Weekend Update #65

Mar 11

Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.

CPI soared to 7.9% year-over-year in February, reaching another 40-year high. While it came in line with expectations, the sanctions and trade restrictions stemming from the Ukraine and Russia conflicts have caused a spike in energy prices which will start to take effect in the March numbers. The NFIB Optimism Index also reported this week, decreasing by 1.4 points to 95.7, the second consecutive month below the 48-year average of 98. With inflation cited as the main concern for Americans, the Fed Committee is expected to announce rate hikes next week, which will likely continue to add pressure on the stock market. The S&P and Nasdaq are down 12% and 18% year-to-date respectively, while the VIX reached a 1 year high indicating the indexes may continue to push lower.

Thank you Blue Room Analyst NICK PEART

FY 2022 Earnings Expectations (via Bloomberg)

Revenue Estimate: $2,087.9 million (+43.7% year-over-year, compared to $1,453.0 million in FY 2021)
GAAP Net Income: $(60.5) million (+75.1% year-over-year, compared to $(243.3) million in FY 2021)
GAAP EPS: $(0.27) (+79.4% year-over-year, compared to $(1.31) in FY 2021)

FY 2022 Earnings Expectations — BR Estimate

Revenue Estimate: $2,086.0 million (+43.6% year-over-year, compared to $1,453.0 million in FY 2021)
GAAP Net Income: $(43.3) million (+82.2% year-over-year, compared to $(243.3) million in FY 2021)
GAAP EPS: $(0.22) (+83.2% year-over-year, compared to $(1.31) in FY 2021)

FY 2022 Actual Performance

Revenue: $2,107.2 million (beat; +45.0% year-over-year, compared to $1,453.0 million in FY 2021)
GAAP Net Income: $(70.0 million (miss; +71.2% year-over-year, compared to $(243.3) million in FY 2021)
GAAP EPS: $(0.36) (miss; +72.8% year-over-year, compared to $(1.31) in FY 2021)

Q4 2022 Earnings Expectations (via Bloomberg)

Revenue Estimate: $561.6 million (+30.3% year-over-year, compared to $430.9 million in Q4 2021)
GAAP Net Income: $(22.3) million (+69.2% year-over-year, compared to $(72.4) million in Q4 2021)
GAAP EPS: $(0.076) (+80.2% year-over-year, compared to $(0.38) in Q4 2021)

Q4 2022 Earnings Expectations — BR Estimate

Revenue Estimate: $559.6 million (+29.9% year-over-year, compared to $430.9 million in Q4 2021)
GAAP Net Income: $(3.81) million (+94.7% year-over-year, compared to $(72.4) million in Q4 2021)
GAAP EPS: $(0.02) (+95.0% year-over-year, compared to $(0.38) in Q4 2021)

Q4 2022 Actual Performance

Revenue: $580.8 million (beat; +34.8% year-over-year, compared to $430.9 million in Q4 2021)
GAAP Net Income: $(30.4) million (miss; +58.0% year-over-year, compared to $(72.4) million in Q4 2021)
GAAP EPS: $(0.15) (miss; +60.1% year-over-year, compared to $(0.38) in Q4 2021)

March 8, 2022 at 1:30 PM EST

Moderator: Max Masucci — Cowen

Speakers: Helmy Eltoukhy — Co-Chief Executive Officer

AmirAli Talasaz — Co-Chief Executive Officer

Michael Bell — Chief Financial Officer

——————

Question & Answer Session

We had an MRD monitoring panel and a screening panel yesterday. Taking into consideration the quality of biobank samples you used in the previous CRC studies, the design of the 2020 AACR study, the 2021 ASCO study, and the 2021 ACG study and how closely those populations are representative, how do those key factors play into your ability to reduce variability between the earlier CRC studies and ECLIPSE?

AmirAli Talasaz — Co-Chief Executive Officer

Very pleased with the data at different conferences
They processed samples from symptomatic to asymptomatic, late stage, early stage
Early stage asymptomatic patients is the toughest setting — they hope it is very close to what they will see in ECLIPSE
Those samples are representative
ECLIPSE will find some advance stage obviously, but the data looks pretty representative
High 80s/low 90s is the performance they’ve seen in the early stage asymptomatic cohort so far

We have a few factors that could allow you to have better alignment between the early studies and ECLIPSE. Wouldn’t that intuitively lead to less performance degradation than the 6% seen in DEEP-C a half decade ago?

