Q2 2021 Seer Inc Earnings Call
[music].
Ladies and gentlemen, thank you for spending by a.
Welcome to the SEC, Inc. Second 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 this session you will need to get the start and the one key on your Touchtone telephone.
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I would now like to turn the conference over to your speaker host.
Gary Mandeville of Investor Relations. Please go ahead.
Thank you.
Earlier today <unk> released financial results for the quarter ending June 32021.
If you have not received this news release or.
If you'd like to be added to the Companys distribution list. Please send an email to investors at <unk> Dot bio.
Joining me today from here is there a need for Eric Rod Chairman, Chief Executive Officer and founder.
Sudan, President and Chief operating Officer, and David Horton 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 then the meaning of federal securities laws.
These 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 in the section entitled forward looking statements in the press release issued today.
For a more complete list and description. Please see the risk factors section of the company's quarterly report on Form 10-Q for the quarter ending June 32021, and then its other filings with the Securities and Exchange Commission.
Except as required by law.
<unk> 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 August 12.2021.
That I would like to turn the call over to Omi.
Thanks Terry.
I could not be more pleased with the positive trajectory of our business as we continue to build on our strong start to the year.
Market response to the paragraph product suite has been strong.
We're engaging with an increasing number of potential customers, representing a wide range of end markets across a broad set of geographies.
This quarter, we achieved an important commercial milestone reporting our first revenue related to the sale of the paragraph product suite.
Coming into 2021.
We set high expectations for our team.
Two quarters into the year, we're already ahead of where we thought we would be on a number of fronts. These include one the breadth and the depth of our customer pipeline.
The overall performance of our product in the hands of customers through the quality and the depth of data generated from our customers even with relatively small sample sizes that they've used to date and.
And for the level of interest from geographies across the globe.
I'm encouraged by our continued commercial and operational execution as we move through our three phased commercialization approach building under collaboration Phase. We're currently in limited release phase and we expect to enter a broad release phase in early 2022.
We are well underway and making excellent progress in limited release, working with select set of customers across our key market segments.
A rich funnel of prospective customer continues to expand and mature we've now shipped and installed the proto graft product suite at multiple limited release sites, including our first international customer.
And we're on track to onboard a high single digit number of limited release customers in 2021.
Customers are excited by the performance at a paragraph product suite.
Speed with which they are getting up and running and the data they're generating using their own samples.
We are working closely with our customers to demonstrate the power of the paragraph across a wide range of applications, including discovery research early detection and biomarker discovery.
The early data being generated is affirming that the Purdue graph is truly a disruptive product that will enable unprecedented access to the pro deal.
With this project sometime in early fall.
Another of our customers the broad institute used to produce GAAP product suite to study patient samples that we had previously analyzed using extensive depletion and fractionation workflows for unbiased proteomics in essence, they were aiming to compared to Porto graph to the workflow for which data was already known.
With the protium graph, they were able to detect low abundance proteins of known significantly the disease area as well as novel candidate Biomarkers.
This study was completed in a small fraction of the time compared to the original fractionation and depletion workflow.
Importantly, the protium <unk> provided this depth and breadth of Proteomic coverage with reproducibility speed and ease of use which will enable much larger studies previously not possible.
Another example would be a global CRO with deep expertise and unbiased proteomics, who compares a set of samples run on the paragraph product suite.
With samples previously one under existing deep unbiased proteomics workflow.
When comparing the result, the samples process under project graph yielded three times the number of proteins identify.
Compared to their existing workflow and they were able to detect the majority of FDA approved biomarkers.
While most of these biomarkers on the higher side of protein abundant scale. They were also able to detect a very large number of low abundance proteins such as cytokines that are of interest in disease pathogenesis.
This data is another example of the access to the broad dynamic range of the plasma proteome that the protium <unk> uniquely provides at speed and scale that is unprecedented for unbiased proteomic.
It is clear that our customers are eager to move forward to perform large scale studies using unbiased deep plasma proteomics with amino acid level resolution in fact as customers are seeing the early data they are expanding their vision of what's possible with the research and.
Despite the fact that many of the particular product suites were only installed mere weeks or months ago. Our customers already have generated compelling data that have resulted in the submission of numerous abstracts for upcoming fall conferences, we expect to see more of this activity, including peer reviewed publications from sphere and potentially from customers as we.
Heading into 2022.
We also continue to see significant interest from geographies outside the U S, especially from Asia Pacific region and in particular, China.
Given the high level of interest for immediate access to our technology in China and given the robust performance of the <unk> product suite across our customer sites, we decided to accelerate our entry into this market.
