23andMe Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 7, 2024

There are 8 speakers on the call.

Operator

Hello, and welcome to 23andme's Fiscal Year 20 24 Third Quarter Financial Results Conference Call. As a reminder, this call is being recorded. At this time, all participants are in a listen only mode. After the prepared remarks, there will be a question and answer session. I would like to turn the call over to Ann Cooney, Senior Director of Investor Relations at 23andme to lead off the call.

Operator

Thank you. Please go ahead.

Speaker 1

Thank you, Valerie. Before we begin, I encourage everyone to go to investors. 23andme .com to find the press release we issued earlier today reporting our financial results for the Q3. A replay of today's webcast will also be available on our website. Please note that certain statements made during this call regarding matters that are not historical fact, including but not limited to, Management's outlook or predictions for future periods are forward looking statements.

Speaker 1

These statements are based solely on information that is now available to us. We encourage you to review the section entitled Forward Looking Statements in our press release, which applies to this call. Also, Please refer to our SEC filings, which can be found on our website and the SEC's website for a discussion of numerous factors that may impact our future performance. We also discuss certain non GAAP measures. Important information on our use of these measures and reconciliation to U.

Speaker 1

S. GAAP may be found in our earnings release. Joining us on our call today are Ann Wachicki, our Chief Executive Officer and Co Founder and Joe Selzavage, our Interim Chief Financial and Accounting Officer. Jennifer Lee? Thank you, Valerie.

Speaker 1

Before we begin, I encourage everyone to go to investors. 23andme.com to find the press release we issued earlier today reporting our financial results for the Q3. A replay of today's webcast will also be available on our website. Please note that certain statements made during this call regarding matters that are not historical facts, including, but not limited to, management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us.

Speaker 1

We encourage you to review the SEC. Thank you, Valerie. Before we begin, I encourage everyone to go to investors. 23andme.com to find the press release we issued earlier today reporting our financial results for the Q3. A replay of today's webcast will also be available on our website.

Speaker 1

Please note that certain statements made during this call regarding matters that are not historical facts, including, but not limited to, management's outlook or predictions for future periods are forward looking statements. These statements are based solely on information that is now available to us. We encourage you to review the section entitled Forward Looking Statements in our press release, which applies to this call. Also, please refer to our SEC filings, which can be found on our website and the SEC's website for a discussion of numerous factors that may impact our future performance. We also discuss certain non GAAP measures, Important information on our use of these measures and reconciliation to U.

Speaker 1

S. GAAP may be found in our earnings release. Joining us on our call today are Ann Wachicki, our Chief Executive Officer and Co Founder and Joe Selzavage, our Interim Chief Financial and Accounting Officer. Jennifer Lowe, our Head of Therapeutics Development and Bill Richards, Head of Therapeutics Discovery will join us for Q and A. I'd now like to turn the call over to Anne.

Speaker 2

Thank you, Ian. The 3rd quarter was busy and productive at 23andme. We made meaningful strategic progress across our three businesses. We introduced our 1st integrated care offering with Total Health, signed a nonexclusive research agreement with GSK and filed our second IND in therapeutics. I am extremely proud of the effort put forth by our team as we work toward creating a new future of healthcare powered by genetics.

Speaker 2

Starting with our Consumer business. The 3rd quarter saw the company execute on our strategic shift towards actively engaging with our customers on managing their health based on their unique genetics and lifestyle. In November, we introduced a new membership called Total Health, a personalized preventative care service. It includes clinical grade exome sequencing, biannual blood testing and access to clinicians from our Lemonade acquisition with unique training in genetics. Members of Total Health receive all the reports and features offered in our 23 and me plus membership along with personalized guidance for ongoing disease prevention and early detection.

Speaker 2

This is an exciting step in our vision to bring accessible genetics driven preventative care to millions of our U. S. Customers. In addition to the introduction of Total Health, added more value to the 23andme plus membership with the introduction of 23andme Health Action Plan and 23 andMe Health Tracks. These personalized action plans are part of our broader effort to help our customers take action based on their genetic insights and other data.