AmirAli Talasaz — Co-Chief Executive Officer

Degradation is a function of the samples you process vs. the samples you expect to get in prospective trials

All of the samples are prospectively collected but ran as a biobank cohort at the end
There’s nothing wrong with biobank data
The delta is how representative they are
Late stage or symptomatic are a few percent higher
They really focus on early stage asymptomatic
Data generated in 2012 in DEEP-C was from samples that got collected from symptomatic patients as well
You can expect some kind of delta between asymptomatic and symptomatic patients
Internally, Guardant doesn’t have any decay function built into their models

You’re enrolling patients aged 45 and older vs. DEEP-C at 50 and older. I would imagine that leads to a higher number of asymptomatic early stage patients. How does the enrollment age factor into the mix of cancer stages you might see in the final readout and the performance for each cancer stage?
AmirAli Talasaz — Co-Chief Executive Officer

Excited about the vision of the team to include this age group into ECLIPSE early on
They wanted to make sure the study would get 45+ when they thought CRC screening guidelines would be changing
This age group is still new to screening and the compliance is not great
Across 13,000 patients enrolled by December, the patients enrolled at 45-49 were in the few hundreds
It was a tiny percentage because CRC screening is new for them and a lack of compliance
Hopefully the device readout will be positive
There probably won’t be a delta because this is a small portion of the enrolled patients

Earlier this year, we asked you about the role of advanced imaging. I think your belief is that it will play a role and that its importance will likely vary across different tests. Do you see advanced imaging playing a bigger role around individual screening types?

AmirAli Talasaz — Co-Chief Executive Officer

Thinking about the future for different oncology applications, Guardant believes blood based screening will be the centerpiece
- Based on what they see
- But it will not be the only piece
The cancer journey doesn’t start and stop with just blood tests
To ensure patients are compliant, the provider and patient experiences need to be smooth
Guardant is investing in a bunch of programs to make sure the whole workflow is as streamlined as possible from beginning to the end
Imaging is a modality that would remain for final diagnostic needs
- Colonoscopies, CT scans, abdomen scannings
- Those will remain in the workflow
Guardant is excited about a bunch of activities — both internally and in partnership
Partnerships with radiology AI companies
Guardant did a strategic investment in Lunit — a frontline AI player
One day, basically the whole workflow will get streamlined for a patient
- That will be a big differentiator for Guardant
When they get to a more mature state, they’ll talk about it more

2021 Fourth Quarter and Full-Year Earnings Results: February 24, 2022

2021 Q4 Consensus Earnings Estimates:

Revenue: $ 6.78 billion

EPS: $ 9.90

Earnings Press Release | Earnings Webcast | Earnings Presentation

Q4 2021 Actual Earnings:

Revenue: $ 7.21 billion

EPS: $ 12.03

2021 Year End Earnings

Revenue: $18.47 billion

EPS: $28.29

2021 Revenue Breakdown

Product Sales: $ 17.675 billion (95% of net revenue)

Grant Revenue: $ 0.735 billion

Collaboration Revenue: $ 0.061 billion

Cash and Cash Equivalents as of December 31, 2021: 17.570 billion

First Majestic FY 2021 and Q4 2021 Earnings Summary

FY 2021 Earnings Expectations (via Bloomberg)

Revenue Estimate: $580.0 million (+59.4% year-over-year, compared to $363.9 million in FY 2020)

GAAP Net Income: $16.997 million (-26.4% year-over-year, compared to $23.1 million in FY 2020)

GAAP EPS: $0.079 (-12.2% year-over-year, compared to $0.09 in FY 2020)

FY 2021 Actual Performance

Revenue: $584.1 million (beat; +60.5% year-over-year, compared to $363.9 million in FY 2020)

GAAP Net Income: $(4.923) million (miss; -121.3% year-over-year, compared to $23.1 million in FY 2020)

GAAP EPS: $(0.02) (miss; -122.4% year-over-year, compared to $0.09 in FY 2020)

March 7, 2022 at 9:50 AM EST

Moderator: Dan Brennan — Cowen

Speakers: Kevin Conroy — Chief Executive Officer, President & Chairman

Jeff Elliott — EVP, Chief Financial Officer & Chief Operating Officer

——————

Question & Answer Session

The next few years will be quite exciting for Exact Sciences — New product launches, readouts, growth drivers. What’s the right way to think about the investment thesis for Exact Sciences today?

