Q1 2021 Seer Inc Earnings Call
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Good day and thank you for standing by welcome to see our first quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during that time, you wouldn't need to press star one on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker Carrie meant to do with Investor Relations.
Thank you.
Earlier today.
Released financial results for the quarter ending March 31 2021.
If you've not received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investor at Seer Dot bio.
Joining me today from Seer is Amit Birk, Dodd Chairman, Chief Executive Officer, and founder Amit hosted on President and Chief Operating Officer, and David Horn, Chief Financial Officer.
Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.
Statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appears on the section entitled forward looking statements in the press release issued today.
From a more complete list and description. Please see the risk factors section on the company's quarterly report on form 10-Q for the quarter ending March 31, 2021, and then this other filings.
With the Securities and Exchange Commission.
Except as required by law seer disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information and is accurate only as of the live broadcast May 10, 2021 with that I'd like to turn the call over to Amit.
Thanks Kerry.
We're making strong progress across all areas of our business our business strategy.
Adding to our talented team at <unk>.
Pending our commercial reach on broadening access to reported GAAP product suite.
We are enabling more researchers to undertake proteomics studies.
That'll be drive novel biological insight create and expand new market and ultimately improve human health.
To further drive this momentum we continue to be focused on four areas first.
Moving to pay for innovation in the proteomics space second leveraging the unique capabilities of our differentiated solutions third.
Coupling exceptional customer experience with transformative products and fourth forming strategic relationships with key customers and partners.
And of course, most importantly debt.
Foundation for all of this is predicated on continuing to grow on incredibly talented team.
Since we last updated you at the end of March we have continued to build on our strong start to the year.
Demand for the polio graft product suite is exceptionally strong and our value proposition is resonating with prospective customers across the globe.
We expect our message to amplify even more as we ramp up on marketing activities and scale our commercial organization.
Even with the strong market demand, we remain committed to a measured commercial approach and you will hear more about this from Amit.
With all four per ablation customers up and running we have commenced limited release by signing multiple customers since our last earning call.
We expect to have high single digit number of limited release customers before we commence a broad release.
We're on track to deliver against this objective.
These initial limited release customers also include plug gnomic, which is we spun out last fall and retained 19% ownership.
<unk> will be using the <unk> product suite for liquid biopsies across a range of applications, including early disease detection and protium genomics.
We believe <unk> can play a key role in demonstrating the impact of unbiased and deep plasma proteomics in these applications.
Accelerating the realization of a market opportunity that we already believe to be very large.
Our goal is to create an ecosystem around our technology on its broad use in proteomics and Portio genomics.
This is a critical part of our strategy.
Our partnership with the leading mass spec companies.
Our three phased commercial approach.
Our spinout of programmatic are all evidence of this strategy in action.
We believe this will set us up long term success and broad scale adoption of our <unk> product suite.
It is clear that customers are eager to perform studies using unbiased deep plasma proteomics at scale.
And early customer data is providing strong evidence of the depth and breadth of proteomic access that can be generated easily from our platform.
Both of which <unk> Knight Cancer Institute and abroad have completed their initial evaluation studies, which demonstrated encouraging results.
We are progressing towards the next set of larger scale studies in particular or just use initial pilot has spurred plans for several large scale projects, including one looking at proteomics signatures of prostate cancer again, we'll meet we'll give you more color on this shortly.
Discovery Life Sciences is already preparing to run samples for large scale per viewer genomic projects in the complex disease, which is one of the use cases uniquely enabled by our technology.
The focus that suit our fourth collaboration site has received their instrument and we have already completed installation.
They will be up and running with samples in the coming weeks.
We expect you will begin to hear more from each of these collaboration customers as their studies progress.
During the position to share their experiences and results through presentations or publications.
We continued to strengthen our leadership team welcoming Kenny Ross.
As our new Vice President for operations on quality.
