Molecular Cytology That Transforms Patient Care. William Blair 35 th Annual Growth Stock Conference June 9, 2015

Transcription

1 Molecular Cytology That Transforms Patient Care William Blair 35 th Annual Growth Stock Conference June 9, 2015

2 Forward-Looking Statements Various remarks that we make in this presentation that are not historical, including those about our business strategy and goals, future plans and prospects, growth opportunities, drivers of our business, the size of potential addressable markets, international expansion plans and future products and product pipeline, constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. These risks and uncertainties include, but are not limited to: our limited operating history; our ability to increase usage of and reimbursement for Afirma and any future products we may develop or sell, including our Percepta bronchial genomic classifier for lung cancer; our dependence on a few payers for a significant portion of our revenue; risks associated with new laws and regulations, including regulation of our tests by the FDA; our ability to attract and retain key personnel; our ability to develop and commercialize new products and the timing of commercialization; the timing, results and applicability of clinical study results to actual outcomes; our ability to raise capital as needed; our ability to successfully commercialize our Percepta test; our ability to commercialize other pulmonology products and the other risks set forth under the heading Risk Factors in our filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. We disclaim any obligation to update these forward-looking statements. ***** Veracyte, Afirma, Percepta, the Veracyte logo and Afirma logo are trademarks or registered trademarks of Veracyte, Inc. This presentation also contains trademarks and trade names that are the property of their respective owners. / 2 / 2015 Veracyte, Inc. All rights reserved.

3 Diagnostic Ambiguity: A Significant Healthcare Issue AMBIGUOUS DIAGNOSIS HUNDREDS of THOUSANDS of Unnecessary, Invasive Procedures $ BILLIONS of Healthcare Dollars Wasted / 3 / 2015 Veracyte, Inc. All rights reserved.

4 Veracyte: Using Molecular Cytology to Resolve Diagnostic Ambiguity ENDOCRINOLOGY PULMONOLOGY Thyroid Cancer (Commercialized) Esophagus Breast Skin Liver Lung Cancer (Commercialized) Pancreas Kidney Bladder Prostate Idiopathic Pulmonary Fibrosis (IPF) Ovary Testicular Endometrium / 4 / 2015 Veracyte, Inc. All rights reserved.

5 Deep Pipeline with Multiple Near-Term Milestones GENOMIC SIGNATURE DISCOVERY PRODUCT DEVELOPMENT CLINICAL VALIDATION COMMERCIAL U.S. INTERNATIONAL EXPANSION ENDOCRINOLOGY Afirma Thyroid Cancer 2015 Afirma Malignancy Classifiers PULMONOLOGY Percepta Lung Cancer Idiopathic Pulmonary Fibrosis U.S. Launch Estimated / 5 / 2015 Veracyte, Inc. All rights reserved.

6 Large, Expanding Addressable Genomic Testing Markets MORE THAN DOUBLING with New Product Launches over Next Two Years ~$2B ~$0.8B Thyroid Lung Cancer IPF / 6 / 2015 Veracyte, Inc. All rights reserved.

7 We re Setting New Standards COMMERCIALIZED Afirma through Genzyme Partnership MEDICARE Coverage for Afirma within 1 Year of Commercialization LAUNCHED 1 st Test within 3 Years of Founding GUIDELINES Inclusion within 2 Years of Commercialization 150 MILLION Covered Lives for Afirma ~100 MILLION Contracted Lives for Afirma ACQUISITION of Allegro Diagnostics September 2014 LAUNCHED Percepta April 2015 / 7 / 2015 Veracyte, Inc. All rights reserved.

8 Continued Afirma Revenue and GEC Test Volume Growth Revenue Afirma GEC Test Volume $7.5M $11.2M 3, % +30% 4,020 Q Q Q Q SIGNIFICANT IN-NETWORK CONTRACTS Medicare / 8 / 2015 Veracyte, Inc. All rights reserved.

9 An Attractive Investment Thesis LARGE MARKETS Near Term $2B Opportunity in Multiple Specialty Markets PROVEN MODEL Unique Molecular Cytology Model Focused on Delivering Clinical Utility GROWING FRANCHISE Successful Execution in Thyroid; Expanding into Lung ATTRACTIVE FINANCIALS Efficient Commercialization and Reimbursement, Growing Revenue and Margins STRONG TEAM Deep Expertise in R&D, Commercialization, and Reimbursement / 9 / 2015 Veracyte, Inc. All rights reserved.

