Q2 2021 Olink Holding AB (publ) Earnings Call
In the remarks or responses to questions management's main mention some non-GAAP financial measures.
Reconciliations of adjusted gross profit and EBITDA on certain other non-GAAP financial measure to the most directly comparable GAAP measures are available in the recent the earnings press release available on the company's website.
This conference call contains time sensitive information and is accurate only as of the live broadcast today August 11.2020 bonds.
<unk> disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future of them or otherwise except as required by law.
And with that I will turn the call over to Oscar.
Thank you, Steve and good morning, everyone and thank you for joining <unk> second quarter earnings call. The.
Before we get started today I just want to inform the don't Unfortunately is unable to join the call today, Jonathan admitted to hospital with the intestinal obstruction caused by in the appendix removed really have some 35 years ago of <unk>.
Sales in today and he is doing well given the circumstances and the expected return on its own force very soon as soon as we receive treatments.
With me today I have call Raymond our Chief commercial officer, Thank you for joining us.
I'll start with an overview of our operating results of strategic objectives, which include on X, which.
Which include expanding our product offering and signature launch at two of an update on our financial results of full year guidance. We will then open up the call for questions.
Overall I am very excited with our performance in the second quarter of 2020 of them, which marks our first full quarter at the public company during.
During the quarter, we delivered on all of the strategic aspects of our plan to expanded adoption of proteomics.
Sure understand real time human biology.
And our first full quarter of the public company, we delivered solid financial results and achieved several operating objectives, which bill will discuss the state.
We replaced to report that we had a strong quarter with total reported revenue of $17.7 million, representing significant growth of 124% compared to the second quarter of 2020.
On the non-GAAP on non organic constant currency basis, our revenues grew 129% compared with the second quarter of 2020.
This performance resulted from the strategic execution across our entire business demonstrated by year on year growth in both acute and service segments of 191% and 131%, respectively, which were driven by the explorer platform and our explorer kit launch.
As a reminder, our products are offered both on the kits and services through our analysis service lab and further as you may recall, our kit offering was launched late in Q1 of 2021. So Q2.2021 represents the first full quarter of activity for explorer kits.
We are pleased to see continued momentum for the explorer platform and there we're building out our external installation somewhat the head of our internal targets.
The explore pipeline looks very robust the supports the plan that we've set out for the near term.
We're also encouraged by the fact that we see a good representation of both Biopharma and academia in that pipeline.
To date, we've generated kit revenues from 16 installations, including early access customers from a regional perspective, we saw positive quarterly revenue growth and solid penetration of explore in all regions.
We continue to ramp up investments into our organization and we're excited about the strong team that we're continuing to expand globally.
We continue to monitor the development over the Covid pandemic and the night of the recent increased uncertainty of of how countries respond to the Delta variant, we've been paying our annual revenue guidance of $90 million to $92 million for 2021.
As we discussed during last quarters call OLED is the leader in the emerging field of proteomics with our differentiated platform that provides clarity on mechanistic biology to address the overwhelming inefficiencies in healthcare in drug development. We are proud of that researchers and clinicians are recognizing the.
<unk> is a market leader evidenced by our growing customer base and accelerating adoption of our technology.
Furthermore, our customers of ours have led to an accelerating number of publications referencing the <unk> platform.
All of <unk> depreciation and the market starts with our disruptive and proprietary proximity extension assay technology PDA comprised.
Comprised of three product lines explore targets on focused our newest product lines explore gross launched worldwide at the service offering in June 2021 of 2020 and rolled out as I keep the offering in March of 2021.
This offering has been met with excitement of strong adoption from our customers. We ended the quarter with 16 external installations that we generate the revenues from since 2020 and the pipeline of additional labs continued to increase at several of the strategic sites, including Oxford University and the head of homes.
Some of them in Munich.
In the second quarter of 2021 explore represented more than 53% of total revenues as compared to 26% in the FY 'twenty.
We are pleased with the ex north production of the service offering and remain excited about the momentum indicates business.
We recently announced the expansion of this product offering with the introduction of old link explore 37 to two in June. This is the significant milestone as it provides customers with access to our expanded library of approximately 3000 carefully create at on validated assays with this expansion.
We doubled the number of available protein biomarker of targets covering all of biological pathways and increasing the dynamic range, while maintaining unparalleled sensitivity specificity and position.
By using only explore 30.72 customers can experience of throughput of close to 10000 samples per week per system. The.
The system features of our PPA high Plex high multiplex immune assay technology combined with Mds readout on the aluminum robotic and Illumina next six platforms. We have started to take orders with deliveries expected to begin fourth quarter of 2021.
This is an important step in our goal to rapidly expand our offering in the high Tech space. We know our customers are very excited about the expansion of our protein biomarker targets. We are proud to further demonstrate ties acts as the proteomics through access to reagent kits for customers individually views.
And rapidly growing network of service provider inhibiting all link contracted sites.
Our ambition to expand to.
<unk> 4500 protein biomarker targets in 2022 remains on track.
Importantly, OLED continues to invest in protein assay development by incorporating feedback from customers. What is the most important and relevant to them. We have approached our protein has a larger expenses dropped the deep from a value added perspective and.
And continue to be focused on customer priorities as we expand our protein assay offering.
During the quarter decode genetics, and Amgen subsidiary and global leader in analyzing and understanding of the human genome that came on early adopter of export of starting 72 platform.
We are excited to work closely with decode genetics World class scientists led by Dr accounted Stephane.
As they implement our new proteomics platform on a 10000 sample multi omics study.
Current his team had a very impressive track record of discovering key genetic risk factors for dozens of common diseases, ranging from cardiovascular at the cancer, which of the intense new means of diagnosis treatment and prevention for patients.
