken, I just want to say it has been great getting to know my colleagues here at Invitae the last few weeks, and I look forward to meeting and interacting with many of you going forward. Ken?

肯，在我把它交還給你之前，我只想說，過去幾週在 Invitae 認識我的同事真是太好了，我期待著將來與你們中的許多人見面和互動。肯？

Thanks, Ana. To summarize the Q3 results in today's call. We are reaffirming our full year financial guidance. Non-GAAP gross margin expanded for the ninth straight quarter. Increased resources and efforts to improve payment collection are showing progress already. And we achieved 2 regulatory wins with the FDA authorization of our hereditary cancer panel and the clear approval on our submission for the enhanced PCM assay. As we look to close out 2023, our operational performance continues to improve. Our team is focused on the things in the short term that we can control, and we are committed to addressing the challenges that remain as we determine the best path forward in order to achieve our mission to serve many more patients ahead. Operator, I'll now hand it over to you for questions.

謝謝，安娜。在今天的電話會議中總結第三季的業績。我們重申全年財務指引。非公認會計準則毛利率連續第九個季度擴大。增加資源和努力來改善付款收集已取得進展。我們取得了兩項監管勝利，FDA 授權我們的遺傳性癌症小組，並明確批准我們提交的增強型 PCM 檢測方法。展望 2023 年即將結束之際，我們的營運表現將持續改善。我們的團隊專注於短期內我們可以控制的事情，我們致力於解決仍然存在的挑戰，同時確定最佳前進道路，以實現我們為更多患者服務的使命。接線員，現在我將把問題交給您。

Thank you, Ken. (Operator Instructions) Our first question today comes from Isabel Prugue from Leerink Partners.

謝謝你，肯。 （操作員指示）我們今天的第一個問題來自 Leerink Partners 的 Isabel Prugue。

I we saw earlier with the announcement of the chemistry enhancements for MRD test. Could you perhaps maybe speak to how this helps addressing the (inaudible), IP and litigation concerns? And if you don't mind clarifying if these are the same new design for the commercial...

我們早些時候就看到了有關 MRD 測試化學增強功能的公告。您能否談談這如何幫助解決（聽不清楚）、智慧財產權和訴訟問題？如果你不介意澄清這些是否是相同的商業新設計...

Isabel, this is Ken. I'm sorry, I was having difficulty hearing you. I think your first part of the question was relative to the enhanced PCM assay and how it addresses the Natera litigation. Obviously, there's still ongoing litigation with that. In terms of specifics, I'm not going to be able to go into a lot of specifics about the differences between the chemistry and how it differs from the patents that are under dispute. But we are confident that the enhanced chemistry and the process changes we've made, knowing what those -- the items on the dispute were that this appropriately addresses it.

伊莎貝爾，這是肯恩。抱歉，我聽不清楚你在說什麼。我認為您問題的第一部分與增強型 PCM 分析以及它如何解決 Natera 訴訟有關。顯然，有關該案的訴訟仍在進行中。就具體細節而言，我無法詳細說明化學成分之間的差異以及它與有爭議的專利之間的差異。但我們確信，透過增強化學反應和改變流程，我們知道爭議的內容是什麼，這可以適當地解決這個問題。

I'm glad that (inaudible). The second part of my question was redesigned with the plan for the commercial asset as well and if we can expect to see that.

我很高興（聽不清楚）。我的問題的第二部分是重新設計商業資產計劃，以及我們是否可以期待看到這一點。

Yes. So the assay -- the enhanced assay is our assay that we're going to be operating going forward. And so as we prepare for commercialization of our PCM product, our MRD product, that will be based off of the enhanced assay.

是的。因此，檢測－增強型檢測是我們今後將要進行的檢測。因此，當我們準備將 PCM 產品和 MRD 產品商業化時，這將基於增強的檢測方法。

Thank you, Isabel. We will now take our next question from Dan Brennan from Cowen.

謝謝你，伊莎貝爾。我們現在將回答來自 Cowen 的 Dan Brennan 提出的下一個問題。

This is Tom Stevens on for Dan. It was more a question on the guide. So clearly, you reaffirmed it, but that seems to be in some sequential acceleration. So I guess if you could talk through some of the puts and takes kind of behind that? And then I've got one more follow-up.

