Q4 2023 Personalis Inc Earnings Call

Participants

Caroline Corner; IR; Personalis, Inc.

Chris Hall; CEO & President; Personalis, Inc.

Aaron Tachibana; CFO & COO; Personalis, Inc.

Rich Chen; EVP, R&D & Chief Medical Officer; Personalis, Inc.

Madison Patricia; Analyst; Morgan Stanley

Daniel Sammarco; Analyst; Cowen Inc.

Presentation

Operator

Welcome to the Personalis fourth quarter 2023 earnings conference call. (Operator Instructions) Reminder conference is being recorded. It is now my pleasure to introduce your host, Caroline Corner of Investor Relations. Thank you.

Caroline Corner

Thank you, operator, and welcome to Personalis Fourth Quarter and Full Year 2023 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 fact should be considered forward-looking statements within the meaning of US 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 for reimbursement, gold sales and booking orders, product services, technology, clinical milestones, the outcome and timing of reimbursement decisions, expectations for our existing and future collaboration activities, cost 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 filing. Personalis undertakes no obligation to update these statements except as required by applicable law.
Our press release with the full year and fourth quarter 2020 results is available on the 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. Our recording of today's call will be available on our website by 5 p.m. Pacific Time today. Now I would like to turn the call over to Chris for his comments on full year and fourth quarter business highlights.