Through our partnership decode genetics is empowered with in house resources to add high throughput high quality proteomics towards population scale of efforts of advancing modern healthcare.
Additionally, the UK biobank form of protein.
The proteomics project agreed to expand the ongoing <unk> study of 53000 participants through our new explore 30.72 platform for background. The Biopharma consortium and the UK Biobank is currently performing one of the growth larger studies of blood protein Biomarkers conducted the date.
And the aim is to significantly enhance the field of proteomics, enabling better understanding of disease biology, and supporting innovative drug development for more effective therapies.
By expanding the study from explorer 15, 36 of the new platform explore 30.72 of the UK Biobank and the consortium of 12 of biopharmaceutical companies demonstrate their commitment to the OLED technology cut for them and support for our continued investment in customer oriented.
Protein assays.
We plan to book revenues from this contract extension in the first half of 2020, and we expect to run the 56000 samples on the first 15.36 closings during the Q3 and Q4 of 2021 as previously communicated and reflected in our guidance.
As I mentioned earlier.
Yes.
At the <unk>, we're committed to delivering the most relative protein assets to our customers and I would like to take a moment to discuss the library coverage of biological pathways and processes that explore 30.72 enables.
At the oil link we provide a holistic broad and deep integration of the plasma proteome.
We use the freely available open source react the database, which provides a transparent intuitive and visual overview of the molecular molecules in our case protein.
And the relationships organized into biological pathways and processes proteins participate in process. This form of network of biological interactions, which of a grouping of pathways, including immune system metabolism signaling and transcription on regulation.
The react them, it's composed of 26 main sort of.
Our pathways, describing normal cellular function and onemain pathway, describing the seats in.
In total there of 2536 pathways in the react on database.
Proteins can then be cross linked the unallocated to the different pathways based on open source database of public literature.
We can then use the reactive as a tool to measure our proteomics coverage and the focus for expansion of new protein biomarker targets. The takeaway here is with explorer 13, 70 to recover 100% of all the major pathway.
Just one protein.
The <unk>, 94% of level one.
87% of level two to four and finally, 81% of all level five pathways.
Our coverage of four out of five level five pathways represent a vast proteomics landscape that we're playing in and we will continue to expand.
Of the reactor is an essential knowledge source for our community to better understand owning data on which pathways and mechanism of our enrolled in health and disease.
Before turning to an update on our target and focused product I want to provide an update on third party validation of our product the services.
During the quarter, we saw on expansion from the scale of consortium at pre confidential consortium, consisting of academia and Biopharma participants sharing genomic and Proteomic data.
Scallop is to our knowledge the Brooks the largest protein genomic database with the purpose of identifying novel and cash of drug targets.
This strategy combined data on genetic versus protein levels with based on genetics versus the endpoints with the goal of identifying proteins that are cash flow indices distinguishing between costs and consequence.
Despite being early days for the modern approach that's already now proven to lower risk and drug development two to four times.
The expansion includes a launch of a clinical arm using only the derived proteomics data.
With the goal to boost the statistical powering comparison between active arm versus placebo on standard of care.
This will allow participants to access larger data sets to assess where the protein changes and active on a specific for their indications where all of sourcing in other trials.
And for different disease indications. The final aim is to develop an industry standard for MPLX, which stands for normalized protein expression and as the unit in which day owning <unk> presented the future proof protein profiling and clinical trials.
Moving to our target of focused products in June. We also introduced all of <unk> signature of cue 100, and affordable bench top system designed for readout of target them focused protein biomarker panels the.
Introduction of the systems expand researchers access to OLED technology and high quality of proteomics data.
We have seen significant interest in signature thus far and based on the initial indications of interest of inquiries from potential customers.
This positive early response from customers is reassuring as we look to commercialize signature later this year and into 2022.
We remain committed to investing in and developing our product portfolio of more targeted solution for the.
The protein biomarker research based on true PCR Readouts on till now readouts of our target the focus panels have been exclusively carried out the using the biomarker HD instrument for <unk>.
Signature of cue 100 offers of new dedicated solution for retard the readout of target of focused panel that will enable researchers to run our kits more easily and conveniently on their own labs using as little as one of the my fleet raw plasma with the serum to measure up to 92 proteins simultaneously.
This is one of many developments currently underway to serve a broader spectrum of needs within protein biomarker research, providing a broader offering of application focused mid tech solutions and more flexible customer offerings, which demonstrates our commitment to innovate and improve across all aspects of.
Of our growing portfolio to better serve the needs of our customers.
We also remain on track with development of our new flexible product offering where customers can freely pick and choose up to 'twenty protein biomarker targets.
This product will be significant addition to our target portfolio that we believe our customers with very much appreciate it.
And we plan to begin selling this flexible product in 2022.
Looking forward all of <unk> remains focused on investing in the business to accelerate the research and development as well as to expand the commercial infrastructure to drive revenue growth of.
We're already showing the market great innovation with the expansion of our validated protein library of 3000 of space with holistic pathway coverage, which further expansions to move to 4500 in 2022.
We also continue to add a meaningful number of hires, especially through our commercial and R&D teams.
All parts of our business on our investing slightly ahead of the growth curve, we are expecting in the months quarters and years to come.
We ended 2020 with 214 in <unk> and at the end of June we had 317 employees of whom.
120 of our in the commercial team.
In addition, we recently closed a secondary offering by selling shareholders led by assume equity a significant equity holding in July and.
And we were excited about the opportunity to speak with many of you underwrote and we wanted to announce the we're planning in the Investor Day in New York on November 15, where we hoped to have the chance to meet the number of you in person.