10 Proven Model for Efficiently Building Additional Franchises DIFFERENTIATED STRATEGY PROPRIETARY SCIENCE CLEAR VALUE SUCCESSFUL REIMBURSEMENT Inform a Specific, Uniquely Apply Clinical Utility and Published Evidence Relevant Question Whole Genome Economic Value Drives Clinical at the Right Point in Biomarker Discovery that Changes the Guidelines and the Clinical Pathway and Algorithms to Standard of Care Positive Coverage Cytology Samples / 10 / 2015 Veracyte, Inc. All rights reserved.

11 Thyroid Diagnostic Solutions COMMERCIALIZED LAUNCHED MAY 2014 Gene Expression Classifier (GEC) Malignancy Classifiers (MTC and BRAF) Reducing Unnecessary Thyroid Surgeries and Lowering Healthcare Costs Pre-Operatively Informing the Choice of Thyroid Surgery When Surgery Is Needed / 11 / 2015 Veracyte, Inc. All rights reserved.

12 DIFFERENTIATED STRATEGY: Focused on the Right Point in the Clinical Pathway for Thyroid Nodule Assessment 525,000 FNAs per Year Cytopathology 5-8% Non-Diagnostic 60-75% Benign 15-30% Indeterminate 3-6% Malignant Without Afirma (74%) Surgery Repeat FNA 5-8% Risk of Malignancy Follow with Watchful Waiting Malignancy Classifiers Inform Thyroid Surgery 100,000+ FNAs GEC Benign (~5% Risk of Malignancy) GEC GEC Suspicious (~40% Risk of Malignancy) ~50% Benign / 12 / 2015 Veracyte, Inc. All rights reserved.

13 PROPRIETARY SCIENCE: Entire Genome Explored to Identify Gene Signature FEASIBILITY DEVELOPMENT VALIDATION Whole Genome Discovery Custom Chip with 3,000 Thyroid Genes Final 142 Genes + Locked Algorithm Number of Genes All Human Genes 3,000 Genes 142 Genes ISSUED PATENTS Sept 2013: U.S. 8,541,170 March 2014: U.S. 8,669,057 April 2014: GB June 2014: GB Nov 2014: GB / 13 / 2015 Veracyte, Inc. All rights reserved.

14 PROPRIETARY SCIENCE: Proven Clinical Validity AFIRMA GEC Clinical Validation Study Published in The New England Journal of Medicine (August 2012) Prospective, Multi-Center, Double-Blinded Study - 49 Sites, 4,812 FNAs >94% NPV When It Identifies Benign Nodules Among Those Deemed Indeterminate by Cytopathology CONCLUSION Findings May Enable Physicians to Replace Surgery with Routine Monitoring for Patients with a Benign Afirma GEC Result / 14 / 2015 Veracyte, Inc. All rights reserved.

15 CLEAR VALUE: Afirma Delivers Strong Clinical Utility and Measureable Economic Value Diagnostic Clarity WITHOUT SURGERY 50% Reduction in Surgeries 80% Reduction in Time to Diagnosis 70% Reduction in Cost to Diagnosis PATIENTS Reduce Unnecessary Surgeries ~50,000 Surgeries Potentially Avoided Annually PHYSICIANS Make More Informed Treatment Decisions, Earlier 14 Days Instead of Days PAYERS Lower Healthcare Costs $500 Million in Direct Medical Savings Over 5 Years Source: Li H, et al. J Clin Endocrinol Metab. 2011; Duick DS, et al. Thyroid 2012 / 15 / 2015 Veracyte, Inc. All rights reserved.

16 SUCCESSFUL REIMBURSEMENT: Published Evidence Drives Guidelines and Positive Coverage Published Evidence Guidelines 150 Million Covered Lives ~100 Million Contracted Lives Clinical Validation Chudova D, et al. JCEM 2010 Alexander E, et al. NEJM 2012 Analytical Verification Walsh PS, et al. JCEM 2012 Clinical Utility Duick D, et al. Thyroid 2012 Alexander E, et al. JCEM 2014 Angell T, Alexander E. US Endo Cost-Effectiveness and Quality of Life Li H, et al. JCEM 2011 Duick D, et al. Thyroid 2012 Recent Reviews Ali S, et al. PLoS Currents 2013 Xing M, et al. Lancet 2013 Ward L, Kloos R. Arq Bras Endo Metab National Comprehensive Cancer Network (NCCN) Published 2013, Updated 2014 UpToDate Evidence-Based Clinical Decision Support Resource of Physicians Published 2013, Updated 2014 American Thyroid Association (ATA) Preliminary Guidelines 2014 American Association of Clinical Endocrinology (AACE) Guideline Update in Process Medicare Several Blues Plans including: / 16 / 2015 Veracyte, Inc. All rights reserved.

