John West
`Carol Tillis
`Personalis Board meeting preview
`Tuesday, September 4, 2012 7:15:28 AM
`
`From:
`To:
`Subject:
`Date:
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`Hi Carol,
`
`Can you please send this with the slides this morning, as we discussed ?
`Please distribute your slides, the Solexa investor list, your financing scenarios and my Market
`Data slides.
`Rich & Christian are close on their slides and those will also likely be send-able this morning.
`I will complete my slides later today.
`
`Thanks,
`
`John
`
`Dear Jonathan, Rowan & Chris,
`
`Our Board meeting is tomorrow morning 9-11am, but I am sending this to give you a preview
`/ summary. You will also receive slides electronically today and printed Board books
`tomorrow. We will have some breakfast available at Personalis starting at 8:15am tomorrow
`in case it works for you to arrive early.
`
`Our biggest news is that our R&D team completed our prototype product on schedule at the
`end of August and we expect our first purchase order ($100k) in the next few days. It is from
`a group researching the genetic cause of a rare brain disease. We will sequence exomes from
`130 clinical samples and analyze them using our state of the art case/control software. We
`expect to complete the project by December. This is an example of our plan to begin revenue
`in the research market. We had actually planned to begin our beta testing with non-paid
`collaborations, but as we have included in-house sequencing of the samples, proposed that
`they pay our cost of the sequencing reagents. They have agreed to that and understand that,
`were this not a beta test, the price would be over $300k. As part of our development, we also
`completed an exercise of processing 25 whole genome data sets in 25 days, and a separate
`project using Stanford data from super-centenarians (> 110 years old).
`
`Other meetings we have held with prospective customers include researchers in ALS and
`Alzheimers, and the Genomic Medicine Institute at El Camino Hospital.
`
`As we can show you when you visit tomorrow, our labs are now up and operating. We have
`conducted sequencing runs on both our MiSeq and HiSeq instruments and have been pushing
`their limits (e.g. 500 base-pair single-reads and 2x300 paired-end reads). We have also filed
`formally for both CLIA & CAP accreditation and expect to complete those in the first half of
`next year. We are hearing increasing interest in CLIA sequencing for research applications,
`particularly in pharma, so we expect CLIA certification will be an advantage for us even
`before we offer anything for real clinical use. We have also begun planning development of
`our "Exome-Plus" product. It is intended to provide better accuracy and exome coverage than
`a standard exome, and using our proprietary database content, will also target key functional
`regions outside the exome. In discussions with prospective customers, we have found a lot of
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`interest in our ability to provide sequencing of their samples, in addition to the genome
`sequence analysis. They like our potential for fast turn-around time (Illumina and Complete
`Genomics are currently 3-4 months to deliver and many core labs are the same) and the fact
`that we offer exomes (neither Illumina nor Complete do). They also understand that if they
`have higher quality data going in to the analysis (in addition to better analysis) the overall
`result is likely to be much more reliable.
`
`Based on this customer feedback, we are proposing to pull in the purchase of our second
`HiSeq sequening instrument, originally planned for early next year, and will ask your approval
`of this (approx. $540k) CapEx item at the meeting. We anticipate that we can achieve
`reasonable margins on exome sequencing and on our Exome-Plus offering. We should do
`better than breakeven on fast-turnaround-time whole genomes (currently $10k from Illumina),
`so we can use this capacity to draw early customers, though that's not where we want to go
`longer term margin-wise. As a market benchmark, we note that exomes now represent 50% of
`all human sequence submissions to the US government database (SRA) and that percentage is
`increasing. Whole genomes (mostly very low coverage) are 20%. Full coverage whole
`genomes are still quite rare in the SRA. Long term, we expect whole genomes to take over,
`but it has already taken much longer for that to happen than expected and products like our
`Exome-Plus will bring more and more of the whole-genome advantage to the exome price
`category. When we do offer whole genomes, we expect that some of our Exome-Plus
`accuracy advantages will carry forward, letting us offer a differentiated whole genome
`sequencing service.
`
`Our message about DNA sequencing accuracy has also been reaching the FDA. After I
`presented at the Institute of Medicine (Washington, DC) in July, Elizabeth Mansfield of the
`FDA came up to me, commented on how positive what we are doing is, and invited me to
`attend a meeting they were co-sponsoring at NIST in August. I presented and met her again at
`the NIST meeting, and we have tentatively planned to make a Personalis presentation at the
`FDA late this year. Although our plans do not include any formal filings with the FDA in the
`near-term, I think it is important to be building their recognition.
`
`We have also begun mapping out some scenarios for a Series B financing in early 2013. Carol
`will circulate those. I have also put together a list of 44 former Solexa investors which will be
`provided as part of the Board meeting material. I would appreciate your input about their
`potential for this round. Several of them have already contacted me, having heard through the
`grapevine about the new company.
`
`On the theme of Big Data, we are expanding. Our in-house storage capacity is now above 300
`Tbytes. There are also now two groups proposing government funding for sequencing
`projects of a million whole genomes. The VA has already piloted their project and funding is
`being sought for a separate cancer-focused project. At about 0.5 Tbyte / genome, these
`projects together could use almost a zeta-byte (10 to the 18th bytes). While these will take a
`couple of years to ramp up, it does give an idea of the scale people are now considering.
`
`At 8/31, our cash level was about $500k above the projection of our July budget, and even
`further above the projection from our February budget. This is primarily due to hiring running
`slightly behind plan, as we have continued to be very selective. We have been growing, but
`just not quite at the rate originally projected.
`
`I have put together some slides with current market data and these will be circulated as part of
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`the Board meeting material. We will not have time to go through all of it at the meeting, but
`you may find it helpful background.
`
`I hope this gives you a helpful preview for the meeting, and I look forward to seeing you
`tomorrow.
`
`John West
`CEO
`Personalis, Inc.
`Cell : (408)836-5586
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`Personalis EX2084
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