We will continue to monitor the COVID-19 developments.
And I'll save the date and more details the come soon.
Before taking a closer look at our financials I wanted to pause on conclude in summary, we're pleased with our second quarter performance. We are confident that we have the framework in place to continue executing on our investment and strategic plans and drive meaningful growth for years to come.
Digging deeper into our financials.
Total revenue for the second quarter of 2020 volume was $17.7 million as compared to $7.9 million in the second quarter of 2020.
Revenue growth.
Was driven by the continued momentum in the expansion of our explore platform with Q2.2021, representing the first full quarter of sales activity for our explore caped offering which was launched late Q1.2021.
Our explore services revenues are driven by a broad spectrum of customers across the Americas, EMEA and rest of the world.
At the end of the quarter.
16 externally place next door installations that we have generated revenue from in 2020 and in the first six months of 2021.
2020 kit revenues related to early access customers and primarily occurred in the fourth quarter.
We have seen an average pull through on these customers thats on the $600000 with individual customer spend range from less of $100000.2 million orders.
Analysis services revenue for the second quarter was.
The 11.8 million as compared to $5.1 million for the second quarter of 2020. The service growth continues to be largely driven by explore across all regions.
<unk> revenue for the second quarter of 2021 of $5 million as compared to $1.7 million for the second quarter of 2020.
Revenues for primarily driven by the X for kit launch and more specifically the day Coldwater.
Explorer kit revenues accounted for 39% of all ex fuel revenue in the quarter.
Majority of that the attributed to two one on the water.
Other revenue was <unk> 8 million for the second quarter of 2021 as compared to $1 million for the second quarter of 2020.
Looking at the revenue by geography revenue in North America was $7.8 million as compared to $4.5 million for the second quarter of 2020.
In EMEA revenue was $8.7 million as compared to $2.9 million in Q2 of 2020.
And revenue in China, and rest of the robust $1.2 million as compared to north of <unk> 5 million in the second quarter of 2020.
Cost of goods sold was five 8 million of the second quarter, resulting in the gross profit of $11.9 million in the second quarter of 2021 as compared to cost of goods sold of $2.3 million in the second quarter of 2020, resulting in the gross profit of $55.6 million in the second quarter of 2000.
'twenty.
Adjusted gross margin decreased.
70, 76% versus 72, 4% for the second quarter of last year.
This decrease of 180 basis points was primarily due to a reduction in the service gross margin in the quarter assets continue to invest in capacity.
And the decrease in the margin as Q2.2019 was positively impacted our production variances.
Our strategy to increase kit revenues as a percentage of total revenues of six.
Expect it to have a positive mix impact over time.
By segment adjusted gross profit margin for analysis service for 64% for the second quarter as compared to 6% to 7% for the second quarter of 2020.
The decrease in adjusted gross profit percentage compared to the second quarter of 2012. This was primarily due to a continued investment into the lack of capacity ahead of the anticipated growth and temporary and reduce deficient in the lab as we introduce the explore service offering.
Adjusted gross profit margin for kits was 90% for the second quarter of 2020 as compared to 9% to 5% for the second quarter of 'twenty.
The decrease in adjusted gross margin for kits was primarily due to a positive inventory variance in 2020, and the 2021 gross margin level represents an underlying margin level for our business.
Adjusted gross profit margin for <unk> was 44% for the second quarter of 2021 as compared to 6% to 2% for the second quarter of 2020.
The decrease in other gross margin compared to the second quarter of 2020 was due to a single order to a core lab.
Total operating expenses for the second quarter of 2021.
For $23.3 million as compared to $10.5 million for the second quarter of 2020.
We continue to invest according to our strategy, our strategic plan and what we communicated during the roadshow, adding a meaningful number of hires to our commercial and non deep teams in particular that as mentioned previously we are really growing all parts of the business.
And investing slightly ahead of the curve.
Excluding non recurring items related to our follow on offering.
Operating expenses for the second quarter of our $21.9 million, including DNA.
Excluding DNA, our operating expenses for the quarter were $18.1 million.
We ended 2020 with 214 employees and at the end of June we had 317 employees of whom of 120 bar on the commercial team, we see a lot of opportunity ahead for all linked.
And we are investing accordingly.
Our operating expenses are broken out as follows.
Selling expenses for the second quarter were $7 million compared to $3 million for the second quarter of 10 to 20.
Administrative expenses for the second quarter on 2021, or $12.2 million as compared to $4 million for the second quarter of 2020.
Administrative expenses in the second quarter of 2021 included approximately $1.4 million of expenses related to our follow on offering and $2.7 million related to intangibles amortization stemming from the purchase price allocation following <unk> acquisition of <unk> in 2019.
Further administrative expenses have increased year over year as we incurred additional expenses in the ordinary course of business of being a public company.
Research and development expenses for 5 million for the second quarter of 2021 versus $3.5 million for the same period in the prior year.
We continue to invest in our R&D efforts and we are proceeding according to plan on all on major initiatives.
Other operating income loss were north of $9 million in the second quarter of 2021 compared to a loss of the $0.1 million of.
In the second quarter of 2020.
Net loss for the second quarter of 2021.
$10.6 million as compared to $2 million for the second quarter of plenty plenty.
Net loss per share for the second quarter of 2021 was <unk> <unk>.
As compared to 28 for.
For the second quarter of <unk>.
2020.
Adjusted EBITDA for the second quarter of 2021 was negative $6.3 million as compared to negative $1.3 million for the second quarter of 2020.
We ended the second quarter with $168.1 million of cash on cash equivalent.
And.
