- Needham has upgraded Personalis Inc PSNL to Buy from Hold with a price target of $8.
- The analyst writes that Personalis's cash burn has likely peaked and expects it to decline steadily over the next few years.
- Needham writes that PSNL used $41 million of cash in 3Q22, up from $33 million in 2Q22, and a significant portion of its new facility expenses ($38 million in 2022) fell into 3Q22.
- The company used $121 million in 2022, up from $78 million in 2021 (down from its initial expectation of $140 million) and $45 million in 2020.
- Management had expected the cash burn to be less than $85 million in 2023, but recent steps to reduce operating expenses (including reducing its headcount by 30%) are expected to reduce its operating expenses by $17 million in 2023.
- The analyst models $62 million of cash burn in 2023.
- The analyst is also encouraged by the strength of the biopharma business, which has sustained 50% Y/Y growth for eight consecutive quarters through 3Q22 as customers increase engagement with the NeXT platform.
- Earlier this month, Personalis signed a new agreement to continue using the Personalis NeXT Platform as part of upcoming clinical studies of mRNA-4157/V940, an investigational personalized cancer vaccine jointly developed by Moderna Inc MRNA and Merck & Co Inc MRK.
- The deal could generate a material amount of revenue for PSNL, and demonstrate PSNL's traction with biopharma customers, writes the analyst.
- Price Action: PSNL shares are up 7.179% at $4.18 on the last check Monday.
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