我是湯姆·史蒂文斯，代替丹。這更像是一個關於指南的問題。顯然，你重申了這一點，但這似乎是某種連續加速的過程。所以我想您能否談談這背後的一些優缺點？然後我還有一個後續問題。

Yes. So we're seeing -- we talked about already that we've seen the sequential growth already taking place, especially in our hereditary cancer business. We talked about double-digit volume growth quarter-over-quarter. And so we expect that that's going to continue. And then the combination of the work we're doing on our collection and reimbursement, our average payment per test gives us confidence that the fourth quarter will continue to have sequential growth in revenue. And we talked about our rare disease business and how it's doing on a pro forma basis year-over-year and 44% revenue growth in women's health, a 21% revenue growth and hereditary cancer with double-digit volume growth and getting better quality revenue. We have a lot of confidence that the revenue guide that we have is what we're going to be able to achieve.

是的。所以我們看到——我們已經討論過，我們已經看到了連續的成長，特別是在我們的遺傳性癌症業務中。我們談到了季度環比兩位數的銷量成長。因此我們預計這種情況將會持續下去。然後，結合我們在收款和報銷方面所做的工作，我們每次測試的平均付款讓我們有信心第四季度的收入將繼續連續增長。我們討論了我們的罕見疾病業務及其同比表現，女性健康業務收入增長 44%，遺傳性癌症業務收入增長 21%，銷量實現兩位數增長，收入質量也得到提高。我們非常有信心，我們能夠實現我們所製定的收入指南。

Great. That's helpful. And I guess just kind of jumping off that kind of stepping back, as you have these conversations with your stakeholders, have you settled down to kind of revenue growth rate you feel is sufficient to kind of potentially meet cash ban requirements and credit requirements going forward?

偉大的。這很有幫助。我想，當您與利害關係人進行這些對話時，您是否已經確定了您認為足以滿足未來現金禁令要求和信貸要求的收入成長率？

Without getting into a lot of details, I mean, I think I must respect the process as we're working with our stakeholders. Our stakeholders are asking the right kind of questions. And I think we are providing them sufficient information to the responses to those questions. And so the -- I am confident in the process and the relationship that we have. We're working together. They're asking good questions. And we're determined to continue the map a path forward for our company to continue to build upon the work that we've already done. I just got to say that how we -- the work we've done to this point is a representation of the dedication and the grip of the visions in our company, the team has worked extremely hard, and we've made some tough decisions, and we've been able to execute extremely well. And so that goes without saying that our team has really delivered on what we had set out to do for 2023, and we like our momentum going into the last part of the year.

我不想談太多細節，我的意思是，我認為我必須尊重我們與利害關係人合作的過程。我們的利害關係人正在提出正確的問題。我認為我們為他們提供了足夠的資訊來回答這些問題。因此—我對我們的進程和關係充滿信心。我們正在共同努力。他們問了很好的問題。我們決心繼續為我們的公司規劃前進的道路，在我們已經完成的工作的基礎上繼續前進。我只想說，我們迄今為止所做的工作體現了我們公司的奉獻精神和對願景的把握，團隊非常努力，我們做出了一些艱難的決定，並且我們能夠非常好地執行。毋庸置疑，我們的團隊確實實現了我們為 2023 年設定的目標，我們對今年下半年的勢頭感到滿意。

Our next question comes from Tejas Savant from Morgan Stanley ahead.

我們的下一個問題來自摩根士丹利的 Tejas Savant。

This is [Madison] on for Tejas. Congrats on the quarter. Maybe just firstly, within oncology. I was wondering if you expect the delayed payment from the commercial insurance payers to be resolved by year-end, that sounds like it is improving or if you do expect any spillover as we think into next year? And then can you kind of quantify the impact of your guidance at the midpoint for this year and then what impact we could be seeing in 2024?

這是 Tejas 隊的 [Madison]。恭喜本季取得佳績。也許首先只是在腫瘤學領域。我想知道您是否預計商業保險付款人的延遲付款問題將在年底前得到解決，這聽起來像是情況正在改善，或者您是否預計明年會出現任何溢出效應？然後，您能否量化您今年中期指導的影響，以及我們在 2024 年可能會看到什麼影響？

So I'll say to you that the work that we've done in terms of addressing the commercial payer challenges that we have. We're seeing that, that's starting to materialize. But we actually believe that the full year benefit of it won't be seen until we get into 2024. So the good news is that the progress we're making, we are confident is doable, and we'll see a full year implication of it next year. And so your question about the implications on the midpoint of the revenue guide. Is that what the question was? Yes.