Moving to our outlook for the rest of the year due to the continued uncertainty around the Covid pandemic, we maintained our revenue guidance and we expect revenue for the full year 2021 to be in the range of 90% to $92 million, representing 6% to 6% to 70% growth over 2020.
In summary, the second quarter of 2021, well, it's another quarter of continued execution on growth.
We're pleased with the growing traction in redux robust adopt adoption across our entire portfolio of products and services.
We look forward to providing future updates on the investments we are making into our business on our strong operational and financial results.
At this point, we will open up for questions operator.
If you would like to ask a question. Please press star one on your telephone keypad.
Your first question comes from the line of Mike, Matt <unk> with Goldman Sachs.
Hi, Good morning, Oscar and Karl Thanks for taking my questions.
Just to start out on unexplored you mentioned the 16, new installations and you said it was a good mix of Biopharma for <unk> I'm, just wondering in terms of mix versus new versus existing.
The customers I know theres some early access in there too, but any new customers represent part of the 16 new installations.
Yes, so I think I mean, we see sort of a healthy mix of both existing and new customers.
In the Indian installations.
I would say through the majority of these is sort of from a dollar perspective is coming from from existing customers, but there are definitely some new customers in there.
Yes.
On.
On a mixture of both.
The new customer interest.
<unk> the C as well as Oscar mentioned.
Good uptake from our existing customers and the adoption of the platform.
Great. Thanks for that and then just on on.
The competitive landscape and the low plex targeted area. Obviously a lot of your focus has been on explore for for good reason I'm. Just wondering in terms of the signature launch and the importance of that to kind of building growth momentum within the low plex, how important is that.
And are you seeing.
<unk> growth within the target and focused products.
So I can start by brief comment on I can hand over to Carl I think I mean, we do see good traction on the signature launch and just sort of at the restaurants in the guidance that we put out the sort of the the monetary contribution from signature is relatively limited.
Uh huh.
The handing over to call. So you can comment more on sort of the momentum that we see in sort of the signature part of the <unk>.
Target part of the business.
Yes, thanks, Oscar so, yes, the uptake and interest has been.
Has been tremendous so far and it's sort of.
The outstripped expectations a bit.
And the signature instrument is absolutely going to be.
I think it's critical for our success in the mid and low Plex business in fact, I guess sort of reflecting back on your prior question.
Also seeing sort of interest.
Beyond the existing customer base into new customers as well so we.
We are seeing that entry point for the instrument and the acceptability of the technology that's being.
Allowed by the launch of this instrument to open up the market. So we think thats going to be a very important story for us as long as there as well.
Oscar mentioned.
In terms of development of future products and sort of a custom offering that will be available sometime in 2022, which then just sort of further addresses the needs of our customers are expressing.
Great. Thanks, very much I appreciate the question.
And your next question comes from sung <unk> Nam with BTG.
Hi, Thanks for taking my questions just a couple of questions for me.
The coral initiatives that you guys announced.
I was curious does that include both academic and biopharma customers as well or do you anticipate that day.
And then.
Just kind of out of curiosity with that.
Hi.
Partnership utilized.
Explore.
For the the target.
Platforms, just kind of curious how theyre thinking of how I guess.
Alright, you guys are thinking about that.
Yes.
Thanks, Tony.
The call Im going to take that question.
Yeah, I don't want to speak on behalf of the consortium of and our leadership, but to the best of my knowledge. It's open for any collaborators to participate in.
And we certainly encourage you to reach out to the consortium.
And then Conversely.
For the best of my knowledge is well I don't think Theres, a limitation on which day that they would.
Particularly in the analyzed so.
Again sort of.
Refer to the consortium, but.
But yes, the tremendous amount of opportunity I think overall for the user community to contribute in that specific way as.
As well with with any sort of all linked data.
Got you great. Thank you and then.
On the UK biobank.
Project E.
You mentioned the.
The project for the at the 1500.
And completed by the end of the year and then for the 30.72 revenue.
The recognition for the first half of next year.
I was wondering.
The.
What's the contribution from the 30.72 might look like would that be kind of comparable to.
What you're looking to recognize for the the first part of the project.
Yes. Thanks, that's a great question. So the extension of the UK Biobank. So we're running the first 15 to 36 of this year and then Dean of the extension will be another 15.36 to get the the 30.72 sort of next year.
And we have you know Unfortunately Korea sort of under contract with the big the.
The company is in the consortium, so we cant disclose the exact details, but the sort of overall contribution from the extension will be sort of smaller from a monetary perspective than the initial 15.36.
But then of course, the sort of scientific contribution and also the sort of the contribution from <unk>.
Strategic positioning perspective rolling.
The.
It's great.
Got you great. Thank you so much.
Thank you.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
We have no further questions on queue.
Okay. Thank you. So thank you everyone for joining us today and for your continued interest in <unk>. We look forward to keeping you updated on our progress advancing proteomics, but also enhancing shareholder value and we'll hope to see you in person at our plan on Investor Day on November 15th.
Thank you Anna of a great day.
This does conclude today's call. Thank you for your participation you may now disconnect your lines.
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Good morning, ladies and gentlemen, and welcome to the only proteomics Q2, 2021 earnings conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
If anyone should require assistance during the conference.
The press Star then zero on your Touchtone telephone.
I would now like to turn the conference over to your host Ms. Dana The women IR manager. Please go ahead.
Good morning, everyone and thank you all for participating in today's conference call.
Earlier today <unk> released unaudited financial results for the second quarter ended June 30 of 2021.
Oh from the press release on an updated corporate presentation are available on the company's website.
Before we begin I'd like to remind you of that management will make statements. During this call that include forward looking statements within the meaning of the U S. Federal Securities laws, which are made pursuant to the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 90 to 95.