17 Continued Afirma GEC Volume Growth: Attractive Opportunities in the Institutional Segment Afirma GEC Test Volume FNAs Performed Annually (U.S.) 4,500 Over 35,000 GEC Tests Performed 4,000 30% Growth 3,500 3,000 2,500 2,000 60% in Office (Ambulatory) 40% in Institutions 1,500 1, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q ~20% MARKET SHARE Continued Growth and Adoption by Physicians ~10% MARKET SHARE Higher Margin Opportunity Source: Veracyte / 17 / 2015 Veracyte, Inc. All rights reserved.

18 Sales Force Is Positioned for Continued Afirma Growth SCALE Grew Veracyte Sales Force from 8 to 26 in 2014 Continued Leverage with Genzyme Sales Force Expanded Marketing Campaigns, Physician and Patient Awareness Initiatives Number of Reps VP Sales Regional Director Institution Channel Manager Endocrine Prod Specialist Genzyme FOCUS Fully Dedicated Team, Transaction Oriented Process Positioned to Target the Institutional Opportunity Genzyme Will Focus Efforts on Lead Development and Account Maintenance EFFICIENCY Continued New Account Penetration Deeper Selling into Institutions Growth in GEC Test Volume % 15% % Rev to Genzyme / 18 / 2015 Veracyte, Inc. All rights reserved.

19 Pulmonary Diagnostic Solutions U.S. LAUNCH APRIL 2015 U.S. LAUNCH Interstitial Lung Diseases Improving the Diagnosis of Lung Cancer without Surgery Improving the Diagnosis of IPF without Surgery 1 Estimated / 19 / 2015 Veracyte, Inc. All rights reserved.

20 DIFFERENTIATED STRATEGY: Focused on the Right Point in the Clinical Pathway for Lung Cancer CT Scan Reveals Lung Nodule Bronchoscopy 250,000 per Year Likely Malignant ~100,000 Non-diagnostic Low Risk CT Surveillance in Lieu of Surgery OUR OPPORTUNITY Moderate to High Risk / 20 / 2015 Veracyte, Inc. All rights reserved.

21 Clinical Dilemma Each year in the United States, 100,000 bronchoscopies to diagnose lung cancer yield inconclusive results Next steps are not always clear Monitor with CT surveillance? Refer for invasive procedure? The number of bronchoscopies including those where no malignancy is found is expected to increase substantially as lung cancer screening increases / 21 / 2015 Veracyte, Inc. All rights reserved.

22 PROPRIETARY SCIENCE: Innovative Field of Injury Genomic Technology Peripheral Lung Nodules Are Difficult to Biopsy, Yielding High Rates of Non-Diagnostic Bronchoscopies Smoking Alters the Epithelial Cell Gene Expression throughout the Airway A Gene Signature of a Cytology Sample Collected from the Airway Can Determine Cancer Risk in a Peripheral Lung Nodule Determining Who Is at Low Risk of Cancer WITHOUT Surgery or a Sample From the Nodule or Lesion Directly / 22 / 2015 Veracyte, Inc. All rights reserved.

23 PROPRIETARY SCIENCE: Thyroid Development Process Replicated for Lung Cancer Program We Are Here Whole Genome Discovery and Algorithm Development BRONCHIAL BRUSHINGS Training Set n=299 Affymetrix GeneST Array Supervised Learning Exploiting the Field of Injury 23 Genes Logistic Regression Classification Algorithm Two Clinical Validation Studies PROSPECTIVE Bronchial Brushing Samples - AEGIS I (n=298) - AEGIS II (n=341) Performance Shows High NPV >90% Support with Robust Clinical Evidence Published AEGIS I and II CLINICAL VALIDATION STUDIES Performed ANALYTICAL VERIFICATION Studies to Transfer Test to CLIA Lab Initiate CLINICAL UTILITY and COST - EFFECTIVENESS STUDIES / 23 / 2015 Veracyte, Inc. All rights reserved.

24 PROVEN CLINICAL VALIDITY PERCEPTA BRONCHIAL GENOMIC CLASSIFIER Clinical Validation Studies Published May 2015 Prospective, Multi-Center Studies - 28 Sites, 639 Patients (298 in AEGIS I and 341 in AEGIS II) 91% NPV in patients for whom there is the greatest uncertainty of cancer status* 89% Sensitivity 47% Specificity Improves diagnostic performance of bronchoscopy for the detection of cancer * Assessed pre-bronchoscopy as intermediate risk (10-60%) patients CONCLUSION Identifies Patients at Low Risk for Lung Cancer Following Inconclusive Bronchoscopy and Who Can Avoid Unnecessary Invasive Procedures / 24 / 2015 Veracyte, Inc. All rights reserved.