Speaker 2

Over time, we will continue to add more dynamic recommendation content and intuitive ways to track phenotypic inputs with the ultimate goal of helping customers improve their health span. 23 and me Health Tracks is a digital health tool that helps customers gain a more holistic picture of the risk for developing a particular condition by integrating lifestyle and genetic factors into a single model for the first time with the goal of motivating behavior change. Health Action Plan helps customers take the next step to improve their health by drawing on genetics, health history and blood and biomarker data to provide tailored, bite sized health recommendations. We will continue to innovate in this area to create a dynamic meaningful experience to help our customers optimize their health. We also continue to refine and improve our genetic reports and insights.

Speaker 2

Our updated BRCA test allows us to report 44 additional variants in the BRCA1 and BRCA2 genes known to be associated with higher risk for breast, ovarian, prostate and pancreatic cancer. Many of these additional variants occur more often in populations that have traditionally been underserved by genetic testing, including the African American and Hispanic Latino communities. As part of our August FDA clearance, we were granted the first ever predetermined change control plan, allowing us to continue to update our BRCA report with additional validated variants without additional pre market review. As we continue to invest in our Personal Genomic Service business, we also focus on creating value for our customers through the uptake of membership services. We see repeated engagement by our customers and they have shown interest in learning more about their genetics and how to apply those learnings for their lives.

Speaker 2

We are focused on moving to a membership model so that we can meet customer demand for more services as well as develop a recurring revenue stream that will allow us to continue to innovate and grow the business in a way that is most helpful to our customers and shareholders. We continue to prioritize price and efficient marketing spend as we look to move our PGS segment toward cash flow breakeven. We recognize this effort is likely to cause some uneven results in our business in the short term, and we saw some of that effect in Q3. PGS kit volumes were impacted in the quarter as we entered the holiday promotional period with firmer pricing discipline after raising prices for the first time since 2015. This plus an environment of macroeconomic and consumer uncertainty led to lower PGS kit sale volume.

Speaker 2

We remain confident in our ability to transform our PGS segment into a sustainably growing and profitable business, And we are incredibly excited to help build toward a future of personalized preventative health. Transitioning over to therapeutics. We continue to advance our pipeline of clinical and preclinical programs. In November, we presented positive safety and preliminary efficacy data from a Phase IIIa clinical trial of our wholly owned immuno oncology program 23me-six ten at the Society For Immunotherapy of Cancer Annual Meeting. The study demonstrated that 23 me 610 is well tolerated and shows promising preliminary efficacy in a number of patients with advanced solid malignancies.

Speaker 2

In December, we announced the further expansion of the ongoing Phase IIIa study to include an additional 30 patients with advanced neuroendocrine and ovarian cancers, above the original enrollment goals. We are encouraged by the progress of 610 and anticipate reporting further data later this year. The company recently announced the U. S. Food and Drug Administration has cleared the IND application for 23andme 1473, a natural killer cell activator intended to treat cancer.

Speaker 2

23andme plans to evaluate 1473 in participants with advanced solid tumors in a Phase 1 clinical study beginning in the first half of twenty twenty four. 1473 targets UOBP6 to restore antitumor immunity through NK and T cells. UOBPs are stress induced ligands found on the surface of cancer cells that bind to the receptor, NKG2D on NK and T cells. Cancers escape immune cell recognition by shedding UOBP ligands from their cell service, which acts as immunosuppressive molecular decoys. Blocking the binding of soluble UOBP6 to NKG2D may restore immune cell recognition in killing of cancers.