Chris Hall

Thank you, Caroline, and good afternoon, everyone, and thank you for joining us. 2023 was a year of strong performance for Personalis as we build a culture of execution and winning. We focused on the MRD market, reduced our annual expenses by $35 million and extended our cash runway to two years delivered on all of our commitments to investors, investors and positioned our company for a pivotal 2024.
We ended the year with $73.5 million in revenue at 13% year-over-year growth. And our culture of execution yielded many important wins we received Medicare coverage for NeXT Dx, which is our high performance, comprehensive genomic profiling or CGP test. We launched an early access program for our ultra-sensitive MRD test. Next personal, we presented compelling early stage lung cancer, MRD data with our partners.
At tracer X, we entered collaborations with multiple leading cancer centers to develop robust clinical evidence. We entered partnerships with companies including Myriad, Tempus and Madonna, and we extended our agreement with Terra with momentum across our business. We're excited for what lies ahead. Taking a step back.
We're focused on achieving scale and our $100 million in 2025 plan where we intend to cross $100 million in annual revenue in 2025, and then we put in place a growth strategy with three engines to propel us there. First and most importantly, we are executing on our win and MRD. strategy CMRG market using liquid biopsy to find evidence of molecular residual disease or cancer recurrence is estimated to mature into a $20 billion opportunity. And we are establishing Personalis is a leading company in this space and clinical evidence is coming together to demonstrate that an ultra-sensitive test provides tremendous value to patients, doctors and partners, and that was Personalis in a position to grow rapidly.
Second, we're leveraging our core immuno Idenix platform to support biopharma customers in their drug discovery efforts and personalized cancer vaccine companies and their efforts to establish a new generation of therapies. Our proprietary solutions create a unique molecular fingerprint of a patient's cancer, allowing for new insights and pushing the entire field forward.
Third, we are deepening and expanding our relationships with our enterprise customers such as new Terra and the VA MVP with our personnel's inside approach that allows customers to leverage our technology and ability to produce cost effective assays.
I'll now walk you through a more tactical view of our 2024 strategy as we push into delivery on our $100 million in 2025 plan.
Before I'll turn it over to Aaron, who will detail our 2023 financial highlights and our guidance for this year 2024, starting with next person or first growth engine. I quickly remind you that our win and MRD. strategy has four pillars. First focus and launch our test in cancer types where an ultrasensitive liquid biopsy test can unlock significant value for patients, payers and partners.
Second to drive reimbursement by developing robust clinical evidence and partnering with the top global collaborators. Third, to leverage our deep pharma relationships to accelerate adoption and power our revenue growth by using the next personal using X personal and clinical trials and forth to commercialize NeXT Personal with a partner-centric model delving into the first pillar, we've previously explained how we're developing evidence to support NeXT Personal clinical usage in early-stage lung cancer, breast cancer and IO therapy monitor.
Our focus on these cancers is intentional as we believe we can win with our ultra-sensitive approach in each indication. We believe that detecting recurrence as early as possible can dramatically impact a patient's health and that a highly sensitive test can be used to deescalate patients from ineffective therapies, potentially saving payers, money and sparring patient therapies and procedures they may not. You might recall that we launched our NeXT Personal DXLDT. for MRD. in October 2023, and we are currently selectively launching that on direct Early Access Program or EAP.
We are the first ultra-sensitive test to market and the adoption of our tests has been rapid and indeed, it's exceeding our initial targets. We now have characterized and are monitoring more than 250 patients referred to us by only 10 doctors involved in the program. We've capped the number of MDs in our early access program. We have a waitlist of more than 150 doctors that have indicated they wanted to be included.
Moving to our second pillar, I believe many of you saw the compelling early-stage lung cancer clinical MRI data presented by Professor Charles Swan and Dr. James Black with tracer next October. The TRACER study is greatly advancing the understanding of lung cancer and cancer biology. And the next and next personal is enabling an ultrasensitive specific detection of CTDNA. before and after surgery through treatment and during surveillance for recurrent cancer, which we believe will ultimately allow clinicians to make more informed decisions about patient care to put it in the simplest terms, the data show that our ultra sensitive approach can detect cancer up to 11 months performance.
We are completing the testing of the full cohort for the TRACER study and expect our collaborators to submit in 2024 for publication, we expect that work once published to form the foundation of a Medicare submission for lung cancer and breast cancer. We completed processing samples from our collaboration with the Royal Marsden, one of the leading global institutions and breast. Our work here is focusing on patients with early-stage disease for several subtypes, including ER positive HER2 positive triple-negative breast cancer.
The Royal Marsden collaboration provides access to a well annotated set of samples with known clinical outcomes. We plan to use our work here to provide a clinical dataset to support Medicare coverage in breast. This data set is expected to be showcased in mid 2024. We are also working with the Dana-Farber Cancer Institute in breast cancer, which provides us with a robust set of HER two positive prospectively gathered samples and with the Korea Institute, which provides access to a study in triple negative breast cancer. These collaborations are extremely important because we have multiple cohorts that we can leverage to drive commercial success and underpin our reimbursement submission.
Additionally, for breast cancer, our own perspective, clinical trial called these stronger is underway. We've made progress establishing committed sites and we've begun enrolling patients. Breast cancer is an important priority for us, and we continue to deepen our collaborations that expand our clinical evidence.
Turning to IO therapy monitoring are key study as a pan cancer data set with the valve to Hebron Institute of Oncology or VHIO. design to demonstrate and leverage the efficacy of NeXT Personal CHIO. gives us access to a large well annotated bank of prospectively gathered samples that are the cornerstone of our efforts to achieve reimbursement coverage for PanCancer IO therapy monitoring. We've begun testing VHIO. patient samples and expect clinical data presented in the middle of 2024.