We were excited to announce this afternoon that we've established a distribution partnership in China with enlighten medical we view, China as a significant opportunity for us and.
And we're delighted to partner with and like to enabled institutions across the region to access to produce our products suite.
In light is not only a region specific distributor, but also a partner with significant market access and regulatory expertise across the <unk> space in China.
We believe this expertise will be valuable for our strategy of establishing the <unk> product suite as a critical component of the entire research to clinical continuum in China.
As we expand our footprint across an increasing number of customer types with what is already a disruptive product. We're also pushing the envelope with the next set of innovation to further extend the capabilities of the photograph products suite.
And I expect over the coming months, you will hear more from us about some of these innovations which include driving a protein coverage, increasing throughput driving down sample volume and optimizing use of model organisms.
We're absolutely committed to driving a continuous stream of new products and product enhancements that will set the pace for innovation in proteomics.
Extremely proud of our team the ingenuity and the commitment to delivering products.
That allow us to access the proteome in ways never before possible.
We're making strong progress across all dimensions of our business. We have reached a significant milestone with our first quarter of product revenue.
And where were at the onset of our journey and there is still much to be done and to execute we're accelerating towards the opportunity in front of us.
So inspired by the enthusiasm of our customers the early successes with the <unk> product suite there.
They are growing ambition for future projects.
The impact we can have together to enhance our understanding of health and disease with that.
I will now turn the call over to Amit for more detail on our commercial progress.
Thank you.
I'm excited by our strong commercial progress as we execute against our objectives for the year.
We have an expanding installed base of customers across discovery research translational research clinical development and biomarker discovery to name a few.
The paragraph product suite is performing exceptionally well in the hands of customers, enabling them to generate data in waste previously not possible.
We are well on our way to meeting our target of high single digit limited release customers for the year and are expanding our funnel of prospective customers in advance of broad release.
We are growing our commercial team and along with it our commercial footprint.
I am, particularly excited we have entered into a distribution agreement within like medical and are poised to enter China with a partner who has expertise and capabilities will enable us to reach the most impactful customers efficiently and expeditiously.
We are taking the right steps to broaden to footprint and impact of our technology and to deliver the type of customer experience that will set us apart from others in our industry.
Despite the significant demand for our product we remain committed to executing our three phased commercial approach, which we believe is ideal for commercialization of truly disruptive product such as the <unk> product suite.
We are already seeing the benefits of this strategy in action.
We have signed multiple limited release customers, who have committed to undertake large scale studies demonstrating the unique power of the FERC graft product suite across a broad range of applications.
These are generally multi months and in some cases multi year agreements, which include a commitment to scaling to large cohort sizes in a relatively short timeframe.
Given the nature and extent of these commitments. It is important to ensure mutual alignment and fit to create a foundational partnership that can expand over the course of time.
As these customers scaled their studies, we anticipate the pace of abstract presentations and publications to accelerate and lead to even greater demand for access to the paragraph products suite.
As Hamid mentioned a number of these customers submitted abstracts have already been accepted by leading industry conferences. This fall, including SMS at the end of October.
We are delivering a highly differentiated customer experience and enabling our customers to rapidly expand our scientific vision.
The experiences of these customers are creating blueprints that others can follow to adopt and rapidly scaled defer to GAAP product suites during broad release.
And number of our collaboration in limited release customers have begun to serve as reference sites for prospective customers and are willingly sharing their experience and their excitement with others, who are interested in accessing the power of the FERC GAAP product suite.
The relationships insights and proof points, we're establishing during the first two phases of our commercial release are enhancing our ability to develop applications fine tune our approach to enable new markets and drive the next phase of product adoption.
With each new data set generated using the protein GAAP product suite, we are seeing the power of this platform in action.
Importantly in every case, we're aware of data generated from the protein graft product suite is exceeding the data generated using any other approach coupled.
Coupled with the ease of use scalability and recruit a stability of the platform. The Purdue graph products suite is demonstrating a level of performance that is unparalleled.
I believe this unprecedented access to the proteome will drive novel insights from large scale unbiased and deep proteomics studies using our technology.
With that I will now turn the call over to David for more details around our financials.
Thanks, Amit total revenue for the second quarter of 2021 was $1.3 million compared to 71.
In the second quarter of 2020, the increase in revenue was a result of initial sales of our <unk> product suite and services performed for <unk>.
Revenue for the second quarter of 2021 was $837000 and consisted primarily of products related to the <unk> product suite, including SP 100 instruments consumable assay kits and platform evaluation studies. In addition to product revenue related party revenue was $380000 and consisted of consumable sales and serve.