Speaker 2

Further, 1473 is Fc effector enhanced, which provides an additional mechanism for NK cells to induce cell death of UOBP6 expressing cancer cells. 1473 also has the potential to address a major unmet need in cancer treatment. Patients who may have or may develop tumor resistance to checkpoint inhibitors. By combining NK and T cell activation, 1473 may initiate a broader and deeper response of the immune system to treat cancer cells and delay tumor resistance seen in treatment with traditional checkpoint inhibitors. This program validates the power of the 23.

Speaker 2

Me database for identifying novel therapeutic targets and highlights the team's ability to develop molecules and advance them into the clinic. I also want to highlight that we launched our new therapeutic website at the end of December. We think the new site does a great job explaining how our team turns genetic insights into potential new therapies with a higher probability of success in the clinic and provides a great initial diligence resource for Prudential partners, collaborators and investors. I encourage everyone to visit the new site at therapeutics. 23andme.com.

Speaker 2

Moving to the Research business. In Q3, we extended our collaboration with GSK into the 6th year. The new 1 year non exclusive data license pays 23andme $20,000,000 upfront in exchange for GSK using the 23andme database to conduct drug target discovery and other research. Importantly, this new collaboration is a sign of the significant value in the 23.me database and the potential for continuous new insights and discoveries as we grow in size. The new collaboration is important for 23andme as it generates $20,000,000 and enables us to continue to collaborate with GSK, but in a non exclusive way.

Speaker 2

We are actively pursuing new partnerships with other therapeutic companies. The excitement around AI and data opens up a tremendous for 23andme as companies are establishing their data strategies. Genetics is fundamental to the world of AI driven drug discovery. We look forward to updating you as discussions progress. As I look to 2024, I'm excited about the opportunities for 23andme.

Speaker 2

There is a growing recognition about the potential for data and AI and drug discovery, and we have an incredible asset that can accelerate and improve drug discovery for the industry. For customers, we are getting closer to our ultimate vision of having a complete solution for people who want to actively engage in their wellness and prevent disease. We look forward to an exciting year. With that, I'll turn the call over to Joe to review our financial results for the quarter.

Speaker 3

Thank you, Anne, and hello everyone.

Speaker 4

I'd like to reiterate Anne's excitement about the future of precision healthcare at 23andme And I'm proud of our ability to execute while maintaining cost discipline amid our shift towards a more sustainable operating profile. Revenue for the quarter was $45,000,000 representing a 33% decrease on another strong prior year comparable. Similar to last quarter, the year over year decrease in revenue was primarily due to the conclusion of our exclusive discovery term under the GSK collaboration in July as well as lower consumer services revenue in our PGS Kin and Telehealth businesses. The decrease in consumer revenue was driven primarily by lower sales volume as we entered the holiday promotional period with higher pricing than prior years. These efforts were intended to increase product margin through improved average selling prices and advertising efficiency, which remained a core focus of the company, but resulted in lower than expected unit sales for the quarter as we believe the combination of higher prices and extended macro headwinds placed a temporary damper on demand for our products.

Speaker 4

These decreases were partially offset by non recurring payments from other research partners in the current quarter and continued growth in our subscription services. Looking at the composition of our revenue, Consumer services revenue represented approximately 96% of total revenue for the quarter. And research services revenue, which was primarily derived from other research partners accounted for approximately 4% of total revenue for the same period. As a reminder, the new GSK data license announced in Q3 is expected to have minimal impact on this year's results with the majority landing in fiscal year 2025 given the terms of the agreement.

Speaker 3

Our gross profit for the

Speaker 4

Q3 was $20,000,000 representing a 35% decrease over the same period in the prior year. The decrease in Q3 gross profit was driven primarily by the decrease in research services revenue, while subscription revenue and improved telehealth margins Following the August 2023 disposition of Lemonade Health Limited in the UK helped to offset through continued margin accretion within their respective categories. Turning to our expenses. Total operating expenses for the quarter were $301,000,000 compared to $128,000,000 for the same period in the prior year. The increase in operating expenses was primarily due to a 199,000,000 Non cash goodwill impairment charge taken over the quarter, which was partially offset by lower personnel related expenses following workforce reductions in prior quarters and the disposition of a UK entity.