Kenny brings with him over 30 years of experience in operations on quality and life Sciences, having previously held senior leadership roles at applied Biosystems life technologies, and most recently aluminum where he served as vice president manufacturing strategy.
And finally, we doubled our redwood city footprint to support our growing organization expanding our lease to a total of 50000 square feet of standard the art office and research space.
There continues to be a growing enthusiasm and energy in the proteomics space.
And what we're doing is fear is truly differentiated.
We are developing innovative solutions to empower the scientific community to arrive at exceptional proteomics outcomes.
We have developed a per geographic product suite.
First of its kind solution, leveraging our proprietary nanoparticle technology to enable unbiased deep proteomics at scale, eliminating the need for scientists to make trade offs between depth of coverage and scale when designing the unbiased proteomics studies.
Our solution is the only available state of the art technology to deliver peptides and amino acid level resolution, which is necessary to match nucleotide level genomics information and broadly enabled per deal genomics.
The program has been designed to fit in front of nearly any detector, making it easy for those who are adding per view homage to their studies to easily integrated into their workflow the per.
<unk> allows nearly any lab to undertake these studies in a way that is not possible today without tradeoffs.
And through these capabilities, we expect our solution will enable population scale studies that will enrich biological datasets and enhanced the number of Biomarkers and drug targets and we believe the overall impact on human health will be enormous.
We are very much at the onset of this journey to transform acceptability of the protocol by finally, eliminating the long standing technology barrier that has prevented researchers from tapping into this rich critical source of biological information.
And while much work remains we are excited and inspired by the opportunity that lays in front of us with that I will now turn the call over to a need for more detail on our commercial progress.
Thanks, Amit.
There is increasing enthusiasm and evidence that we're underwrite path and on our current and future offerings have the potential to play a significant role in advancing our understanding of biology.
We are seeing and sensing this in our ongoing interactions with our customers our discussions with prospective customers and the early peaks on data coming from a growing list of studies using our per to graft product suite.
The response, we're getting from our expanding engagements are reaffirming our belief that we have the right strategy, the right product and the right value proposition.
We believe the continued progress of our collaboration customers, who will provide clear examples of the unique and differentiated value of the protium <unk> product suite.
Also of our collaboration customers now have their per day graft product suites installed and in fact three of these sites are already on the verge of or in the midst of larger scale studies.
One such example is <unk> Knight Cancer Institute, the first site to receive a perennial graft product suite.
Recently, Dr. Marc Fleury on his colleagues at IHS unite cancer Institute completed a pilot study looking at prostate cancer.
The aim of this study was to demonstrate that the paragraph products. We can be used to power large scale unbiased and deep plasma proteomics across a range of applications, including the early detection of cancer.
Dr. Florian colleagues were able to demonstrate that the <unk> product suite not only enables a far more efficient and scalable approach of plasma proteomics.
But it does so while covering previously known proteins and a number of potentially novel protein biomarker candidates that have not previously been associated with prostate cancer.
With the findings of this pilot study Dr. Florian colleagues are moving forward to implement a larger study of 500 to 1000 samples.
Turning up a whole new set of possibilities.
We are thrilled about the progress Dr. Flurry and his team are making with the FERC agraffe truly everything we're doing a seer is done with the aim of delivering exceptional customer experience that enables our customers to realize their scientific vision.
Market response for access to debt pretty graph has exceeded my already high expectations coming into this year.
The value proposition on the <unk> product suite is resonating with prospective customers and people are highly interested to access this transformative technology.
However, as <unk> stated, we remain committed to our phased approach as we believe this is the best way to commercialize the first of its kind product both for near and long term success.
And we have officially moved into the second phase of commercialization and now have agreements in place with multiple limited relief customers among them prop gnomic, we expect to add other limited release customers throughout the coming weeks and months to reach our target of high single digits of customers for this phase of our commercialization.
We believe this is the best path for developing the right customer relationships the right proof points and most importantly, the right trajectory for current and future growth.