And the statements contained in this call related to expectations or predictions for future of them.
Results for performance are forward looking statements.
Actual results may differ materially from those expressed or implied in the forward looking statements due to the variety of the sectors.
For at least the description of the risks and uncertainties associated with the early.
Please refer to the risk factors section of our final.
I know the prospectus relating to our registration statements on form S. One final number of three three and three to 5782 for which was declared effective by the U S Securities and Exchange Commission on July 14.2021.
And in our other filings with the SEC.
We urge you to consider these factors and you should be aware that these statements should be computers estimates only and are not the guarantee of future performance.
Also in the remarks or responses to questions management's made mention some non-GAAP financial measure.
Were you thinking of the age of the adjusted book.
The EBITDA on certain non-GAAP financial metric.
For the most directly comparable GAAP measures are available in the recent the earnings press release available on the company's website.
This conference call contains time sensitive information and is accurate only as of the live broadcast today August 11.2021.
<unk> disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of the new information future of them or otherwise, except as required by law and the.
With that I will turn the call over to Oscar.
Thank you, Steve and good morning, everyone and thank you for joining <unk> second quarter earnings call.
Before we get started today I just want to inform the don't Unfortunately is unable to join the call today, Jonathan admitted to hospital with the intestinal obstruction caused by on the appendix removed really had some 35 years ago I've spoken of in today and he's doing well given the circumstances and the expected returning from force.
Very soon as soon as we receive treatment.
With me today I have called Raymond our Chief commercial officer. Thank you for joining us.
I always start with an overview of our operating results on strategic objectives, which include on X, which include expanding our product offering of signature launch of two an update on our financial results. Our full year guidance. We've done on open up the call for questions.
Overall I am very excited with our performance in the second quarter of 2021, which marks our first full quarter of at the public company.
During the quarter, we delivered on all of the strategic aspects of our plan to expanded adoption of hotel mix.
As you understand real time human biology.
And our first full quarter as the public company, we delivered solid financial results and achieved several operating objectives, which we will discuss the state.
We are pleased to report that we had the strong quarter with total reported revenue of $17.7 million, representing significant growth of 124% compared to the second quarter of 2020.
On the non-GAAP on an organic constant currency basis of revenues grew 129% compared with the second quarter of 2020.
This performance resulted from the strategic execution across our entire business demonstrated by year on year growth in both acute and service segments of the 191% and 131%, respectively, which were driven by the explore pet platform and our explorer kit launch.
As a reminder, our products are offered both the kits and services through our analysis service lab as far the rest you may recall, our kit offering was launched late in Q1 of 2021. So Q2.2021 represents the first full quarter of activity Forex for kids.
We are pleased to see continued momentum for the explore platform and they were building out the external installations on what the head of our internal targets.
The explorer pipeline looks very robust the supports the plan that we've set out for the near term.
We are also encouraged by the fact that we see a good representation of both biopharma and academia in that pipeline.
To date, we've generated kit revenues from 16 installations, including early access customers from a regional perspective, we saw positive quarterly revenue growth and solid penetration of explore in all regions.
We continue to ramp up investments into our organization and we're excited about the strong team that we're continuing to expand globally.
We continue to monitor the development over the Covid pandemic on the night of the recent increased uncertainty of how countries respond to the Delta variant we've been paying our annual revenue guidance of 90 to 92 million net for 'twenty to 'twenty one.
As we discussed during last quarters call <unk> is the leader in the emerging field of proteomics with our differentiated platform that provides clarity on mechanistic biology to address the overwhelming inefficiencies in healthcare and drug development.
The researchers and clinicians are recognizing owning as the market leader evidenced by our growing customer base and accelerating adoption of our technology.
Furthermore, our customers of ours have led to an accelerating number of publications referencing the overland pass for.
All of <unk> deterioration in the market starts with our disruptive and proprietary proximity extension assay technology PDA comprised.
Comprised of three product lines explore targets on focused our newest product lines explore both launched worldwide at the service offering in June 2021 of 2020 and rolled out as I keep the offering in March of 2021.
This offering has been met with excitement of strong adoption from our customers. We ended the quarter with 16 external installations that we generate the revenues from sales 2020, and the pipeline of additional labs continue to increase at several of the strategic sites, including Oxford University on the headlines.
Turning Munich.
In the second quarter of 2021 explore represented more than 53% of total revenues as compared to 26% in for 'twenty.
We are pleased with the ex north production of the service offering and remain excited about the momentum indicates business.
We recently announced the expansion of this product offering with the introduction of all link explore <unk> 72 in June. This is a significant milestone as it provides customers with access to our expanded library of approximately 3000 carefully create and validate that assays.
This expansion, we doubled the number of available protein biomarker targets covering all of biological pathways and increasing the dynamic range, while maintaining unparalleled sensitivity specificity and position.
By using only explore 30.72 customers can experience of throughput of close to 10000 samples per week per system. The.
The system features of our PPA hi.
Hi, Plex high multiplex immunoassay technology combined with Mds readout on the alumina normalcy and Illumina next six platforms. We have started to take orders with deliveries expected to begin fourth quarter of 2021.
This is an important step in our goal to rapidly expand our offering in the high Tech space. We know our customers are very excited about the expansion of our protein biomarker targets, where trials to further demonstrate ties access the proteomics to access the reagent kits for customers individually views.
And rapidly growing network of service provider inhibiting all link contracted sites.
Our ambition to expand to.
The 4500 protein biomarker of targets in 2022 remains on track.
Importantly, all of <unk> continues to invest in protein assay development by incorporating feedback from customers what is most important and relevant to them.