Speaker 4

A non cash Impairment charge for intangible assets in the prior period can lower therapeutics related R and D spend due to significant IND enabling activities also in the prior year. Looking at the bottom line, net loss for the quarter was $278,000,000 compared to $92,000,000 in the prior quarter. The increase in 3rd quarter net loss was driven mainly by the lower revenues and goodwill impairment charge mentioned previously. Next, our adjusted EBITDA. For details on how we define adjusted EBITDA as well as the corresponding reconciliations to GAAP, Please see our earnings press release.

Speaker 4

Total adjusted EBITDA deficit for the 3rd quarter was $48,000,000 compared to a $43,000,000 deficit for the same period in the prior year. The increase in the adjusted EBITDA deficit was primarily due to lower revenue, partially offset by lower personnel costs and lower R and D spend described previously. We ended the quarter with $242,000,000 in cash and cash equivalents compared to $387,000,000 as of March 31, 2023. We intend to be judicious with our cash usage and believe the current level of cash supports 20 Afienme's plans for targeted investment and high ROI growth initiatives. Now turning to our guidance.

Speaker 4

As a reminder, the company's full year fiscal 2024 guidance is based on the conservative approach, Recognizing challenges in recent performance, continuing uncertainties in consumer sentiment, the macroeconomic environment and geopolitical conditions. The company is adjusting its full year guidance for fiscal year 2024, which ends on March 31, 2024. For revenue, we are updating our fiscal year 2024 guidance to be in the range of $215,000,000 to $220,000,000 With net loss adjusted to be in the range of $520,000,000 net loss to $525,000,000 net loss. Full year adjusted EBITDA deficit is adjusted to be in the range of $180,000,000 deficit to $185,000,000 deficit for fiscal year 2024. Our focus within the existing lines of the PGS and telehealth consumer businesses remains unchanged.

Speaker 4

We continue to prioritize margin expansion and progress towards cash flow profitability. These efforts include remaining with our pricing strategy to realize higher average selling prices, ongoing value additions to our current services like the Health Action Plan HealthTrax features within 23meplus, expanding the recently introduced Total Health membership to a broader audience and streamlining the expense profiles of our Consumer and Therapeutics segments. Within the therapeutics and research businesses, We are investing only in projects we believe are most strategically and financially valuable and continue to explore potential partnerships and collaborations. Wrapping up, we are pleased with the company's strategic progress and improved operating discipline. Given the current operating environment, We are being prudent in our planning and project prioritization while remaining incredibly optimistic about the future of the company and our ability to help people access, understand and benefit from the Unum genome.

Speaker 4

With that, let's open it up to questions.

Operator

And the first question that we have today will be coming from Steve Ma of TD Power. Your line is open.

Speaker 5

Great. Can you guys hear me?

Operator

We can.

Speaker 6

Hello? Yes. Oh, hi. Yes.

Speaker 5

Okay. Great. Yes, sorry. Apologies for the background noise. Could you comment on the and this is a question from her.

Speaker 5

I know it kind of came across the wire. Could you comment on your recent interview you gave On the consideration of splitting the consumer and therapeutics business, how would that look? Would it be Now the therapeutics business into a private company with external financing or some other structure, how should we think about that?

Speaker 7

Yes. So if we've said this before that we are definitely pursuing and exploring all different options for being able to fund progress going forward on the therapeutic side. So as you know, discovering and developing drugs is expensive. So if you look at where we are with the Phase 2 program with P06 and just initiating P014 into the clinic as well as a very robust pipeline behind it that's going to require capital. So we have not made any definitive decisions about what we are going to do, but there is definitely opportunities and things that we are exploring with Potentially having therapeutics be independent versus consumer, these are all just ideas that we are exploring right now.