所以我要告訴你們，我們在解決商業付款人挑戰方面所做的工作。我們看到，這個目標正在開始實現。但我們實際上認為，直到 2024 年才能看到它的全年效益。因此，好消息是，我們有信心取得的進展是可行的，並且明年我們將看到它的全年影響。所以你的問題是關於收入指南中點的影響。問題就是這個嗎？是的。

Just like what's baked into the guidance range for this year at the midpoint. What kind of headwind?

就像今年中期指導範圍所包含的內容。什麼樣的逆風？

Well, I'd say that we expect that we'll -- you've seen really quarter after quarter, our top corporate level average payment per test has improved, and we're expecting that that's going to improve for Q4 as well. That's informing our confidence in the revenue guide. We are also seeing improvement in growth in the (inaudible) of growing more volume as well as increasing the quality of our revenue in terms of average payment per test and those 2 things together is what gives us confidence in our guide.

嗯，我想說，我們預計——您確實已經看到，一個季度又一個季度以來，我們公司最高級別的每次測試平均支付額都有所提高，我們預計第四季度的情況也會有所改善。這增強了我們對收入指南的信心。我們也看到（聽不清楚）成長的改善，以及我們收入品質（就每次測試的平均支付而言）的提高，這兩件事結合起來讓我們對我們的指南充滿信心。

Okay. That's really helpful. And then maybe just one follow-up. I realize you talked a bit about that.

好的。這真的很有幫助。然後可能只需要一個後續行動。我知道你已經談論過這一點。

The Board is extremely supportive of our company. But as we looked at this, the Board was willing to have several of the independent directors to dedicate more time, if you will, to really specifically focusing on the capital structure of the company and helping guide us on our way forward. And so that, to me, is a good sign. Time lines and things like that, it's a little premature to try to signal that. But I would say to you that the commitment and the time that they're putting in, we all are operating with an appropriate level of urgency associated with mapping the next path for Invitae. And when we set out last year, I'm reminded that we said we were going to be focusing on a few things. One was to kind of stabilize the business and execute on the short term. And then we talked about growing profitably, which we're doing. And then we talked about really mapping out a path to be able to drive investment into the future of the company. And so I think this is where we are in this phase between steps 2 and 3 and our Board and special committee are really there to help us with that effort and direction.

董事會非常支持我們公司。但當我們審視這個問題時，董事會願意讓幾位獨立董事投入更多時間，真正專注於公司的資本結構，並幫助指導我們前進的道路。所以，對我來說，這是一個好兆頭。時間軸和諸如此類的事情，現在試圖發出信號還為時過早。但我想告訴你們，他們投入的承諾和時間，我們都在以適當的緊迫性為 Invitae 規劃下一步的發展道路。當我們去年出發時，我記得我們說過我們將重點放在一些事情上。一是穩定業務並在短期內執行。然後我們討論了獲利成長，我們正在這樣做。然後我們討論瞭如何真正規劃出一條能夠推動公司未來投資的道路。所以我認為這就是我們處於第 2 步和第 3 步之間的階段，我們的董事會和特別委員會確實在幫助我們實現這一努力和方向。

Thank you. We will now take our next question from Andrew Brackmann from William Blair.

謝謝。我們現在將回答威廉布萊爾公司的安德魯布拉克曼提出的下一個問題。

This is Dustin on the line for Andrew. On gross margin, good to see that continue to trend up over many quarters. Wondering if you guys can talk about the levers driving that and where it can end up over time.

我是達斯汀，找安德魯。就毛利率而言，很高興看到其在多個季度內持續呈上升趨勢。想知道你們是否可以談論推動這一進程的因素以及隨著時間的推移它將走向何方。

Yes. I mean there's multiple efforts levers that are driving that. Obviously, we made a decision, a conscious decision really starting about 18 months ago that we were changing the commercialization go-to-market from volume at all cost to a focus on growing profitable volume. And so that's step #1. Then secondly, we've been really dedicated and focused on process improvement internally, whether it's supply chain, logistics, whether it's our laboratory processes and efficiencies, Ana talked about our variable cost efficiency that has probably been about as impressive in terms of quarter -- each quarter, driving more efficiency in our operations as has our gross margin expansion as well. So that's a true sign of focused effort there.