These relationships will enhance our ability to rapidly develop applications open up approaches that create markets and drive the next phase of adoption.
We are very focused on partnering with customers, who are driven to leverage the potential <unk> of our product suite to accelerate the realization of their scientific vision.
Each limited release customer must have.
Shared vision of disruptive power of unbiased day proteomics at scale to unleash novel biological insight.
Access to large sample cohorts infrastructure and know how to efficiently scale projects.
Commitment to rapidly undertake large scale exemplary studies and share aspects of their findings.
And willingness to collaborate deeply to serve on the lighthouse accounts and to help other scale.
We are excited for our limited release customers to get up and running and to demonstrate the power and utility of the <unk> product suite across a wide range of applications, including oncology complex diseases therapeutics and more.
We will work closely with our limited release customers and leverage our success on experience to broaden and accelerate adoption.
Many of our limited release customers will likely serve a strong reference sites and their experience will provide clear blueprint that others can follow to have similarly successful experiences in adopting the protium <unk> product suite.
To address the broader near term demand for access to defer new GAAP product suite, we are prioritizing setting up select preliminary release customers at centers of excellence.
These centers of excellence will offer end to end on by US deep plasma proteomics services using the <unk> product suite in the process, providing researches on entities globally access to seer technology in advance a broader release.
Through these partnerships, we will demonstrate the scaled new set of proto graph across an ever expanding range of applications and customers enabled more and more researchers to access our technology and see the power and impact it can deliver to their research.
We continue to scale, our commercial efforts building the team infrastructure on partnerships that will expand our reach and allow us to serve our customer base around the world.
Over the past few months, we have added a number of highly talented individuals across marketing sales and support.
We are prioritizing the customer experienced by implementing foundational commercial tools that will allow us to seamlessly and efficiently launch install and support customers as we scale globally.
We are also deepening our interactions with our mass spec partners to continue to develop the market and facilitate adoption, especially among new to proteomics customers.
Overall I am extremely encouraged by our commercial progress and look forward to continuing to work with our growing group of customers to demonstrate the unique capabilities of the Purdue graph for a wide range of applications.
We have much to do and we will remain intensely focused on the tasks ahead of us so that we can truly deliver on the promise of this transformational technology.
With that I will now turn the call over to David for more details around our financials.
Thanks, Amit total.
Revenue for the first quarter of 2021 was $62000 compared to $177000 in the first quarter of 2020. The decrease was due to less activity associated with our small business innovation research grant from the NIH as a reminder, all of our revenue to date has been generated from grant funded activities and research collaborations with Biopharma.
On the companies, we expect to begin to recognize revenue from product sales in the second quarter.
Total operating expenses for the first quarter of 2021 were $16 6 million compared to $6 million.
In the first quarter of 2020.
Research and development expenses for the first quarter of 2021 were $6 2 million.
Compared to $4 2 million in the first quarter of 2020, the increase in R&D expenses was primarily driven by an increase in product development efforts related to our <unk> product suite, including increased compensation costs and other related expenses with the hiring of additional R&D personnel.
Selling general and administrative expenses for the first quarter of 2021 were $10 3 million compared to $1 8 million in the first quarter of 2020. The increase in SG&A expenses was primarily driven by increased employee compensation costs and other related expenses to being a publicly traded company.
Net loss for the first quarter was $16 4 million.
Compared to $5 $5 million on the first quarter of 2020.
We ended the first quarter of 2021 with approximately $531 million in cash cash equivalents on investments. This amount includes approximately 103 million in net proceeds from our follow on offering which closed in February of 2021.
As we work to realize our vision of providing novel biological insights that will lead to new discoveries and ultimately improve human health, we will significantly increase our investment to grow and scale the company.
In 2021, we are focusing our investments on building our commercial organization.