This exciting collaboration joins existing work we have announced on melanoma I/O therapy with University Medical Center, Hamburg, Eppendorf, also known as KY. and R. Duke and UC San Diego relationships. These data sets will form the core of our Medicare submission for coverage for IO therapy. Monitor reimbursement coverage is accomplished with great products that demonstrate clinical utility and our relentless focus on execution to build and publish the data. Our team at Personalis is focused on delivering data to collaborators that spotlight the compelling performance of our approach and then submitting for reimbursement coverage for all three cancer types this year.
The third pillar of our NeXT Personal strategy is to leverage our biopharma relationships to drive the use of ex personal clinical trials. We are engaged with most of the world's top biopharma customers and have received positive feedback on our platform. Customers want an ultrasensitive approach to ensure that only the most appropriate patients enter into a clinical trial. The promise of an ultrasensitive assay is a we believe patients testing negative are much less likely to recur.
This would mean for our biopharma customers that these patients are less likely to benefit from a therapeutic intervention. The data that the tracer X team analyzed on lung cancer indicated that patients testing CTD. and a negative on our assay largely didn't recur and were still alive five years later. This holds out the promise that NeXT Personal could be an excellent approach to optimize biopharma trials. Indeed, here in the first quarter. We've already booked record new orders for NeXT Personal, and we believe it will be a driver of revenue moving forward, an important way for us to deepen the clinical utility of NeXT Personal.
Now move on to the fourth and final pillar commercializing NeXT Personal using a partner-centric model. On our last call, we mentioned that we are seeking partnerships that help us amplify our message to the Park Place, allowing us to market and sell our test in a capital-efficient manner.
In December, we announced our key partnership with Tempus to commercialize NeXT Personal Dx and clinics with oncologists. We are thrilled that campus selected us as their MRD. tumor informed choice to offer to their customers under the agreement, we will leverage services sales channel, which consists of more than 200 sales professionals calling on oncologists to co-commercialize NeXT Personal, the Axon Accelerate Growth.
Personalis will process samples in our lab to obtain reimbursement and invoice health insurance payers and patients enter the arrangement all pain campus, fair market value for the commercial services they provide to us overall, the deal is worth approximately $30 million for Personalis, should all the milestone payments be triggered and if campus fully exercises there. Most importantly, though, it allows us to ramp up our commercial efforts quickly with minimal cash investments. We will work through 2024 to expand our early access program to include Tempus, and we'll learn how to work together as partners integrating our business systems and refining our message to colleges. This is an exciting relationship that paves the way to achieving commercial traction in a capital-efficient manner.
Now while we made strides with our first growth engine, our win and MRD. strategy to establish NeXT Personal was a leading MRD test. We've also made progress with our second growth engine, leveraging our immuno IV NeXT platform to deepen relationships with biopharma customers who use the offering to pioneer new therapies and enterprise customers as they develop a ramp up volume for tissue and forest products we previously told you about our partnership with modernity, personal cancer therapies were modernity utilizing our platform and our mRNA cancer program. We have several other partners that work in this space as well modernity and its partner. Merck are enrolling patients in clinical trials, and we expect our collaboration with Novartis to be a driver of revenue for us at 24 and 2025.
In November, we disclosed the Myriad is expanding its pharma service offerings by introducing our BIGX. platform to pharmaceutical partners who use Myriad's cancer tests. This is another exciting opportunity to continue to grow our biopharma customer base. Myriad is a pioneer in the industry and we're excited to be collaborating with them.
Last month, we disclosed that we also partnered with clear node health. Clear note has an epic genomic platform that we believe is gaining traction with biopharma customers by allowing those partners to detect cancer earlier monitor disease progression and understand mechanisms, mechanisms of resistance with the aim of identifying promising drug targets and biomarkers in this relationship, Personalis is Biopharma sales team will bring clearing those products to its cut to our customers, which provide another growth vehicle relationships like the Myriad and clear, no deals are examples how we expect our partner-centric approach to drive our revenue going forward.
We are laser focused on adding value to biopharma customers with a comprehensive suite of products and services and accelerating our growth rate. You will know when Aaron walk through guidance for the year ahead, we expect our biopharma segment to grow in 2024 by more than 20%. This is a reflection of the progress we are making certain segments.
The third engine of our growth strategy is probably not a personnel side approach as we service enterprise customers and these relationships, partners adopt our platforms, the technology to power their solution to provide new insights to their customers. We have two larger relationships where this is the case versus new tariffs. We've partnered with Terra for a few years and they've leveraged our sequencing platform to analyze the exosome as a part of their Signatera product.
At the end of the year, we extended our agreement with material through the end of 2024. We work this year. With new Teradata evolve our platforms, we can reduce our price to them on growing our margins to those ends, we expect our revenue to decline this year from the Terra would expect our margins to improve and are optimistic we put in place the foundation to continue that relationship over time.
Our second key enterprise relationship is with the VA the VA utilizes our whole-genome sequencing capabilities to power the Million Veterans Program and national research program, looking at how teams lifestyle, military experience and exposure affects health and wellness and veterans we have helped power this program with the VA for years, and we're excited to continue the work in 2020 for both of these relationships are examples of how our platforms drive value for partners are focused on expanding our efforts with additional partners.
This year, we made significant progress across multiple fronts, and we appreciate our collaborators, partners and investors being part of the journey to establish an ultra-sensitive test at the forefront of the emerging markets. I want to especially thank my colleagues and our team at Personalis for their extraordinary efforts in 2023 to navigate through a challenging climate as we reduced head count, grew our revenue, launched new products, chief coverage showcase truly transform formative clinical data. 2024 is an exciting year, and we look forward to updating you on our progress towards our $100 million in 2025 initiative and our wind and MRG strategy with that I will now turn it over to Aaron to review our financial results.