<unk> performed for Greg Gnomic Grant revenue was $117000 and represents reimbursement of research costs related to our SBR grant from the National Institutes of health.
Total gross profit inclusive of grant revenue was $748000 for the second quarter of 2021, representing a gross margin of 56%.
Total operating expenses for the second quarter of 2021 were $17.4 million.
Compared to $6.4 million in the second quarter of 2020.
Research and development expenses for the second quarter of 2021 were $6.9 million compared to $4.5 million.
In the second quarter of 2020, the increase in R&D expenses was primarily driven by an increase in product development efforts related to our paragraph product suite, including additional compensation benefit and stock based compensation expense related to an increase in personnel and cost for expansion of facilities as well as increased costs associated with laboratory equipment.
Selling general and administrative expenses for the second quarter of 2021 were $10.5 million compared to $1.9 million in the second quarter of 2020. The increase in SG&A expenses was driven primarily by increased compensation and benefits and stock based compensation expense associated with an increase in personnel and an increase in cost.
Associated with becoming a publicly traded company.
Net loss for the second quarter was $16.6 million compared to $6.1 million in the second quarter of 2020.
We ended the second quarter of 2021 with approximately $518 million in cash cash equivalents and investments.
As I shared on our last call we plan to significantly increase our investment to grow and scale. The company as we work to realize our vision of providing novel biological insights that will lead to new discoveries and ultimately improve human health.
As our work progresses, we continue to see numerous attractive investment opportunities across all areas of the organization that will allow us and our customers to unleash the full power of the <unk> product suite and its unique capabilities.
These areas include assay application and software development. In addition, we are continuing to scale up our commercial manufacturing operations ahead of broad release in early 2022.
At this point I'd like to turn the call back to meet for closing comments.
Thanks, David.
Incredibly proud of our team and the progress, we're making to transform proteomics and empower the scientific community.
Our continued execution has been fantastic and I'm extremely excited about the early data our customers are generating with the <unk> product suite.
This growing set of customer data further substantiates my belief that our approach to deep unbiased rapid proteomics at scale, we will open up a new gateway to the proteome, we look forward to continuing to update you on our progress and with that we will now open it up to questions.
Ladies and gentlemen.
Wanted to ask a question you will need to press. The Star then the one key on your Touchtone telephone to withdraw your question press the pound key.
Standby, while we compile the Q&A roster.
And our first question coming from the line of.
Doug Schenkel with Cowen Your line is open.
Hey, guys. Good afternoon, and thank you for taking my questions.
I want to add.
I think given some of the progress you've talked about over in terms of what you've done since the last quarterly update.
I think some of these questions are fair if it's still too early of course, I think that'll be understandable too, but let me let me take a shot so.
We understand that.
Current early customers span.
Areas like discovery research oncology complex disease, and then just core protein protein genomics.
Wondering if you could share how some of these early users are either thinking about or actually integrating proteus graph into.
They are existing in house mass spec based workflows, essentially how theyre actually moving these towards production.
It's not too early to maybe talk a little bit about if a number of workflows for customer.
The volume.
The volume of each workflow, particularly for large scale biomarker studies, such as over 1000 samples and across these parameters how would you how.
How would you expect these to ramp over the coming quarters again, maybe it's a little bit too early for that but really anything along those lines would be really helpful to hear about.
Got it thanks, so much.
Let me maybe tackle the front end of it.
Also a comment as well.
As we have mentioned one of the key events of the <unk> graph is that it's.
MFS and frankly more broadly just detect the agnostic.
And so it can really sit in front of nearly any mass spec and customers with a wide range of mass spec systems can and frankly hard integrating the product and our product suite as part of the overall workflow.
And they are having great success, I think youre going to see some of that.
In terms of abstract presentation from that in the upcoming conferences.
Now as much as we're encouraged.
By the way in which customers are utilizing a progressed some of the questions that you asked for example, the number of workflow.
Per match back or the pull through I, just think it's too early to comment on it.
I do think that we're going to see a steady state kind of pace of.
Integration of this workflow in front of the mass specs.
And then we're going to get embedded sensor the pull through over time.
With regards to how much utilization are we seeing this really depends on the customer type for example, we expect academic.
Academic sites.
To run at a slower pace than if you would commercial sites.
Can also expect that within commercial.
Some very high throughput users.
Some other ones and from local food users I think very similar to what we saw in genomics or sequencing.