Running our reach and providing an exemplary customer experience for our current and future customers. We're exploring new areas of research to exploit the power of our Proto graft product suite and its unique capabilities continuing to build our product pipeline and scaling our operational capabilities ahead of broad release.
Finally, we are expanding our intellectual property portfolio through continued innovation and advancement in our products and technology at this point I would like to turn the call back to me for closing comments.
Thanks, David.
I could not be more excited about what's ahead for sphere on.
On by the rapid proteomics at scale will pave the way for broad scale, a novel biologic insight with incredible impact across science and medicine.
So incredibly proud of and amazed by our team on the progress we have made this quarter.
We look forward to continuing to build our commercial momentum throughout 2021 as we bring the next phase of oil mix through the labs.
All around the globe with that we will now open it up for questions.
Thank you and as a reminder to ask a question you will need to press star one on your telephone.
The other question press the pound on cash clean.
Standby, while we compile the Q&A roster.
Our first question on income taxes, Savant and Morgan Stanley Your question. Please.
Hey, guys good evening.
Just one.
Opening question for you on the collaboration customers do not have.
Can you just shed some light on what has been the key learnings for you so far.
We hope to leverage going forward you are not just simple limited release, but also the broader commercial rollout.
Perhaps some data points that you've ironed out or.
The way you clean those customers any key learnings there.
Okay Alright.
Just for a second we're clarifying which Amit although I knew which one you were talking to here on potatoes on on that question. So really good question and so I would put it in a couple of different buckets briefly in terms of things that you talked about pinpoint nothing outside the ordinary quite frankly, I mean, what we've run into would be some of the stuff that you would expect the very first time, you ship a product on installed as a customer.
Making sure that you're clear on for example, your site prep requirements.
Making sure that <unk> got all the things that you need for installation and so on and so forth. So installations have by and large gone fairly smoothly nothing out on the ordinary and in fact, what we've seen is that as we've done more and more of these installations. The time for every install has has come down which is exactly what you want to see so that puts us on the right trajectory for being able to go to a limited release and be able to build on.
And in terms of the engagements with their collaboration customers I suppose as we talked about it in our earnings.
Again to early data is looking very positive on promising and as our collaborators are encouraged by it and so that all of that is reaffirming to me that the product that we have is going to be able to continue to deliver unique value to the customers. So hopefully that answered your question.
Got it perfect.
And then one for the other Ahmed.
So now that non mature a few months into limited early release on that.
You mentioned signing multiple sort of agreements.
Agreements with customers, including plug gnomic can.
Can you quantify how many customers and then perhaps shed some color on how that order funnel is shaping up I believe you mentioned sort of one to two installs across six customer segments in the past.
Then on a related note.
You can update us on your conversations around setting up those centers of excellence from the reference sites that will be terrific as well.
Yes, So let me take on this is Amit let me break it up in good.
Apart from the first is debt.
As we said.
We're going to have.
Upwards of high single digit.
Number of.
Limited release sites.
<unk>.
There has been a tremendous amount of demand.
We arent going to be identifying names going forward in terms of the customers. We signed suffice it to say that we have signed some in the limited release and Prague Normick is actually one of them.
Some of these limited release sites going forward are going to become centers of excellence for us.
And I think think of it touch us in that.
Temporarily required solution because of just the high level of demand that we're seeing in terms of.
Players many of whom are actually not even proteomics focuses on.
People, who play with large scale omics data. They just don't have the capabilities day, one access to large scale proteomics and our centers of excellence will actually give these guys on opportunity too to get to the level of information that they need over the coming time until they build the infrastructure and actually we have.
Photographs or a detector install for their own sites.
Yes.
So was there anything else that.
So was there anything else from your question that I did not answer.
No I think I think thats covered debt and then one for David on the Opex should we still be thinking from.
$50 million target for Opex, David outside of stock comp.
Anything you can comment on the cadence through the year.
Yes.
As we've said in the past, we are not giving guidance either on revenue or on Opex.