Aaron Tachibana

Thank you, Chris. Our fourth quarter and full-year 2023 financial results and milestone achievements demonstrate our ability to execute crisply. And importantly, we continue to meet our financial commitments. I will be providing details of fourth quarter and full-year 2023 financial results and guidance for the first quarter and full-year of 2024.
Total company revenue for the fourth quarter of 2023 was $19.7 million and increased 18% compared with $16.7 million for the same period of the prior year. The increase in revenue was due to higher volume from biopharma customers and the VA MVP. For the full year of 2023, total company revenue was $73.5 million, an increased 13% compared to $65 million for the full year of 2022. The full year revenue increase was due to higher volume biopharma customers, the Terra and the VA MVP.
Gross margin was 26.5% for the fourth quarter compared to 13.8% for the same period of the prior year. A year-over-year increase of 12.7 percentage points was primarily due to operating leverage from 18% higher revenue volume and also an increase in work performed for product development and clinical evidence generation that is classified as R&D.
For the full year of 2023, gross margin was 24.8% compared with 20.5% for the full year 2022. The 4.3 percentage points of margin expansion was primarily due to favorable operating leverage from the 13% increase in revenue volume. Operating expenses were $29.2 million in the fourth quarter and included a one-time expense of $4 million for employee severance costs from the reduction in workforce compared with $34.4 million for the same period of the prior year. Excluding the employee severance costs, operating expenses were $25.1 million, an decreased $9.3 million from the same period last year.
R&d expense was $13.6 million in the fourth quarter compared with $16.6 million for the same period last year. And SG&A expense was $11.5 million compared with $17.8 million for the same period last year. For the full year of 2023, operating expenses were $128.1 million and included severance and lease impairment costs of $13.6 million compared with $128.9 million for the full year of 2022. In 2023, we made significant progress in reducing our expense base by approximately $35 million annually.
Net loss for the fourth quarter was $26.6 million compared to $31.1 million for the same period of the prior year. The fourth quarter net loss included $4 million for employee severance costs and also, an additional $4 million of non-cash expense related to the fair value accounting of the outstanding warrants issued to Tempus. This non-standard expense was a result of the increase in fair value of the warrants at December 31, 2023, compared with the fair value -- the fair market value when the warrants were issued.
The net loss per share for the fourth quarter was $0.54 and a weighted average basic and diluted share count was $49.6 million compared to $0.67 and a weighted average basic and diluted share count of $46.3 million for the same period of the prior year. For the full year of 2023, net loss was $108.3 million compared with $113.3 million for the full year of 2022.
For full year net loss included $8.1 million of employee severance costs, $5.6 million of a lease impairment write-down for the Menlo Park facility previously vacated, and a $4 million expense related to the fair value accounting of the outstanding warrants issue to FX. Net loss per share for the full year of 2023 was $2.25, and the weighted average basic and diluted share count was $48.2 million compared with $2.48 and a weighted average basic and diluted share count of $45.7 million for the full year of 2022.
Now onto the balance sheet. We finished the fourth quarter with a strong balance sheet with cash and short-term investments of $114.2 million. During the quarter, we used $6.5 million. and for the full year of 2023, we used $53.5 million of cash, primarily to fund operations. In the fourth quarter, we received $6 million from Tempus related to the first two milestone payments. And we estimate the remaining $6 million of payments to be received equally in 2024 and 2025. We have approximately two 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 first quarter of 2024, we expect total company revenue in the range of $18 million to $19 million, revenue from pharma tests, enterprise sales and other customers in the range of $16 million to 17 million and revenue from population sequencing of approximately $2 million. And for the full year of 2024, we expect total company revenue in the range of $73 million to $75 million with oncology revenue from pharma tests, enterprise sales and other customers in the range of $65 million to $67 million in population sequencing revenue approximately $8 million.
Our full year revenue guidance of $73 million to $75 million includes an estimated revenue decline of approximately 25% from the Terra which reduces our total revenue by 10% to 12%. In late 2023, we amended our volume supply agreement with them. This amendment extends the minimum quarterly volume out through the end of 2024 compared with two one in the prior agreement. In addition, we have modified selling prices to the Terra Industries in this amendment, along with the ability to convert to a cost optimized product so that the amended terms are beneficial for both companies.
We expect revenue growth from biopharma customers to offset the decline from the tariffs in addition, we expect net loss of approximately $80 million, which is $28 million lower than the loss of $108 million in 2023. And this estimate does not include any income or expense related to the outstanding warrants issue to Tempus. Cash usage is expected to be approximately $62 million and includes employee severance payments of approximately $3 million from the Q4 23 reduction in headcount. 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.