Kevin Conroy — Chief Executive Officer, President & Chairman

This is a tremendously exciting time for Exact Sciences
Many previous investments are about to pay off in a major way
More data readouts in the next 18 months than in Exact’s history
Exact Sciences has the best 2 brands in cancer diagnostics: Cologuard and Oncotype DX
- Growth drivers, strong margin profiles, meeting important patient needs
- Both have long runways to gain broader adoption in the U.S. and globally
The core business can continue to grow
Science that fuels the company — in partnership with Mayo Clinic, Johns Hopkins, and City of Hope
- That science gives a broad array of tests to bring to patients
- Built that technology in a very methodical way over the past 10 years
The most important thing is that this is all about the patient
New, innovative ways to screen and guide cancer treatment
Detecting cancer earlier can prevent cancer
Exact is in the position to do this with the largest commercial organization in diagnostics, bar none
Importantly, Exact has $1 billion on the balance sheet
The company is in the position to achieve profitability without any new dilution in equity issue or convert, “come hell or high water”
Expect to be cash flow positive before 2024
- Then, for FY 2024, Exact will generate cash
They expect this to improve more over time

What role does M&A play in the strategic plan for Exact? You’ve done the Thrive deal, smaller deals, a transaction with Pfizer. What types of transactions make sense?

Kevin Conroy — Chief Executive Officer, President & Chairman

Exact looks for smart deals across a range of different opportunities
Biomatrica — acquired that company 3 or 4 years ago
- They have a blood tube, blood preservation chemistry
Exact’s tube is able to preserve twice as much plasma as the Streck tube, the industry standard
That will increase the performance of Exact’s blood-based test
Deals like Biomatrica that advance science or deals that enhance commercial capabilities
Thrive advanced both the science and the commercial capability
Thrive allowed multi-cancer test sooner than Exact could have done on their own
- This creates value for investors and patients over time
A lot on Exact’s plate right now
Focus is on growing Cologuard and Oncotype DX as well as delivering on pipeline promises
Exact will continue to look at opportunities to impact patients in a positive way

2021 Fourth Quarter and Full-Year Earnings Results: March 8, 2022

Revenue: $ 209.92 million

EPS: $ 0.10

Earnings Press Release | Earnings Webcast

Q4 2021 Actual Earnings:

Revenue: $ 150.5 million

EPS: $ (0.08)

Bumble App ARPU: $ 30.57

Badoo App and Others ARPU: $ 13.33

Total ARPU: $ 22.83

Full Year 2021 Financials:

Revenue: $765.660 (+32% year-over-year)

Diluted EPS: $ 1.48

Bumble App ARPU: $ 29.61 (+12.6% year-over-year)

Badoo App and Others ARPU: $ 13.16 (+3.7% year-over-year)

Total ARPU: $ 21.68 (+15.3% year-over-year)

Cash and Cash Equivalents as of Dec. 31, 2021: $369.175 million

Vimeo | BLUE ROOM

March 17, 2022 BLUE ROOM Meeting Number 79

Dear Blue Room,
__________

Thursday
March 17, 2022
12 PM

Happy St. Patrick's Day!
__________

BLUE ROOM FUND ONE Launched and Is Trading!

Agenda:Blue Room Research Team provides a quick 2 minute update on what they are working on and other intellectually delectable nuggets.

Icebreaker:What is the luckiest thing that has happened to you?

A
R
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Dyani White Hawk: Speaking to Relatives

-and-

Eamon Ore-Giron: Competing With Lightning/Rivalizando con el Relámpago

Visit MCA Denver to take in these two exhibitions running through May 22nd: Dyani White Hawk: Speaking to Relatives and Eamon Ore-Giron: Competing With Lightning/Rivalizando con el Relámpago. The exhibitions feature new and recent works by the artists that recontextualize abstraction within a more expansive legacy of artistic creativity in the Americas.

TICKETS