25 The Roadmap to Percepta Coverage and Reimbursement On Track for Successful Commercialization Addressing a specific and compelling unmet clinical need Backed by proprietary and scientific foundation Analytical verification studies complete Two prospective, multi-center and blinded validation studies AEGIS I and II - published in The New England Journal of Medicine Study on Derivation of Percepta published in BMC Medical Genomics Early adoption with top thoughtleaders in pulmonology Key Milestones Going Forward Additional published evidence including clinical utility and costeffectiveness Coverage and reimbursement anticipated in 2016 Broaden access to patients across the United States Meaningful revenue in 2017 / 25 / 2015 Veracyte, Inc. All rights reserved.

26 DIFFERENTIATED STRATEGY: Replacing Surgical Pathology with Transbronchial Biopsy Genomic Classifier K Patients Suspicious for ILD* (Including IPF) High Resolution CAT Scan (HRCT) Confident for IPF High False Positive Rate Incorrect Therapy, Delayed Therapy OR Inconsistent / Possible IPF Consider Diagnostic Surgery High Rate of Complications Costly, Invasive Procedure Genomic Results Replace Surgical Pathology Diagnostic Clarity WITH SURGERY Diagnostic Clarity WITHOUT SURGERY *U.S. and Europe / 27 / 2015 Veracyte, Inc. All rights reserved.

27 PROPRIETARY SCIENCE: Thyroid Development Process Replicated for IPF Program We Are Here Whole Genome Discovery and Algorithm Development SURGICAL TISSUE Banked ILD Surgical Tissues (n = 309) Local Clinical Diagnosis and Some with Expert Surgical Pathology Review MACHINE LEARNING ALGORITHMS Microarray and Deep RNA Sequencing Support Vector Machines Product Development and Clinical Validation PROSPECTIVE Bronchoscopy Sample Collection >25 Sites in United States and Europe Diagnoses by Expert Pathologist and MULTI- DISCIPLINARY TEAM (MDT) Further Assay and Algorithm Development Lock Test and Algorithm Support with Robust Clinical Evidence ANALYTICAL Verification Prospective, Multi-Center CLINICAL VALIDATION CLINICAL UTILITY and COST-EFFECTIVENESS Studies / 28 / 2015 Veracyte, Inc. All rights reserved.

28 Financial Highlights Afirma Commercial Success Strong Revenue, FNA and GEC Volume Growth Positioned to Achieve Afirma Profitability Reimbursement Rate Expansion Increase in Institutional Volume and Penetration Upside Potential from Percepta and Franchise Expansion CONTINUED SUCCESSFUL EXECUTION Strong Financial Position Over $65M Cash as of March 31, 2015 (pro forma for PIPE). Can Substantially Progress All 3 Products / 30 / 2015 Veracyte, Inc. All rights reserved.

29 Strong Revenue and Volume Trends $ Millions Afirma Revenue Afirma GEC Test Volume $ % Growth 4,500 30% Growth $10.0 4,000 3,500 $8.0 3,000 $6.0 2,500 2,000 $4.0 1,500 1,000 $ $0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q / 31 / 2015 Veracyte, Inc. All rights reserved.

30 Experienced Team with Track Record of Success BONNIE ANDERSON President and Chief Executive Officer SHELLY GUYER Chief Financial Officer JULIE A. BROOKS EVP, General Counsel and Secretary CHRISTOPHER M. HALL Chief Operating Officer GIULIA C. KENNEDY, PHD Chief Scientific Officer RICHARD T. KLOOS, MD J.A. THORSON Senior Medical Director, Endocrinology EVP, Corporate Strategy and Business Development / 33 / 2015 Veracyte, Inc. All rights reserved.

31 Execution for 2015: Corporate Milestones Afirma Market Penetration ~50% YoY GEC Test Volume Growth ~30% YoY FNA Samples Received Growth Publication of Final ATA Guidelines Expected in 2015 AACE Guidelines Expected in 2015 Additional Positive Coverage Decisions and In-Network Contracts Mid Year Commercial Launch of Lung Cancer Test Advance IPF Program Focus on Blues Publication of Two Validation Studies Including AEGIS I and II (New England Journal Medicine) AEGIS Data Presentation at May ATS Meeting Publication of Analytical Verification Studies Commencement of Patient Testing in CLIA- Certified Laboratory (April 2015) Initiation of Clinical Utility Studies Presentation of IPF Data on Bronchoscopy Biopsies at May ATS Meeting / 34 / 2015 Veracyte, Inc. All rights reserved.

32 Veracyte LARGE MARKETS GROWING FRANCHISE ATTRACTIVE FINANCIALS STRONG TEAM Proven Molecular Cytology Model / 35 / 2015 Veracyte, Inc. All rights reserved.

33 Molecular Cytology That Transforms Patient Care