Speaker 7

There is nothing definitive, But it is opportunities that we're considering about what's going to be the best way to make consumer successful in the therapeutics group.

Speaker 5

Okay, thanks. I appreciate the color. And with regards to 1473, you still on track to initiate Phase 1 clinical trials in the first half of this year?

Speaker 7

Yes. I have Jennifer Lowe here as well if you want further questions. But yes, we are on track for that.

Speaker 5

Okay, got it. Okay. I'll get back in the queue. Thanks.

Speaker 7

Okay, great. Thanks.

Operator

Thank you. One moment for our next question. And our next question comes from David Lebowitz of Citi. Your line is open.

Speaker 3

Hi, guys. John on for David. Thanks for taking my questions. Got a few on our end. So building off of that report in Bloomberg about the potential split between the consumer business and the therapeutics business.

Speaker 3

Just want to dive into that a little bit more if you guys don't mind. When thinking about potential applications as it relates to the different segments in your business, you have a consumer business, tech business and a biotech business basically all in one. I guess, can you just again talk to the implications as it relates to maybe expanding your investor base and better teasing out the individual value of the components within your business?

Speaker 7

Sorry, do you want to repeat the core part of the question?

Speaker 3

Sure, sure. Just as it relates to potential spin out, can you talk about the potential implications as it relates to expanding your investor base and potentially better teasing out the value of the individual components of your business?

Speaker 7

Yes. I mean, look, I think that you again, you deal with you interact with different investors all the time and you recognize that people have very specific mandates. So there are some investors who are only looking at biotech and some investors that are only looking at consumer and others that are focused on AI. And you are absolutely right that we are an unusual company and that we have all of that. We have a very robust consumer business.

Speaker 7

We have a very robust Research database business and we have a very robust therapeutics business. So that has definitely been brought to our attention that there's a number of different businesses within this and what's the best way to make sure that we're maximizing value.

Speaker 3

Got it. Okay. That makes sense. And then one on the product launch. With respect to Total Health, can you just walk us through some of your key learnings from the soft launch over the holidays and how you plan to use that experience to inform your rollout going forward?

Speaker 7

Yes. Total Health I think Total Health has an incredible potential. And where we look at that really Taking off is in the world of self pay preventive care. I guess the market that I think does not People want it and it doesn't really exist right now. So total health right now goes in the line up, if you look on the website, it goes in the line up with Other tests, you have Ancestry, you have Health and Ancestry, you have Health and Ancestry Plus and you have Total Health.

Speaker 7

What we're really offering here is care. Like it's an opportunity to engage with a clinical product that or clinicians, healthcare providers that are looking all across your genome and really thinking thoughtfully about how can you leverage your genetic information, your blood information, your wearables, your lifestyle, your family history, your medical records to think about a true preventive care plan. So it's a real we've soft launched it really with knowing that there's going to be an early market of people who just want an exome, But the product is a very different type of experience and I think that's more and more what you can imagine us doing with Total Health is being able to help people not just get access to this information, but to leverage it and integrate it into their life.

Speaker 3

Okay. No, that's helpful. Thank you. And then One more, one last one, just on your new drug candidate, 1473, targeting ULB P6. Can you just talk a little bit more about the target, like how it was determined, if there are any other therapies going after UOB P6 and If there's any clinical data that you're aware of that has helped to validate or do you risk the target?

Speaker 7

Yes. Let me point you over to Jennifer Lowe. Hi. The UOBP6 target was one of those that has been identified through our genetic database. It's the premise of how we've been discovering potential targets at 23 andMe Therapeutics and this was right along that lane.

Speaker 7

And we're really interested in this because it highlights a different way of approaching immune cells to attack cancer. And there are a lot of different other modalities out there right now that are activating NK cells or trying to co opt NK cells. We believe that our new drug that we're bringing into the clinic addresses a lot of shortcomings of other programs. And so this is a dual mechanism antibody that has monoclonal antibody like half life. It should be tolerated, it should really provide a novel way of activating NK cells and address an unmet need.