Approached protein has the luxury of expense on the strategy from a value added perspective.
And continue to be focused on customer priorities as we expand our protein assay offering.
During the quarter decode genetics, and Amgen subsidiary and global leader in analyzing and understanding of the human genome. The came in early adopter of the explore starting 72 platform.
We are excited to work closely with decode genetics World class scientists led by Dr accounted Stefan zone.
As the implement our new proteomics platform on the 10000 sample multi omics study.
And his team had a very impressive track record of discovering key genetic risk factors for dozens of common diseases, ranging from cardiovascular at the cancer, which of the entrance of new means of diagnosis treatment and prevention for patients.
Through our partnership decode genetics is empowered with in house resources to add high throughput high quality proteomics to its population of scale efforts of advancing modern healthcare.
Additionally, the UK biobank form of pro form of Proteomics project agreed to expand the ongoing proteomics study of 53000 participants so our new explore 30.72 platform for background of the Biopharma consortium and the UK Biobank is currently performing.
On the world's largest studies of blood protein Biomarkers conducted to date the name.
The significantly enhanced the feel of proteomics, enabling the rest of understanding of disease biology, and supporting innovative drug development for more effective therapies.
By expanding the study from explorer 15, 36, two of the new platform explore certainly 72 of the UK biobank and the consortium of 12 biopharmaceutical companies.
Demonstrate their commitment to the OLED technology cut for them and support for our continued investment in customer oriented protein assays.
We plan to book revenues from this contract extension in the first half of 2020, and we expect to run the 56000 samples on the first 15.36 closings during the Q3 and Q4 of 2021 as previously communicated and reflected in our guidance.
As I mentioned earlier.
Yes.
At the opening we're committed to delivering the most relative protein assets to our customers and I would like to take a moment to discuss the library coverage of biological pathways and processes that explore 30.72 enables.
On the oil linked we provide a holistic broad and deep integration of the plasma proteome.
We used the freely available open source of react the database, which provides a transparent intuitive and visual overview of the molecular molecules in our case protein.
And the relationships organized into biological pathways and processes.
The us participate in process of this form of the network of biological interactions, which of grouping of pathways, including immune system metabolism signaling and transcription on regulation.
The react to them, it's composed of 26 main sort of.
Pathways, describing normal cellular function and one main pathway describing the seats.
In total there of 2536 pathways in the reactor the database.
Proteins can then be cross linked the allocated to the different pathways based on open source database of some public literature.
We can then use the react them as a tool to measure our proteomics coverage and our focus for expansion of new protein biomarker of targets. The takeaway here is with explorer 13, 70 to recover 100% of all major pathway with at least one protein <unk>.
The <unk>, 94% of level one.
87% of level two to four and finally, 81% of all 11 five pathways.
Our coverage of four out of five level five pathways represent a vast proteomics landscape that we're playing in and will continue to expand the.
The reactor is an essential knowledge source for our community to better understand all the data of which pathways and mechanism of Angola, and health and disease.
Before turning to an update on our target on focused product I want to provide an update on third party validation of our product the services.
During the quarter, we saw on expansion from the scale of consortium at pre confidential consortium, consisting of academia and Biopharma participants sharing genomic and Proteomic data.
Scaleup of our knowledge the.
The largest protein genomic database with the purpose of identifying novel and cash of drug targets.
This strategy combined data on genetic versus protein levels with data on genetics versus disease endpoints with the goal of identifying pollo thing that our cash on indices distinguishing between cost and consequence.
Despite being early days for the modern approach that's already now proven to lower risks and drug development two to four times.
The expansion includes the launch of our clinical arm using only the derived proteomics data.
With the goal to boost statistical powering comparison between active arm versus placebo on standard of care.
This will allow participants to access larger data sets to assess where the protein changes and active on a specific for their indications were also seen in other trials.
And for different indications the <unk>.
And on the aim is to develop an industry standard for MPLX, which status was normalized protein expression and as the unit in which day owning phase <unk> percent debt for future proof protein profiling and clinical trials.
Moving to our target of focused products in June. We also introduced OLED signature of cue 100, and affordable bench top system designed for readout of target the focused protein biomarker panels the IND.
Introduction of the systems expand researchers access the OLED technology and high quality of proteomics data.
We have seen significant interest in signature thus far and based on the initial indications of interest of inquiries from potential customers.
This positive early response from customers, it's reassuring as we look to commercialize signature later this year and into 2022.
We remain committed to investing in and developing our product portfolio of more targeted solution for the protein.
Market research based on true because you already doubts on sales.
Now readouts of our targets on focus panels have been exclusively carried out the using the biomarker HD instrument for Florida.
Signature of cue 100 offers a new dedicated solution for retard the readout of target of focus panels that will enable researchers to run our kids more easily and conveniently on their own labs using as little as one of the my fleet raw plasma with serum to measure up to 92 proteins simultaneously.
This is one of many developments currently underway to serve a broader spectrum of needs within protein biomarker research, providing a broader offering of <unk>.
Application focused mid tech solutions, and more flexible customer of offerings, which demonstrates our commitment to innovate and improve across all aspects of our growing portfolio to better serve the needs of our customers.
We also remain on track with development of our new flexible product offering where customers can freely pick and choose up to 'twenty protein biomarker targets.
This product will be a significant addition to our target portfolio that we believe our customers has been very much appreciated.
We plan to begin selling this flexible product in 2022.
Looking forward all of <unk> remains focused on investing in the business to accelerate the research and development as well as to expand the commercial infrastructure to drive revenue growth of.
We're already showing the market great innovation with the expansion of our validated protein library on 3000 of space with holistic pathway coverage, which further expansions to move to 4500.2022.