Question and Answer Session

Operator

(Operator Instructions)
Tejas Savant.

Madison Patricia

Hi, this is [Madison Patricia] come for Tejas. Thanks for taking the question. And I think I just had two for you one starting out on within biopharma. I was just wondering, could you comment on some other peers are seeing if you're seeing any headwinds from the tightening of customers' budgeting or they're seeing stabilization on that front? And as we look at 2024, do you have any headwinds baked into the guide? Or do you expect see it's a recovery in the biopharma spend?

Aaron Tachibana

Yes, hi, Madison. This is Aaron. Thanks for the question. In terms of the biopharma landscape, so in the over the past couple of years, there had been some slowdowns and trials and things of that nature. We're not seeing a lot of that sitting in front of us today. Our funnel is building. And as Chris went through the prepared remarks, we talked about our wind and MRP. strategy. So we're seeing a lot of good take-up for our NeXT Personal Products in biopharma. And in addition, as part of the biopharma revenue. We also have our PCB business with Madonna ramping up their Phase three clinical trial. They've been going through enrollment, and we're starting to see those patient samples started certainly coming to us now.

Madison Patricia

Okay. Got it. That's good to hear from. And then maybe just one more. I know you've talked about MacDon as being an important contributor to your top line in 2024 and 2025. And I was wondering if you could comment on how much it's embedded into the 2024 guide and how you see that ramping throughout the year and into 2025, sorry, 20 years.

Aaron Tachibana

But we haven't said publicly what those specific numbers are from internal. So we'd probably try to stay away from that. But what we can say, what we have said in the past to set our biopharma and total biopharma plus PCV, we'll more than offset any of the decline. We're going to see from them the Terra business in 2024 French. So the guide we have for our total oncology business in 2024 is $65 million to $67 million, which is up a tiny bit from 2023.

Madison Patricia

Got it. Thanks.

Aaron Tachibana

Thank you.

Operator

Mark Massaro, BTIG.

This is [jini] Mark. Thanks for taking the question. And I apologize, I might have missed and some jumping around on calls here, but and could you just walk me through and how we should be thinking about the next per small launch with Tempus. And I guess what steps do you need to take before the launch and have fully marketed? And then I just kind of want to circle back to and if we should still be expecting the next tracer X readout and maybe in the middle of this year?

Chris Hall

Thanks.
Yes, there are some things we will start with Tempus arm with Tempus, we and we've launched the test as early access programs as commercially available. I talked on the call over now, we baseline and created the <unk> unique molecular fingerprint for more than 250 patients and are now monitoring those patients with our liquid biopsy approach. And so that's super exciting. The uptake has been phenomenal and I've been I've been CEO, worked on many launches of products, and that's my the ones that I've been really taken aback by the strong demand that is out there is for an ultrasensitive approach. So we're super excited with Tempus.
We'll be working with them through the entire year two with a field starting with a few reps, and they're just growing as the year goes on and our goal this year because we're not getting reimbursed for the test this year. So, you know, we're we'll be running at a relatively low volume situation, and we've been pretty clear about that until we get reimbursement. So the goal, as we go through the year is to, first of all learned how to work together. Secondly, integrate systems and make sure that we can we can not we can take samples from them appropriately, get them back results to deliver to their customers, et cetera.
And then thirdly, to up to make sure we get messaging, right, et cetera, about how we talk about the testing to the community and at the right points. And so we've started that journey and we're working together. And we feel like now it's the time that we've worked with them as all the other lines that we feel like it's up. It's a great partnership but it's and it's built for the long term.
So we're super excited about where we are, and we're off to a great start. So that's and you'll see that that gave us confidence in talking about our $100 million in 2025 plan, which we're excited about on the tracer X data. I've got Rich in the room as Manny can sort of walk you through kind of how to think about that this year.