Speaker 3

Got it. And then just to the last part, I'm sorry if I missed that. Did you say If there's any clinical data that you're aware of that has helped to validate or derisk it?

Speaker 7

There are other programs that are also looking at the NK pathway, but we have a lot of reasons to believe that this is a better way of addressing, the issues that have plagued, certain other program.

Speaker 4

Okay, got it.

Speaker 7

We are very aware of the competition, but we really think that this is a novel and better way of addressing end case cell activation.

Speaker 3

Okay, great. Thanks for the questions.

Operator

And we have a follow-up from Steven Ma of TD Hi,

Speaker 5

great. Thanks for taking the additional question. Dan, apologies again for the noise up back here. Maybe just digging in a little bit more on the Total Health launch. Maybe give us some color on how that's going?

Speaker 5

How you guys are measuring internally the success of that launch? And then, yeah, if there's any learnings that could be instructive to the launch into the existing customers, which I believe it's slated for the spring.

Speaker 7

Yes. We're not giving much on total health. I think that more and more just It's the first real integration with Lemonade and being able to have on one system access to care, being able to order blood, being able to order medications at some point, being able all in one and all on the 23andme brand. So I think that is One of the big milestones for us, I think what you can also anticipate in the future is more and more how do we bring what we're learning from Total Health also to all of our existing customers. So the 14 +1000000 customers that we have, how is it that they can get a version of this type of care platform.

Speaker 7

So I think there's a lot that we've learned every time we have launched something new to customers. I think there's a fair amount that we can learn about What is it they want? How are they adopting? What's the right way to explain it to them? As I mentioned before, I think that this is It's a big shift for us to from just being a test where people are getting information and learning about themselves to where they are now getting that information, but we are helping them apply it.

Speaker 7

I also would just point to things like health tracks, as a way that it helps action plans as ways that we are looking more and more to be able to give you your genetic information, Your wearables, self report data, all into a score that helps you understand really where you are at on a risk curve for specific disease conditions. So I think more and more you can see us integrating lots of different data sets to give you something that is truly personalized towards you. And I think you can see us emphasizing more and more subscriptions, which we call membership, membership products that help people get affordable preventive care.

Speaker 5

Okay, that's helpful. And one more question. On the BDA effort and the BDA effort in terms of partnering

Operator

I would now like to turn the call back over to Ian for further questions.

Speaker 6

Thank you. Unless Stephen jumps back on, I will now read the top shareholder questions Our SAI Technologies Q and A platform. I'll probably go through 5 or 6 here. The first one, which is top of mind for shareholders is What is the plan to stay compliant with NASDAQ listing requirements?

Speaker 7

Yes. This is something that's obviously top of mind for us as well. We are actively monitoring markets, staying on top of it, in discussions, considering things like a reverse stock but also most importantly just continuing to execute on the business and showing and confirming shareholder value.

Speaker 6

Great. And sort of on that same shareholder value team, a big kind of the second Most popular question was what are you doing to increase the value of the company? I know we've talked about some of that stuff on the call, but maybe you can go ahead and reiterate.

Speaker 7

Yes. So 3 areas that I think are really key for people just to remember where we focus on value. So as I mentioned on the consumer side, We really focus on expanding the offerings we can provide to customers. So it's been very much a people buy our product And it is a one time sale. And we think about lots of opportunities where we can engage people to come back.

Speaker 7

We can provide true value for them in the world of preventive care. And we can also establish a truly viable membership business where our customers are returning value and it is a solid and stable recurring business model for the company. So that is number 1 and consumer and that is very much where we are focused this fiscal year. On research, Research is a fascinating area right now, particularly because of the incredible interest in the world of AI. And companies that are looking at how to really change their approach to drug discovery, it can start in many different ways, but the foundation is genetics, understanding human genetics, understanding how that translates to biology and how you can leverage genetic information to identify drug targets and be more efficient in the entire process.