是的。我的意思是，有許多努力手段在推動這項進程。顯然，我們做出了一個決定，一個大約 18 個月前開始的有意識的決定，我們將把商業化的上市重點從不惜一切代價提高產量轉變為專注於增加盈利產量。這就是第一步。其次，我們一直致力於並專注於內部流程改進，無論是供應鏈、物流，還是我們的實驗室流程和效率，Ana 談到了我們的變動成本效率，就季度而言，這可能同樣令人印象深刻——每個季度，這都提高了我們的營運效率，同時也提高了我們的毛利率。所以這是一個真正集中精力的標誌。

And then I think our mix is also moving in the right direction. Some of the actions we took last year, exited territories and businesses that were just not accretive to our gross margin story. And so we made some hard and tough decisions, but I think those decisions are proving to be more right than wrong in terms of solidifying our path to growth to profitable growth. So it's really about being intentional about the quality of revenue that we demand for ourselves and then driving our middle part of the system in terms of the cost structure and variable cost and ultimately, those things together have led to some pretty strong performance and solid progress in gross margin.

然後我認為我們的組合也朝著正確的方向發展。我們去年採取的一些行動是退出那些對我們的毛利率沒有增值的地區和業務。因此，我們做出了一些艱難的決定，但我認為，事實證明，這些決定在鞏固我們實現獲利成長的道路方面是正確的，而不是錯誤的。因此，這實際上是為了刻意追求我們自己所要求的收入質量，然後在成本結構和變動成本方面推動我們系統的中間部分，最終，這些因素共同帶來了相當強勁的業績和毛利率的穩步增長。

Understood. Within oncology, just wondering if we could get an update on your penetration efforts into the community setting, which you've called out in the past as a catalyst?

明白了。在腫瘤學領域，我只是想知道我們是否可以了解您在社區環境中滲透工作的最新進展，您過去曾稱之為催化劑？

Yes. So I talked about our revenue growth of double-digit growth for hereditary cancer in Q3. And I'd say that what we're finding is that the volume growth in the community setting is spear hitting the growth in hereditary cancer volumes. And so we still are competing well in the NCI center and the academic medical centers, where the genetic experts are, and we're still in there, and we're starting to grow that segment of our business, but we are seeing more growth in our kind of community setting, which is what we were expecting and what we were hoping when we talked about earlier that we wanted to expand our -- where we operate and our call points. And so that's starting to prove with some positive momentum there.

是的。我談到了我們第三季遺傳性癌症治療的收入實現了兩位數的成長。我想說的是，我們發現社區環境中的數量增長正在嚴重打擊遺傳性癌症數量的增長。因此，我們仍然在 NCI 中心和學術醫療中心保持著良好的競爭力，因為那裡有遺傳專家，我們仍然在那裡，並且我們正在開始發展這部分業務，但是我們在社區環境中看到了更多的增長，這正是我們所期望的，也是我們之前談到的我們希望擴大我們的運營地點和呼叫點時所希望的。所以這開始證明那裡存在一些積極的勢頭。

Okay. Great. And then just one more for us. Pipeline progress on PCM in the clinical setting and expected time lines around that heading into next year.

好的。偉大的。然後我們再說一個。 PCM 在臨床環境中的管道進展以及明年的預計時間表。

And when you say -- are you talking about -- when you say pipeline timing for PCM, are you talking about reimbursement or studies? I mean, can you be a little bit more specific, what is your...

當您說 - 您是在談論 - 當您說 PCM 的管道時間時，您是在談論報銷還是研究？我的意思是，你能更具體一點嗎，你的…

Yes, it could be studies, reimbursement and commercialization of different indications.

是的，它可以是不同適應症的研究、報銷和商業化。

Yes. It's a good question. So our efforts are starting to really focus in on several clinical areas, tumor types, lung, breast and colorectal cancer. We are starting to get the data needed to pursue reimbursement. And so we're expecting in early 2024, we'll start to see that data come into fruition where we can start making our submissions to get support for reimbursement. We've gotten some indication from CMS already as to what kind of reimbursement levels they would support for our product. And so we kind of know what that target is going to be and our study work that we're doing has really been more and more focused on what they're going to take to get -- kind of get the information and data needed to confirm the reimbursement path for our products. And so I think we're more aligned now than we've been in a while in terms of getting all of that together. And as we get into 2024, we'll be able to give you a lot more clarity as to how we see that unfolding.