Rich Chen

Is that data second, some large and now we work to make it public? Yes, the tracer ex expansion is on track. We're actively working on it, and we expect that that data should find its way to publication sometime this year.

It is perfectly fine. Yes, yes. How should we think about reimbursement for NeXT Dx, but how are you thinking about the impact of the test in 2024?

Chris Hall

Yes. So if we achieve reimbursement, if you remember, I think what we've talked about, I mean, I know is that we if we use the reimbursement process for the test to establish relationships with payers who really are our job, our goal with moving forward with the test and bring it to market. So we were excited that we've started the dialogue with Palmetto and Goldex and how they now know who we are and can manage through the first tests. And I think that helps derisk NeXT Personal and for investors as we go through the year, we'll keep working on enlarging the number of payers to reimburse the test.
So we'll be engaging with some of the big payers to trade up at large the number of payers. And again, it's a way for them to see the quality of product that we have with NeXT Dx, the quality organization and our systems and our processes so that when we come to next with them next personal we're a known entity of Medicare reimbursement was in the $3,200 range. And I and we had a I mean, should we did we disclose guidance?

Aaron Tachibana

So our guidance for the oncology revenue is $65 million to 67 million. So inside of that number, but in a couple of million.

Thanks for taking the question give us some.

Chris Hall

Thanks.

Operator

Daniel Samarco, TD Catlin.

Daniel Sammarco

Hey, Chris and Aaron. I am on Dan Brennan, thanks for taking the questions. So the first one in the reduction in force press release, you noted that you plan to vote clinical evidence across 10 different clinical studies. Could you just go into a little bit about how much R&D dollars you expect to invest in order to publish evidence and MRG?

Chris Hall

Yes. I mean, it's one of the reasons why we spend a lot of money on R&D is that we have invested heavily in this test. We think it's a significant opportunity of the 10 studies that you did. You mention there's tracer ex collaboration on running those samples and getting that submitted. We're well on track, and most of that work has already been done is in the rearview mirror at the P & L. We've in the lung cancer and breast cancer. We've working with SAP Royal Marsden. We're working with Saab Dana-Farber.
We're working with Accuray Institute. A chunk of those samples have already been run and you'll start to see that data come out in mid 2024. We have a prospective clinical trial would be struck would be stronger on collaboration. And we've we've got our first sites are enrolling our first set of patients, but we're probably still early days there in terms of the spending. But we think it's really important to have a have a prospective clinical trial there to establish the evidence and the clinical utility of the product to triple-negative breast cancer. And we're really excited about that indication because the opportunity to deescalate patients really is really exciting with an ultrasensitive approach.
And IO therapy we have run most of the samples for DHIO., and you should start to see that data in 2024 and we bob and weave and we run many of the samples with our debt-to-cap now 10 a.m. and UK collaborations and then University of San Diego collaboration use onboard. So I don't know that we have a fixed percentage, but we've we've significantly we've spent a good chunk of the dollars that we need on those 10 studies.
But I think as you know, in this space, you know, I mean, we're not done with just the 10. We think that can give us the good cornerstone to drive the right kinds of of submissions that will get us Medicare coverage because we think these data sets are strong and robust and comprehensive, but will be deepening the work in these three indications as we go forward, and it's a journey to two. It's a journey to build the evidence to show the clinical utility that's ultimately going to make a product like this standard of care.

Daniel Sammarco

Great. Thanks, Chris. Just digging a little deeper into gross margins for the guide, food quality, as you mentioned it earlier. But would you mind going through a little bit of your assumptions for 24 and then possibly how they develop into 25?

Aaron Tachibana

Sure. So in terms of gross margin, that's embedded in our guide. So we're assuming somewhere between, yes, somewhere around 25% plus or minus a point here and there for the full year. And then in terms of 2025, gross margins will increase, it will accrete. We haven't guided for '25 yet. So I'll I'd be hesitant to give you a specific number, but we should be in the low 30s in 2025, especially if we can get to this $100 million number that we're targeting, right? Because we're not going to be adding a lot of fixed costs. Most of that footprint for the lab operation has been invested in, we will need to add variable costs as volume grows. But for the most part, we're going to leverage fixed cost footprint.