Do you think we still see a lot of significant opportunities for investment both on the commercial side and the R&D side. So we have said that obviously that investment will increase this year, but again, we are being disciplined about how we how we go about debt in the areas, we invest such that we will generate a good read.
Turn it over the long term for those areas.
Got it Super helpful. Thanks, guys.
Thank you. Our next question comes from day Green with Bank of America. Your question. Please.
Hi, good afternoon.
Hey, Derik.
Great.
Just a bigger picture question I think to start with it's like given the growing number of free on the companies that are going public emerging from scale are you seeing a similar increase in funding for proteomics and also could you just sort of like gauge your interest at this point from pharma biotech it is still too early.
Look there Amit here I think we're just way too early in this game for.
For me to give you clarity remember these companies that you are mentioning that are all coming public. This is all happening in just the last three or four months.
So I think it.
It's a bit early to see how that movie plays out I can tell you that proteomics has obviously been around for a long time the value of proteomics is cleared scientists that do this the magnitude of what is now becoming possible in terms of deep on by proteomics at large scale is something that's going to play out over the coming months.
10 years, and frankly, I do think of.
Academic grant cycles and from the time you submit the ground until funding starts I mean these are not in the order of weeks typically on the order of many many months.
So I think any change in grant funding I think youre going to have to give it more time to see that.
But there is what we're seeing is that there's a high degree of demand frankly, we had expected it.
Actually nice to see debt it exceeds our own expectation in terms of interest in deep on biased.
Proteomics, and specifically plasma proteomics scenario of interest to a lot of a lot of the customers that we're talking to.
Great.
One follow up on that so you first.
The leases are five nanoparticle set.
Have you.
Sounds when you were sort of looking at those particles on what they cover are there certain parts of the plasma proteome debt maybe are underrepresented in so that you need to add incremental particles on it I'm just sort of wondering now that you've had.
Now you've gone and much deeper and across different customers, if theres any sort of like.
Nuances, you're noticing that you might need to expand or change their current offering.
Derek Let me say that format, which is look obviously, we have a tremendous amount of experience with.
The use of those with the use of that panel on those particles with our own samples we know what we see.
And the implication of the content on the proteome content that we get what is Super exciting for me is when I hear feedback from <unk> about the.
The emergence of data.
From our customers, let me turn it to Amit who may be able to give you some indication of the kind of content that is being generated on the enthusiasm around debt.
Yes, I think so I think coming into this year. It was really clear for us that.
There was a need for a product that could enable unbiased and deep plasma proteomics at the scale that we are enabling into order of.
Protein groups that we're talking about and that is playing out the way we expect it to so as customers are starting to generate more and more data and again I want to just temporary does this early we need to generate larger datasets.
What we're finding from them is that this is a really enabling technology, that's given them the ability to be able to.
Dive deeply on broadly into protium in particular at scale in terms of the number of samples. So you've got the way Im starting to re and Im learning. This again coming from the genomic side of it. It really is I kind of think about it as the scale of the sample size.
Ability to be able to increase the total number of proteins that one can identify across a growing project size using our technology is massively powerful and something that quite frankly, they haven't been able to do not with this level of ease and so why do I say that because because what that brings us back to is that this product as it.
This is an awfully, enabling product that is going to give us access to a very substantial part of the opportunity that is in front of us for the coming years that doesn't mean, we're not going to have other products that were not going on other product additions, but this product onto itself is extremely powerful enables customers to be able to go to depth and breadth that day, just flat out can't.
And especially as you look at increasing sample sizes to be able to catalog and increasing number of protein and peptide variance that just flat out is impossible. So just with the five nanoparticles I think we will book, we're going to be able to grow a very very long ways, enabling customers and as we've talked to you. All previously you can expect that we're going to have a continuing stream of products.
That are going to only enhance our market opportunities moving forward, but the <unk> as they exist from what we're hearing are doing what they're supposed to do on more.
