Sophia Genetics SA

Sophia Genetics SA (NASDAQ: SOPH) is a Switzerland-based company engaged in the software publishing sector. The Company offer a cloud-based Software-as-a-Service platform - the SOPHiA DDM, which is data-driven medicine platform enabling insights from disparate, complex datasets to improve diagnosis, treatment, and drug development. The Company has offices in Switzerland, France and the United Kingdom and operates worldwide.

Recent Business and Financial Updates

• Q1 2024 Highlights
  • Consistent Operational Execution and Robust New Business Momentum: In the first quarter of 2024, the company demonstrated strong operational execution and robust momentum in securing new business. Revenue for the quarter increased by 13% to USD 15.8 million, compared to USD 14.0 million in Q1 2023. Adjusted operating loss improved by 13%, reducing to USD 14.1 million from USD 16.2 million in the same period last year. The company has reaffirmed its guidance for 2024, projecting revenue between USD 78 million and USD 81 million, representing a growth of 25% to 30%. Additionally, the adjusted gross margin is expected to increase by 50 basis points to between 72.5% and 72.7%, while the adjusted operating loss is anticipated to be between USD 45 million and USD 50 million, improving from USD 55.9 million in 2023.
  • Expansion of SOPHiA DDM™ Usage: The first quarter of 2024 saw a significant expansion in the use of SOPHiA DDM™ worldwide. The analysis volume reached approximately 84,000, and the number of core genomics customers increased to 463, up from 437 in Q1 2023. The company launched a new Liquid Biopsy application, MSK-ACCESS®, powered by SOPHiA DDM™, signing nine customers pre-launch, indicative of substantial market demand.
  • Commitment to Operational Excellence: The company maintained a strong focus on operational excellence, achieving a 13% year-over-year improvement in adjusted operating loss for Q1 2024. The adjusted gross margin remained above 70%, and the company reaffirmed its commitment to achieving adjusted operating profitability within the next two years. This focus on excellence is expected to drive continued improvements and operational efficiencies.
  • Accelerating Customer Adoption: The adoption of SOPHiA DDM™ accelerated with the addition of 27 new customers in Q1 2024, building on the 35 new customers signed in Q4. The U.S. market showed significant momentum, with a 34% year-over-year increase in analysis volume and a 27% growth in revenue. The company also expanded into three new countries, signing customers in Romania, Norway, and Nigeria, and secured its first customer in Africa as part of a collaboration with MSK and AstraZeneca. Additionally, traction was gained with the U.K.'s National Health Service (NHS) through new signings.
  • New Financing Agreement: A new five-year senior secured credit facility was established with Perceptive Advisors, providing access to up to USD 50 million in debt financing. The financing consists of an initial tranche of USD 15 million and an additional tranche of USD 35 million available for draw through March 2026.
• FY 2024 Financial Guidance
  • Revenue Growth: For FY 2024, the company projects revenue between USD 78 million and USD 81 million, reflecting a 25% to 30% year-over-year growth. This growth is driven by the acceleration of new customer logos into routine usage, growing demand for the Liquid Biopsy application MSK-ACCESS® powered by SOPHiA DDM™, and the strong performance of Solid Tumor applications such as HRD. Significant momentum in the U.S. market also contributes to this optimistic outlook.
  • Adjusted Gross Margin: The adjusted gross margin for FY 2024 is expected to improve by 50 basis points to between 72.5% and 72.7%, benefiting from economies of scale in cloud-based compute and storage costs, as well as favorable price capture in the latter half of the year.
  • Adjusted Operating Loss: The company anticipates an 11% to 19% improvement in adjusted operating loss, projecting a reduction to between USD 45 million and USD 50 million for FY 2024. This improvement is attributed to a continued focus on operational excellence, cost optimizations, and the effects of actions taken in the second half of 2023 to lower professional service fees and optimize public company costs.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands upward trending with value of 57.25, with expectations of a consolidation or an upward momentum. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given to Sophia Genetics SA (NASDAQ: SOPH) at the current market price of USD 5.02 as of May 30, 2024, at 08:15 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is May 30, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.