Thread by @sbarnettARK

@TerraPharma1 @hiddensmallcaps Apologies for the incoming Tweet storm . . .

@TerraPharma1 @hiddensmallcaps Here are some of my thoughts on the Personalis <> Natera tie-up. This is mostly a tech-focused breakdown, so not a recommendation to buy, sell, or hold any security: (bit.do/eyRo8)

First, a bit of background on the details and opinions scattered throughout . . .

@TerraPharma1 @hiddensmallcaps Historically, Personalis has focused entirely on serving the biopharma market. These customers aren't as price-sensitive and they have an insatiable appetite for novel discoveries. In our view, Personalis' NeXT platform is a great biopharma product-market fit. Why? . . .

@TerraPharma1 @hiddensmallcaps NeXT goes way beyond standard exome (~20,000 genes) testing, incorporating years of know-how, trade, secrets, and IP that spans the gambit from biochemistry to bioinformatics. The goal is to extract the most high-quality data from fragile, degraded samples like tumor tissue.

@TerraPharma1 @hiddensmallcaps Nowadays (and in the future) investors and patients alike may be bombarded w/ marketing masquerading as science. "Our assay sequences the most genes!" "Our assay has higher coverage!" Great, what have you done for me lately? This is one reason why we like the NeXT platform.

@TerraPharma1 @hiddensmallcaps If you haven't, I'd recommend reading about just some of the advancements they discuss here:

personalis.com/technology/#Ad…

@TerraPharma1 @hiddensmallcaps Switching gears, recall that Natera is highly experienced w/ cell-free DNA, but doesn't have the same experience w/ tumor tissue, which is required for Signatera as it is a personalized test calibrated on a patient's tumor. Now, it seems Natera is letting Personalis handle . . .

@TerraPharma1 @hiddensmallcaps . . . the tissue half of its Signatera test. I can only speculate why Natera judged it in its best interest to discontinue (?) running tissue in-house and letting Personalis handle it. We've outlined the NeXT platform, so 'why Personalis' isn't the main head-scratcher for me . .

@TerraPharma1 @hiddensmallcaps Maybe Natera was/is running into snags w/ the tissue side of Signatera? Maybe they are running into challenges with their own tech surfacing enough markers to track in blood? If you can't reliably pull trackable variants from tissue, a personalized MRD test is moot.

@TerraPharma1 @hiddensmallcaps Bottom line, I think it's good from an analytical standpoint. Signatera's performance likely will improve by including one of the most sophisticated (in our opinion) tissue sequencing platforms, though indeed it is expensive to run at scale given the current design.

@TerraPharma1 @hiddensmallcaps Logistically and strategically, I'm less convinced of the tie-up, but very open to hearing other opinions. First, I'm guessing Signatera now will be split between two labs/companies, which adds workflow complexity. Tissue would be sent to Personalis, then run on NeXT to . . .

@TerraPharma1 @hiddensmallcaps . . . generate a set of trackable mutations, then the variant set would need to be sent to Natera (or its reagent provider) to custom-build primers for blood-based MRD testing, which would then need to be processed at Natera's lab, where the patient's blood is being sent.

@TerraPharma1 @hiddensmallcaps I'm unsure how this complicates medical coding/billing/claims, but anecdotally I've seen this snowball into a logistical headache for co's as they've acquired or partnered with other labs to run critical assays. We should see if this changes turnaround time as well, which . . .

@TerraPharma1 @hiddensmallcaps . . . already is a concern w/ personalized tests over off-the-shelf, 'tumor-naive' MRD assays in development by others. At the margin, maybe Natera believes these challenges will be muted by the added analytical sensitivity that NeXT provides. If that's the case, then . . .

@TerraPharma1 @hiddensmallcaps . . . it makes sense to be extra-careful evaluating tissue expertise from companies engaged in mutation-based, personalized MRD testing.

Lightning round! Personalis probably benefits from Natera's onco salesforce, though I wonder what happens when Personalis launches its . . .

@TerraPharma1 @hiddensmallcaps . . . own clinical MRD test. Wouldn't NeXT (Tissue+Liquid), run entirely under one roof, perform better than one stretched out over two labs w/ different IP? If so, would people even believe that? Ostensibly, once launched, these two companies would compete here.

@TerraPharma1 @hiddensmallcaps I suppose Personalis gets additional volume in the door too, possibly increasing capacity utilization and back-stopping margins (though it's no secret they already run an expensive workflow). It's a non-exclusive agreement, so maybe this could be a harbinger for other deals. END