We also continue to add a meaningful number of hires especially through our commercial and R&D teams are going on.
All parts of our business on our investing slightly ahead of the growth curve, we are expecting in the months quarters and years to come.
We ended 2020 with 214 I am pleased and at the end of June we had 317 of them. Please.
120 of our in the commercial team.
In addition, we recent pixels for a secondary offering by selling shareholders led by assume equity a significant equity holding in July.
And we were excited about the opportunity to speak with many of you underwrote and we wanted to announce the planning and the Investor Day in New York on November 15, where we hope to have the chance to meet the number of you in person.
We will continue to monitor the COVID-19 developments.
A save the date of more details the come soon.
Before taking a closer look at our financials I wanted to pause on conclude in summary, we're pleased with our second quarter performance. We are confident that we have the framework in place to continue executing on our investment and strategic plans and drive meaningful growth for the years to come.
Digging deeper into our financials.
Total revenue for the second quarter of 2020 volume was $17.7 million as compared to $7.9 million in the second quarter of 2020.
Revenue growth was driven by the continued momentum in the expansion of our explore platform with Q2.2021, representing the first full quarter of sales activity for our explore kicked offering which was launched late Q1.2021.
Our explore services revenues are driven by a broad spectrum of customers across the Americas, EMEA and rest of the world.
At the end of the quarter.
We have 16 externally place next door installations that we have generated revenue from in 2020 and in the first six months of 2021.
2020 kit revenues related to early access customers and primarily occurred in the fourth quarter.
We have seen an average pull through on these customers of some $600000 with individual customer spend range from less than $100000.2 million orders.
Analysis services revenue for the second quarter was.
The <unk>.
Seven 8 million as compared to $5.1 million for the second quarter of 2020. The service growth continues to be largely driven by explore across all regions.
<unk> revenue for the second quarter of 2021 and was $5 million of.
Compared to $1.7 million for the second quarter of 2020.
His revenues for primarily driven by the X for kit launch and more specifically the day cold water.
The slower kids revenues accounted for 39% of all ex fuel revenue in the quarter.
The majority of that the attributed to two one on the water.
Other revenues.
$8 million for the second quarter of 2021 as compared to $1 million for the second quarter of 2020.
Looking at revenue by geography revenue in North America was $7.8 million as compared to $4.5 million for the second quarter of 2020 in.
In EMEA revenue was $8.7 million as compared to $2.9 million in Q2 of 2020.
And revenue in China in best of the level of $1.2 million as compared to north of $5 million in the second quarter of 2020.
Cost of goods sold was five 8 million of the second quarter, resulting in the gross profit of $11.9 million in the second quarter of 2021 as compared to cost of goods sold of $2.3 million during the second quarter of 2020, resulting in the gross profit of $55.6 billion for the second quarter of 2000.
'twenty.
Adjusted gross margin decreased.
The 70, 776% versus 72, 4% for the second quarter of last year.
This decrease of 180 basis points was primarily due to a reduction in the service gross margin in the quarter assets continue to invest in capacity.
And the decrease in the keep the margin as Q2.2020 was positively impacted our production variances.
Our strategy to increase kit revenues as a percentage of total revenues of six.
Expect it to have a positive mix impact over time.
By segment adjusted gross profit margin for analysis service was 64% for the second quarter as compared to 6% to 7% for the second quarter of 2020.
The decrease in adjusted gross profit percentage compared to the second quarter of 2012. This was primarily due to a continued investment into the lack of capacity ahead of the anticipated growth and temporary and reduce deficient in the lab as we introduce the explore service offerings.
Adjusted gross profit margin for kits was 90% for the second quarter of 2020 as compared to 95% for the second quarter of 'twenty.
The decrease in adjusted gross margin for kits was primarily due to a positive inventory variance in 2020, and the 2021 gross margin level represents an underlying margin level for the business.
Adjusted gross profit margin for <unk> was 44% for the second quarter of 2021 as compared to 6% to 2% for the second quarter of 2020.
The decrease in average gross margin compared to the second quarter of 2020 was due to a single order to a core lab.
Yes.
Total operating expenses for the second quarter of 2021.
$23.3 million as compared to $10.5 million for the second quarter of 2020.
We continue to invest according to our strategy, our strategic plan and what we communicated during the roadshow, adding a meaningful number of hires to our commercial non D. Teams in particular that as mentioned previously we are really growing all parts of the.
Business.
And investing slightly ahead of the curve.
Excluding non recurring items related to our follow on offering of.
Operating expenses for the second quarter were $21.9 million, including DNA.
Excluding DNA, our operating expenses for the quarter were $18.1 million.
We ended 2020 with 214 employees and at the end of June we had 317 employees.
Mm 120 people on the commercial team.
We see a lot of opportunity ahead for all linked.
And we are investing accordingly.
Our operating expenses are broken out the as follows.
Selling expenses for the second quarter were $7 million compared to $3 million for the second quarter of 10 to 20.
Administrative expenses for the second quarter of 2021, or $12.2 million as compared to 4 million for the second quarter of 2020.
Administrative expenses in the second quarter of 2021 included approximately $1.4 million of expenses related to our follow on offering and $2.7 million related to intangibles amortization stemming from the purchase price allocation. Following <unk> acquisition of all the link in 2019.
Further administrative expenses have increased year over year as we incurred additional expenses in the ordinary course of business of being a public company.
Research and development expenses were $5 million for the second quarter of 2021 versus $3.5 million for the same period in the prior year.
We continue to invest in our R&D efforts and we are proceeding according to plan on all our major initiatives.
Other operating income loss of <unk> 9 million in the second quarter of 2021 compared to a loss of $1 million of.