Speaker 7

So we are very excited about the collaboration that we signed with, the partnership we signed with GSK, the opportunity to do more and for us to really be a leader in AI drug discovery. Last in therapeutics, it has been a long journey and in a very exciting journey, translating our data into novel therapeutics and I'm very excited about 1473 and potential and the opportunities in patients. So we look forward to updating you on 1473 as that progresses, But I am very inspired and excited about what we have been able to do with that translation of data into patients.

Speaker 6

Great. Thank you, Ann. Next one, what is the cost of the data breach? And what is the plan to increase data security and restore trust in the company? We've incurred $2,700,000 in expenses related to the data breach, or data in success cyber security incident.

Speaker 6

To date, we have also booked $1,000,000 in our financials and that you see in the 10 Q, as we actually booked $1,700,000 in anticipated insurance recoveries. We continue to invest in data security. We now require 2 factor authentication from all of our customers and we realized that our business really runs on the trust of our customers, right. It's what we hold in the highest regard. And we intended to doing this for a long time and continuing to drive innovation and using genetics to help people manage health risk and improve their health span.

Speaker 6

And for us, we're continuing to look at how we can continue to increase data security at 20 and

Speaker 7

And just to jump in there, I would say the company, it has been a top priority since we started this company, but data Security and privacy and transparency are core values for this company. So we have as Joe mentioned, we have instituted 2 factor authentication. It is core for us, a critical priority for us to be leading in privacy and you will see us continue be privacy leaders as we sort of enter into a new era of how people are thinking about all of this data.

Speaker 6

Great. Thank you. Next question, you touched on this a little Ann, but maybe we can dig into it a little further. AI is causing a new gold rush for quality data. You have some of the best quality data out there.

Speaker 6

Are you engaged with anyone specifically for AI use cases and how do you create value

Speaker 7

Yes. Honestly, it's a very exciting time because it is You've seen data transform all these other industries and you see it now coming fast and furious for the entire healthcare space. And is it particularly exciting for the world of drug discovery because drug discovery is so challenging and so expensive. So anything you can do that is going to make it more efficient and have a higher likelihood of success is going to really trickle down and have huge consequence, huge, huge benefit for the entire world. So we see a lot of opportunities for our data.

Speaker 7

We have the world's largest recontactable Genocyte, Genocyte database that is out there. It has been designed and set up since we started the company. It's been designed for research. So we have been engaging in research projects almost since the inception of this company. We have a tremendous amount of experience with translating that data in for therapeutics.

Speaker 7

So we are working on partnerships that want to mine the data and leverage it. There's all kinds of varying abilities in the industry of people who are very familiar with AI models and that this could fit in with some of the work that they're already doing and then you get other groups that have different types of approaches of how they leverage genetics for drug discovery. It is a very exciting time. There's no doubt that having lots of data is going to be a foundation for therapeutic discovery in the future. We are also leveraging all this data for 23.

Speaker 7

Me internal research, meaning that we are translating that for customers, What are ways that we can leverage all of these insights and be world leaders in risk prediction? We're also doing a fair amount of work understanding how you can do DNA language models and how we can be best at predicting FINANCIAL targets, target identification for therapeutics. So there's a lot of great opportunities out there and we continue to stay on top of this industry.

Speaker 6

Excellent. So last one here for Joe. Can you address To the extent that you can anyway, how do you plan to

Speaker 1

move the business towards profitability?

Speaker 6

We've been pleased with the progress we've made to date over the past year and moving the business to profitability. It's really a 2 pronged effort, but the most important being driving our growth in both membership and research businesses to have ongoing recurring revenue. And we can also continue to look at how we can optimize our cost structure We really have a high bar for how we invest in the business in the near term. Great. That's it for us.

Operator

Thanks for joining us. This concludes today's conference call. Thank you for participating. You may now

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