STIFEL 2026 HEALTHCARE CONFERENCE - BILLIONTOONE INC

Financial Performance:

• Oncology revenue is running at a $68 million annualized rate in Q3, averaging over $1 million per sales representative.
• Management targets 70-80% gross margins and 30%+ operating margins on a product-line basis for mature products.
• Current EBITDA margins are ahead of peers (e.g., Natera, Guardant), though long-term company-wide EBITDA may not see significant increases due to continued heavy investment in expanding into larger markets.
• Sales efficiency is described as "incredible," with growth driven by product performance and repeatability rather than just headcount expansion.

Guidance and Future Outlook:

• Oncology aims to maintain approximately 100% year-over-year growth; requires adding 5-6 reps in 2026 and 7-8 reps in 2027 to sustain this rate without compromising service quality.
• Prenatal health system penetration is expected to drive upside potential in 2027 and 2028, following 3 wins in 2025 and 1 in 2026; each win represents 3,000-4,000 tests/quarter.
• Epic Aura EMR integration is complete by Q2, with meaningful volume uplifts expected to materialize in Q1/Q2 of 2027.
• Long-term goal is for all product lines to reach individual operating margins of 30%+, though total company margin growth will be capped by investment needs.

Business Segments and Product Lines:

• Oncology: Features two commercial products: Northstar Select (therapy selection) and Northstar Response (response monitoring). Select shows 50%+ higher sensitivity than incumbents for detecting actionable therapies. Response uses epigenetic changes to track tumor burden, outperforming tumor-informed assays in quantitative monitoring.
• Prenatal: Expanded product portfolio now includes a 130-gene expanded panel to serve genetic counselors, addressing a previously unmet need within health systems.
• Coverage Strategy: Prenatal business is targeting 60% of the market (health systems) which was previously inaccessible due to lack of in-network status; currently 90% in-network for oncology (driven by Medicare) and actively expanding prenatal in-network status to capture Medicaid/managed care.

Market and Competitive Landscape:

• Market is crowded; differentiation is driven by superior product performance (sensitivity and ease of use) rather than first-mover advantage or highest spend.
• Natera: Competitor's "Fetal Focus" assay creates a competitive shift but is perceived as less performant when partner testing is not done; Billion to One maintains differentiation via single-gene, no-father-sample, and IPTE workflows.
• Competitive dynamics show stability in account switching (competitor share remains constant over 2 years), indicating battles are fought against "inertia" rather than active competitor displacement in the short term.
• Independent clinics (40% of market) are easier to grow from high share; health systems (60% of market) are the primary long-term growth vector despite longer sales cycles (6-12 months).

Risks and Challenges:

• Sales efficiency has a ceiling; adding too many reps beyond the 60-100 range risks degrading service quality and turnaround times, which are critical for oncologist adoption.
• Health system adoption is slow due to complex onboarding phases (cybersecurity, phlebotomy agreements, vendor approval) despite clinical committee approvals.
• Reimbursement hurdles remain, particularly for tissue-free liquid biopsy tests in the MRD space against established tumor-informed assays; Molde-X coverage decisions are pending 2027.
• In prenatal, being out-of-network acts as a significant headwind for test volume and Average Selling Price (ASP), particularly with Medicaid programs.

Management Commentary and Tone:

• CEO Oguzhan Atay expresses high confidence in product superiority, citing peer-reviewed data showing 50%+ sensitivity advantages and head-to-head wins against tumor-informed standards.
• Tone is pragmatic regarding sales cycles, acknowledging that "9 out of 10" physicians prefer Billion to One once convinced, but execution relies on overcoming institutional inertia.
• Management emphasizes a "product-led" sales motion where clinicians become advocates after seeing performance data on 5-10 patients.
• Acknowledges that while they are profitable on a per-product basis, the company will reinvest heavily, preventing immediate spike in aggregate profitability metrics.

Analyst Questions and Answers:

• Q: How to compete in a crowded liquid biopsy market? A: Do not need to be first or spend the most; prove 50%+ sensitivity for therapy selection and superior quantitative monitoring for response.
• Q: Sales force headcount targets? A: Currently ~65 reps; plan to add 5-8 per quarter to sustain 100% growth without diluting service quality.
• Q: Impact of Epic Aura integration on volume? A: Integration complete by Q2; benefits expected to ramp in early 2027, primarily driving new health system wins rather than just existing clinic volume.
• Q: Molde-X tissue-free test coverage strategy? A: Used head-to-head data against a covered tumor-informed assay to convince Molde-X of pan-cancer performance parity.
• Q: Impact of Natera's Fetal Focus launch? A: Minimal immediate impact on volume; differentiation in workflow (no partner testing required) and ease of use remains robust against competitor inertia.

Other Key Points:

• Response monitoring is positioned as a quantitative problem (tumor burden tracking) rather than a detection problem, making epigenetic changes more effective than variant tracking for evolving tumors.
• The 130-gene prenatal panel was critical to unlocking health system access by satisfying genetic counselors who handle rare conditions and family history.
• Revenue per rep in oncology exceeds $1M annually even before full ramp-up of new hires and without response test Medicare coverage.
• Management notes that in lower-shedding cancer types, their sensitivity advantage becomes even more pronounced, offering a larger wedge for adoption.