是的。這是個好問題。因此，我們的努力開始真正集中在幾個臨床領域、腫瘤類型、肺癌、乳癌和大腸癌。我們開始取得尋求報銷所需的資料。因此，我們預計在 2024 年初，我們將開始看到數據取得成果，屆時我們就可以開始提交申請以獲得報銷支援。我們已經從 CMS 那裡得到了一些關於他們將為我們的產品支持何種報銷水平的指示。因此，我們知道這個目標是什麼，我們正在進行的研究工作實際上越來越集中於他們將要採取什麼措施來獲得——獲取確認我們產品報銷途徑所需的資訊和數據。因此，我認為，就整合所有這些而言，我們現在比以前更加一致了。隨著我們進入 2024 年，我們將能夠更清楚地向您展示我們如何看待這一發展。

Our next question comes from Matthew Sykes from Goldman Sachs.

下一個問題來自高盛的馬修·賽克斯。

This is [Avi] on for Matt. The first one, it was great to see the FDA market authorization on your hereditary cancer panel. Can you provide an update to your overall hereditary cancer segment since receiving authorization for that product?

這是 [Avi] 為 Matt 開啟的。首先，很高興看到您的遺傳性癌症小組獲得了 FDA 的市場授權。自從該產品獲得授權以來，您能否提供整個遺傳性癌症領域的最新情況？

So yes, I mean, as I said in my comments, we're -- first of all, thank you for the comment about it. We're extremely proud of what the FDA saw when they looked at our processes and our methodology. So far as what the next step is going to be in terms of commercializing it, the FDA authorization market authorization. It's a combination of looking at our development and our operational and our commercial efforts, so we're -- internally, we're working through those to understand what the opportunities are. And when we are ready to announce a product that is commercialized with FDA authorization, we will do that. But at this point, we haven't done that.

是的，我的意思是，正如我在評論中所說的那樣，我們——首先，感謝您對此的評論。當 FDA 審查我們的流程和方法時，我們感到非常自豪。至於下一步在商業化方面會做什麼，FDA 授權市場授權。這是對我們的開發、營運和商業努力的綜合考量，因此，我們在內部透過這些努力來了解有哪些機會。當我們準備宣布一款獲得 FDA 授權商業化的產品時，我們就會這樣做。但目前我們還沒有這樣做。

Okay. Great. And then the next one, can you just talk through how you're thinking about reallocating resources after exiting your PGX business?

好的。偉大的。然後下一個問題，您能談談退出 PGX 業務後您如何考慮重新分配資源嗎？

So yes, I mean, the PGX business for us was, in many regards, a stand-alone operation in terms of where the samples were being processed. And so we basically exited that business. And unfortunately, those resources that were pretty much dedicated to PGX for the most part, have exited the company.

是的，我的意思是，對我們來說，PGX 業務在許多方面都是在樣品處理方面獨立的操作。所以我們基本上是退出了該業務。不幸的是，那些原本用於 PGX 的大部分資源已經退出了公司。

(Operator Instructions) Our next question is from Rachel Vatnsdal from JPMorgan.

（操作員指示）我們的下一個問題來自摩根大通的 Rachel Vatnsdal。

This is (inaudible) on for Rachel. Given you're refocusing on your profitability, can you talk a little bit about the growth plan for the data patient network for the next few quarters, maybe 2 quarters? Obviously, there are a lot of underlying factors going into it, but since you saw a decline quarter-over-quarter. Can you just give us some commentary on how you think about that trending heading into year-end and the growth profile on it? And then I have a...

這是（聽不清楚）為 Rachel 準備的。鑑於您重新關注獲利能力，您能否談談未來幾季（也許是兩個季度）數據患者網路的成長計劃？顯然，有許多潛在因素導致這一現象，但我們已經看到季度環比下降。您能否就您對年底的趨勢和增長情況的看法發表一些評論？然後我有一個...

Yes, that's a great question. I mean, so as we think about it as it goes into year-end, we've obviously taken a into situation when we look at our revenue guide. It's been a good news story for us in my humble opinion. We focused on moving from an unprofitable kind of a discount testing model for sponsor testing program to one where we are being appropriately compensated for the work that we do. And so we were a little concerned that the revive volume was going to drop off significantly. And I think what we found is that we can do both. We can grow it profitably, and we can still continue to grow that business. So we're less concerned about the downside path forward because we're seeing the momentum coming back at the product.