Daniel Sammarco

And thank you, guys, and thanks once again.

Operator

(Operator Instructions)
Mike Matson, Needham.

Hey, guys. This is Joseph on for Mike. Maybe just touching on that 2025 on revenue number, I guess maybe what are the the main assumptions in getting to that number? I guess more broadly, you know, do you need VA MVP revenue to remain stable, increase on? Do you expect a lot of this to be driven by by biopharma, mainly is the MVP upside just given the uncertainty around future task orders?

Chris Hall

Yes. No, I mean, I think we so when we walk through the three drivers on the right in the heart of that is our win and MRG strategy. We are sitting here in 24 were well along the way in evidence development across key indications, how and we intend to submit for Medicare reimbursement across these three large indications this year, and we're on pace to do that. And we expect that to yield efforts and significant revenue because we're also growing the commercial traction with our partner Tempus. So as that starts to come together, we expect the revenue for our NeXT Personal and the clinical market to really start to grow and get traction. And that's a big driver of leads.
And secondarily, we're seeing a lot of interest and and an excitement among the biopharma customers. But with ex personal, and that's starting to move the needle in terms of our growth rate. And you see that embedded in the guide with the we put traction in 2024 and the growth rate starting to pick up on. And that's that's that's just gone up. And we expect that to pick up steam as we come through the year and come into 25. That'll be a big year. We do have we have a 5-year sort of renewable set of agreements with the VA for the Million Veterans Program. But we don't we don't expect that now would be nice if that grew and there's certainly the possibility because there's a lot of untapped opportunity there that they have not sequence yet. And so it's possible that that would pick up steam. We have not assumed in any way that that's going to be a driver of us getting there. We've assumed that that will be pretty stable, to be honest.
Okay.

Yes. Thank you very much. That's super clear.
And then I guess just to understand the Tempus relationship a little bit more clearly. And in terms of like samples, cancer type samples, are you guys going at this as kind of agnostic to cancer type? Or is this a little bit more targeted towards the submissions you expect to do in 2024? And I know you guys said you're kind of just like feeling it out and I'm learning how to work together integrate systems.

Chris Hall

No, but we can be clear, right. We're focused on our own commercial energy and traction.And that with now we're focused on breast cancer were focused on I-O therapy monitoring, and we're focused on lung cancer. And as part of the agreement, they have exclusivity on those three, those three areas. And that's that's what we're focused on now, you know, and so that's the messaging that's the type of doctor that we call on. And that's that's what we're focusing on. We're seeing good chunk of our samples there.
Now I'd be kidding, if I said everything within those three indications because if there are we get other stuff coming through the system. And we've got to manage that the best we can. But we're staying laser focused on these indications. And we'll and we'll as we go through the snow through the next several, several months and few years.
Remember that, you know, the strategy here was to focus on the indications where we thought we could gain significant traction with an ultrasensitive approach at really tremendous value by finding cancer earlier, allowing us to escalate patients to therapies a quicker that actually could yield big results. And secondarily, because if you're flying blind, you do therapies and you do a invasive procedures that a patient may not get benefit from. But because you don't know who does it doesn't then you do it. So we have the opportunity to escalate patients, and that's especially true in breast cancer. So that's where we're focused and Dom and building and building.
And we think that from an investor standpoint that covers a good chunk of the market to be quite frank on.
I mean, it's not like these are esoteric parts of the MRT market where a good chunk of the patients are. And there's there's several hundred thousand patients here that are on I-O therapy and that are being monitored. And that breast cancer is the biggest one of the biggest cancers and lung cancer is one of the biggest cancers. And so those three together, those three indications together, we think cover a good significant portion of the USD20 billion expected market. And we feel like we're I think we're positioned to do well with this approach and in a cost-effective manner rather than building evidence across every single clinical indication simultaneously.

Got you and makes sense. We'll Thanks for taking our questions. Much appreciated.

Aaron Tachibana

Thanks, Joe.

Operator

Thank you, ladies and gentlemen.This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Chris Hall

Thanks.