Great. Thank you very much.
Okay.
Thank you again.
Again, if you have a question simply press star one on your telephone. Our next question is from Tycho Peterson with Jpmorgan. Your question. Please.
Hi, guys. This is Casey on for Tycho.
On.
How quickly do you expect a typical customer and scale up their studies.
And where do you think cost per sample needs to go for customers to effectively scale up and then as a follow up to that how does that cost per sample compared with existing targeted high plex proteomics.
Look I mean, we obviously have experience with just a limited number of customers.
And our first customer Oregon.
Reached this stage that youre kind of referring to let me maybe it will maybe give you a little bit of additional color in terms of the size of the studies.
On the viewpoint about the costs associated with it.
Sure.
No.
Again as Hamid said its early but our expectation is.
Yeah look Ed this is drawing a lot from my perspective on how I saw some of these things play out with products initially in genomics.
First few months, let's just say roughly about a quarter or so customers are getting their arms around the technology getting familiar with it doing pilots and we've seen it sort of play out that way I would say <unk> to begin with and others and then what you see is that sort of this following net.
Three months period is when they start to begin to scale. The next set of their projects and that typically plays out somewhere in the order of a couple of quarters and then beyond that you begin to see them be able to really now take that next inflection point, that's again, drawing a lot from genomics I have no reason to expect it is going to play out differently here largely because all of this is driven as a function.
<unk> of overall power sample size. The way you think about the studies on scaling them. So that's the rough cadence that we're expecting customers to follow through now and it gives us some of our limited release customers remember we talked about this on our earnings call. We are focusing on customers, who can operate at scale and who have a clear scientific vision and so that we can actually.
As much as possible Cds, our customers' inaction sooner rather than later in terms of price per sample.
Put it in this context, so we think for the value that we're actually delivering with these products at these price points are really quite substantial and far better than what any customer can get today trying to use alternative means of doing deepened on bias plasma proteomics, which involves depletion on fractionation, so even discounting for the cost of time to value.
Labor on all the rest of it the overall price per protein group. If you will that we're delivering to customers is far better than any alternatives thats available to them and to date, we have not had a single customer interaction, particularly in the context of limited release, where the issue of price per sample has been.
A concerning point for them. So so I don't expect it to be limitation in driving upscale and also keep in mind the price points that we're talking about on the price points that again in genomics people are routinely paying to do large scale genome studies right. So so for the right biological value that you deliver and especially.
<unk> uniquely enabling a particular avenue of investigation I Havent found these price points to be a problem either in genomics and certainly not so far in plasma proteomics.
Got it thank you for that.
And maybe just one last one can you talk about the thought process around choosing the number of limited release customers here during phase two how do you plan to balance the number and pace of publications along with the depth of early customer engagement.
Yes, sure I mean this is.
All of this all of this went into the overall strategy coming into this year, which is why.
We've approached it for collaboration customers and then you layer on top of that high single digits of limited release customers.
We believe are going to put us in a position to be able to have the right balance of customer critical mass and what's more important than sheer number is the type of customer the type of experiment that youre going to do and their willingness and quite frankly, the credibility to standup and deliver that data and so we're being very thoughtful in not only the number of customers but.
The type of customers and engagements because exactly to your point right. So much of this is about making it very clear broadly that this technology platform has a unique and differentiated value proposition that can absolutely be realized in the context of large scale on bison day proteomics. This has to be done in the context of.
Several customers speaking about it which is why we're very much focused on having the right type of partnerships and limited release, two coupled with the right type of partnerships. We have on collaborations so that we have the substantial proof points coming out because again, it's not so much the number of the customers what do those customers do on how fast they move so I feel very good that we are going.
To be able to strike that right balance between the customer number and peso publication on proof points coming out.
Thank you.
And this concludes our Q&A session and program for today. Thank you for your participation and you may now disconnect.
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Good day.
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