是的，這是一個很好的問題。我的意思是，當我們考慮到年底的情況時，我們在查看收入指南時顯然已經考慮到了這種情況。以我個人的拙見，這對我們來說是一個好消息。我們致力於從贊助商測試計劃的無利可圖的折扣測試模式轉變為我們所做的工作能得到適當補償的模式。因此我們有點擔心復活量會大幅下降。我認為我們發現我們可以同時做到這兩點。我們可以使它盈利增長，並且我們仍然可以繼續發展該業務。因此，我們不太擔心未來的下行趨勢，因為我們看到產品動能正在回升。

And we -- by the way, we've also developed some innovative products off of our data business that are also being well received. And so we see it as actually a rebounding business for us that's got great correlation to our rare disease business. A lot of our data business is driven off of the patient odyssey that pediatric epilepsy in pediatric rare diseases, adult rare diseases are going through. And so we think we have a good combination there, and we like the stability that we've gotten and part of our path to 52.4% gross margins this quarter. Is that each of the segments that we're in are performing better than they were this time last year from a gross margin standpoint.

順便說一句，我們還根據數據業務開發了一些創新產品，這些產品也受到了好評。因此，我們認為這實際上是一個反彈業務，與我們的罕見疾病業務有很大關聯。我們的許多數據業務都源自於兒童罕見疾病中的兒童癲癇和成人罕見疾病患者所經歷的歷程。因此，我們認為我們在這方面有一個很好的組合，我們喜歡我們所獲得的穩定性以及本季實現 52.4% 毛利率的部分原因。從毛利率的角度來看，我們所處的每個部門的表現都比去年同期好。

Great. That's super helpful and kind of right on where I wanted to hit next. Could you talk about maybe if we're expecting some potentially lower growth in that data or patient network segment or maybe some lower gross margin segments in general. Do you think that, that 9 quarters of adjusted gross margin improvement that you're seeing and hitting 52% this quarter, which was meaningfully above the street. Do you think that trend could sort of then continue? It is below the full year guide or above the full year guide, but it'd be interesting to see if that's a potential swing factor upside to the next few quarters here.

偉大的。這非常有幫助，而且正是我下一步想要做的。您能否談談，我們是否預期數據或患者網路部分的成長可能會較低，或者整體上某些部分的毛利率可能會較低。您是否認為，您所看到的 9 個季度的調整後毛利率有所改善，本季達到了 52%，這明顯高於華爾街的預期。您認為這種趨勢會持續下去嗎？它低於或高於全年指南，但有趣的是看看這是否會成為未來幾季的潛在波動因素。

Yes. I mean, the way we're thinking about it is that there is some mix dynamics that still might play out for us as we finish the year. And so there's a little bit of, we have to see how our product mix lands in Q4. So we have revenue and then we've got product mix that kind of contributes to how we see gross margin. At the same time, I'd say, look, I think we're not satisfied with a gross margin of 48% to 50%. We know that we have great products, and we provide tremendous product and service to the health care community, and we have this determination to make sure that we're being appropriately rewarded for those efforts. And so I think our gross margin determination and effort is far from being concluded. And so as we start mapping out what we think 2024 will be, we'll start to guide that. But at this point, as we think about finishing up this year, there is puts and takes in terms of mix and things like that, that we're navigating through. But at the same time, we like the progress we're making, and we're pretty darn confident that we can continue to expand it into the future.

是的。我的意思是，我們的想法是，當我們結束今年的工作時，一些混合動態仍可能會對我們產生影響。因此，我們必須看看我們的產品組合在第四季度的表現如何。因此，我們有收入，然後我們有產品組合，這有助於我們了解毛利率。同時，我想說，看，我認為我們對 48% 到 50% 的毛利率並不滿意。我們知道我們擁有優質的產品，並且我們為醫療保健界提供了大量的產品和服務，我們決心確保我們的努力得到適當的回報。因此我認為我們的毛利率決心和努力還遠遠沒有結束。因此，當我們開始規劃 2024 年會是什麼樣子時，我們就會開始指導它。但此時此刻，當我們考慮結束今年的工作時，在組合等方面存在著一些得失，我們正在努力解決這些問題。但同時，我們對所取得的進展感到滿意，並且我們非常有信心在未來繼續擴大這一進展。

Thank you. We have no further questions registered today. So with that, I'll hand back over to Ken Knight for final remarks.

謝謝。今天我們沒有其他問題。因此，我將把最後的發言權交還給肯奈特 (Ken Knight)。

Well, once again, thanks, everybody. Appreciate you joining us. We appreciate your continued interest in us as well as support and look forward to talking to you again next quarter. So be well. Thank you all.

好吧，再次感謝大家。感謝您加入我們。我們感謝您對我們的持續關注和支持，並期待下個季度再次與您交談。所以祝你一切安好。謝謝大家。

This concludes today's call. Thank you for joining. You may now disconnect your lines.

今天的電話會議到此結束。感謝您的加入。現在您可以斷開線路了。