UBS Global Healthcare Conference - BILLIONTOONE INC

Financial Performance:

• Prenatal revenue surged 42% in Q3; Oncology (Northstar) revenue grew 96% to $17.1 million.
• Gross margins remain robust at 71% overall, driven by 75% prenatal margins offsetting 45% oncology margins.
• Operating expenses rose 56% YoY due to public company infrastructure costs and investments in clinical trials/product launches.
• Company maintains profitability despite heavy investment; oncology products (including MRD) expected to reach gross margin breakeven within the first year.
• Revenue mix is shifting toward oncology, which is growing at >100% YoY, though prenatal remains the primary profit engine.

Guidance and Future Outlook:

• Expect prenatal revenue to grow ~20% annually through long-term volume and ASP improvements, excluding major guideline changes.
• Oncology growth is projected to accelerate >100% YoY, with Northstar becoming the dominant revenue contributor by late 2027.
• The new "Clear" tissue-free MRD test launches December 15; early indications suggest significant long-term value in screening.
• TAMA (Test for Adult Medical Assessment) scheduled for January 1, 2027, is expected to increase single-gene NIPT pricing by >100%, potentially driving 20% total company revenue and profit margin growth.
• Management targets high ROI (5:1 to 10:1) on all operational investments, avoiding negative margin expansion.

Business Segments and Product Lines:

• Unity (Prenatal): Revenue growth driven by single-gene NIPT and expanded fetal risk screening; differentiates via workflow ease (no partner testing required) and comprehensive coverage for Maternal-Fetal Medicine (MFM) specialists and OBs.
• Northstar (Oncology):
  • Select (Therapy Selection): Detects 50% more actionable therapies than incumbents; high physician advocacy due to head-to-head clinical performance.
  • Response (Monitoring): Tracks treatment response via serial blood draws; growth driven by repeat testing and synergy with Select.
  • Clear (MRD): Tissue-free MRD test launching Dec 15; positioned to compete with tumor-informed tests by offering comparable sensitivity without logistical tissue constraints.
  • Origin: Tissue-of-origin prediction add-on addressing 10-15% of cases in community oncology where primary tumor is unknown.
• QCT Platform: Core technology reduces "noise" in cell-free DNA, enabling detection of single-molecule targets and low-level signals (0.01% or lower) previously unattainable.

Market and Competitive Landscape:

• Competition: Natera and others are expanding fetal focus, but Billion to One leverages peer-reviewed prospective studies and direct causal variant detection (vs. linkage correlation) as differentiators.
• Oncology Market: Tumor-informed MRD is becoming commoditized and logistically difficult in community settings; Billion to One aims to capture the 80% of MRD utilization occurring in community oncology via tissue-free solutions.
• Adoption Strategy: Relies on physician advocates and head-to-head clinical pilots rather than just marketing; oncologists switch based on demonstrated patient outcomes and therapy selection efficacy.
• Prenatal Market: Focus remains on capturing full account share (OBs, MFM, genetic counselors) through a complete portfolio including large carrier panels.

Risks and Challenges:

• Reimbursement: Current lack of insurance coverage for single-gene prenatal tests limits immediate ASP lifts, though pricing is designed to be accessible regardless of insurance status.
• Operational Execution: Balancing high OpEx growth (public company overhead, trials) with profitability while scaling new products.
• Market Education: Requires significant effort to convince clinicians that tissue-free MRD can match tumor-informed sensitivity, necessitating head-to-head data.
• Clinical Adoption Friction: Potential delays in uptake if clinical outcomes do not immediately demonstrate superiority over incumbent "gold standards."

Management Commentary and Tone:

• Tone: Highly confident, emphasizing scientific superiority, clinical data, and long-term value creation over short-term volume.
• Strategy: Management explicitly rejects "brute force" sequencing approaches in favor of QCT's noise-reduction capabilities; prioritizes high-ROI investments even if it means walking away from low-margin deals.
• Differentiation: Repeatedly highlights that the core differentiator is solving the "noise" problem in difficult clinical questions (early detection, single-gene) rather than just increasing sequencing depth.

Analyst Questions and Answers:

• Question: Can margins be preserved/expanding despite oncology growth? Answer: Yes; while blended margins may fluctuate, oncology's high volume growth is profitable due to low COGS, and prenatal margins are expected to expand further.
• Question: How does Northstar revenue break down between Select and Response? Answer: Select revenue is ~5x higher than Response ASP-wise, but the ratio of tests is 2:1 (Response:Select), indicating significant future revenue potential from Response.
• Question: Is the "tumor-informed" approach superior for MRD? Answer: Acknowledged as logistically superior for academic centers but flawed for community oncology; QCT offers comparable sensitivity without tissue dependency, addressing the majority of the market.
• Question: Is the technology hitting biological limits? Answer: Management argues they have not hit limits; their approach solves the noise floor issue that traditional sequencing hits, allowing detection of signals others cannot see.

Other Key Points:

• Single-Gene Focus: The company identified that single-gene conditions (e.g., sickle cell, beta-thalassemia) are the most common genetic disorders, driving the need for single-molecule sensitivity.
• Academic vs. Community: Academic centers use tests for difficult cases, while community oncology relies on ease of use for the vast majority of patients; QCT's tissue-free nature is critical for the latter.
• Clinical Evidence: A 5-year prospective multi-site study on single-gene NIPT provides a distinct evidence advantage over competitors relying on correlation data.
• Long-Term Vision: The company views tissue-free MRD and early detection as equivalent technical problems; solving one de-risks the other, with potential for screening applications beyond cancer.