In the second quarter of 2020.
Net loss for the second quarter of 2021.10.
$10.6 million as compared to $2 million for the second quarter of plant sequencing.
Net loss per share for the second quarter of 2021 was <unk> as.
As compared to 28.
For the second quarter of 2020.
Adjusted EBITDA for.
The second quarter of 2021 was negative $6.3 million as compared to negative $1.3 million for the second quarter of 2020.
We ended the second quarter with $168.1 million of cash on cash equivalents.
Sure.
Moving to our outlook for the rest of the year due to the continued uncertainty around the Covid pandemic, we maintain the revenue guidance and we expect revenue for the full year 2021 to be in the range of 90% to $92 million, representing 6% to 6% to 70% growth over 2020.
In summary, the second quarter of 2021, well, it's another quarter of continued execution on growth.
We are pleased with the growing traction and redouble robust adopt adoption across our entire portfolio of products and services.
We look forward to providing future updates on the investments we are making into our business on our strong operational and financial results.
At this point, we will open up for questions.
Sure.
If you would like to ask a question. Please press star one on your telephone keypad.
Your first question comes from the line of Mike, Matt <unk> with Goldman Sachs.
Hi, Good morning, Oscar and Karl Thanks for taking my questions.
Just to start out on unexplored, you mentioned that the 16, new installations and you said it was a good mix of Biopharma for <unk> I'm, just wondering in terms of mix versus new versus existing customers customers I know theres. Some early access in there too, but any new customers represent part of the 16 new installations.
Yes, so I think I mean, we see sort of a healthy mix of both.
<unk> and new customers.
In the Indian installations.
But I would say sort of the majority is sort of from a dollar of perspective is coming from from existing customers, but there are definitely some new customers in there.
Yes.
It's.
On a mixture of both.
The new customer interest, which is exciting to see as well as Oscar mentioned.
Some of it's good uptake from our existing customers and the adoption of the platform.
Great. Thanks for that and then.
Just on on.
The competitive landscape and the low plex targeted area. Obviously a lot of your focus has been on explore for for good reason I'm just wondering in terms of the signature launch and the importance of that to kind of building the growth momentum within the low plex, how important is that.
And are you seeing.
The growth within the target and focused products.
So I can start by brief comment on I can hand over to Carl I think I mean, we do see good traction on the signature launch and just sort of at the restaurants in the guidance that we put all of the sort of the the monetary contribution from signature is relatively limited.
The handing over to call. So you can comment more on sort of the momentum that we see in sort of the signature part of the on target part of the business.
Yes, thanks, Oscar so, yes, the uptake and interest has been.
It has been tremendous so far and it's sort of.
Outstripped expectations a bit.
And the signature instrument is absolutely going to be.
Think of critical for our success in the in the mid and low price business in fact, I guess sort of reflecting back on your prior question.
Also seeing sort of interest.
Beyond the existing customer base into new customers as well so we.
We are seeing that entry point for the instrument and the acceptability of the technology that's being.
Allowed by the launch of this instrument to open up the market. So we think thats going to be a very important story for us as long as there as well as Oscar mentioned.
<unk>.
In terms of development of future products and sort of a custom offering that will be available sometime in 2022, which then just sort of further addresses the needs of our customers are expressing.
Great. Thanks, very much I appreciate the question.
And your next question comes from sung <unk> Nam with <unk>.
Hi, Thanks for taking my questions just a couple of questions for me.
On the coral initiatives that you guys announced.
I was curious does that include both academic and biopharma customers as well or do you anticipate that day.
And then.
Just kind of out of curiosity with that.
Right.
Partnership utilized.
Explore.
For the the target.
Platforms, just kind of curious how theyre thinking of how I guess.
Partners are thinking about that.
Yes.
Thanks, Karl do you want to take that question.
Yeah, Yeah, I don't want to speak on behalf of the consortium and our leadership, but.
For the best of my knowledge, it's open for any collaborators to participate.
Certainly encourage you to reach out to the consortium.
And then Conversely.
For the best of my knowledge is well I don't think Theres, a limitation on which day that they would.
Particularly on the annualized so.
Again sort of.
Refer to the consortium, but.
But yes, the tremendous amount of opportunity I think overall for the user community to contribute in that specific way as.
As well with with any sort of rolling data.
Got you great. Thank you and then.
On the UK biobank.
Project E.
You mentioned the.
The project for the at the 1500.
In completed by the end of the year and then for the 30.72 revenue.
The recognition for the first half of next year.
I was wondering.
For the.
What's the contribution from the 30.72 might look like would that be kind of comparable to.
What you're going to recognize for the the first part of the project.
Yes, Thanks, Thats a great question. So the extension of the UK Biobank. So we're running the first 15.36. This year and then the the extension will be another 50 and 36 of the guests to the 30.72 sort of next year.
And we have you know unfortunately for the year sort of under contract with the big the.
The company is in the consortium, so we cant disclose the exact details, but the sort of overall contribution from the extension will be sort of smaller from a monetary perspective than the initial 15.36.
But then of course, the sort of scientific contribution and also the sort of the contribution from <unk>.
Strategic positioning perspective rolling.
Yeah.
It's great.
Sure.
Got you great. Thank you so much.
Thank you.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
We have no further questions in queue.
Okay. Thank you. So thank you everyone for joining us today and for your continued interest in Knoll, Inc. We look forward to keeping you updated on our progress advancing proteomics, but also enhancing shareholder value and we'll hope to see you in person at our plan on Investor Day on November 15th Thank you and have a great day.
<unk>.
This does conclude today's call. Thank you for your participation you may now disconnect your lines.