I think your question is a perfectly fair one Doug, but I would ask you to maybe just hold until we have a large installed base.
And a clear set of customer indicators that I can give you.
More color and be more accurate in my.
And my sense of customer utilization of I don't know, if Amit wants to add to that.
Or not but Thats my perspective.
Certainly definitely nothing to add other than just to reiterate and I think.
Doug having lived through this at least on the sequencing side of it.
<unk> introduced a variety of different products I think as you know.
It does take a few quarters.
Worth of sort of developing an installed base and getting a sense for the rhythm of the customers for us to be able to have a good enough feel to give you color.
Only other thing I'd say is just.
The couple of things that are standing out to me is the ease with which the system is not only getting sort of installed but the ease with which customers are coming up to speed in using it as part of that integrated workflows to the point that you made earlier and it's part of it is good.
<unk> was designed to do exactly that but still I've been very pleasantly surprised by the ease of that and the second piece of it is to a point that when we made a little bit early actually in the prepared remarks is as they are turning to beginning to turn the crank and generating data. It is very clear that the data is.
Is it was very positive for our customers. So I think what you'll likely see is that we're going to get to a sense where customers are going to get their arms around the types of projects. They want to do in in the course of a couple of quarters and I think at that point, you're going to be in a better position to give you some indicators.
That's great.
Is helpful I know youre, making a lot of progress.
Even acknowledging that I know some of that question was probably a little bit early but I figured I'd take a shot at that.
Color you could provide was helpful. So thank you for that.
Maybe just one more kind of I guess more focused on your.
Pipeline initiatives.
And specifically just thinking about where you are in nanoparticle designed and optimization efforts I think you previously mentioned.
But the fact that there is 275 distinct nanoparticles now and that there is.
Ill comment publication, which will give us a little bit more detail on the profile of those and I'm just wondering as we.
As we hear more about that what are the potential implications for pipeline development from here.
Just on that are we going to be able to.
Understand your ability and maybe boost our confidence in your ability to generate additional data particle panels.
<unk>.
Pacific applications more quickly.
And also along those lines how are you learning about platform breadth.
What we learned more about the confidence you have in working with different biological sample types different disease indications different R&D workflows.
At a high level I guess I'm, just trying to get at how important.
The upcoming publications are coming in at an even higher level, where you are in this process.
Thanks, Doug.
Look by the way.
Last time, we announced it was 275 that number has grown.
Im not prepared to give a new number now, but suffice it to say that I think on literally every call will have a growing number.
<unk> that is growing nanoparticle library prep portfolio I can kind of break it down into two parts. One is having this large library is going to give a ton of optionality.
In terms of what could be done in terms of product development and also give us speak to the market.
Now.
I would say the area of research and discovery efforts has been an area of extreme progress.
Even since the last time, we spoke.
So this local progress has been super sharp what were seeing really is.
We are observing almost a network effect, if you would in our understanding and progress because of the additional samples nanoparticles.
Providing just an incredible level of insight into the design engineering, where for example different combinations of different nanoparticles different assay conditions.
And then this set of data is going to be highly enabling in terms of different products to address different applications now some of what I just said, Doug you should see.
And an upcoming publication from tier I.
I would say in the second half of the year.
Hopefully you won't have to wait too long in that second half of the year to see it.
But more importantly, I think a lot of that work is going to find its way into the market. The next set of products from <unk>.
And then Doug I think once once you see the papers once you began to see whats coming I assume youre going to have a very clear understanding of what's possible using this platform.
That's great. Thank you again.
I'll, let others hop in and have a good night.
Thank you so much Doug.
Our next question coming from the line of Derik de Bruin with Bank of America. Your line is open.
Thanks for taking the question. This is Mike <unk> on for Derik.
I want to follow on a little bit on Doug last question there.
Approaching from a slightly different angle.
The way, we kind of think thorough it as.
Anytime you have a new product rollout, especially something that's near the Proto graph theres going to be a learning curve. There is sort of an experimentation phase where.
The customers, even though early active customers work out the Kinks not just in the protein itself, but also in their workflow and their experimental design and their own processes.
Now that Youre now that youre into the first quarter of <unk>.
Direct interactions with customers and they have the product on hand.
Any thoughts on how that's rolling out any updates on sort of timing on.
When youre going to start seeing some of the more.
Some of the protocols to get worked out.
And go from the sort of early.
Beta testing and experimentation payments, a little bit more routine work and you'll get some of the.
Some more regular.
Feedback and response from these customers.
Eric I wanted to make one one.
If you mean editorial before I respond, which is this is not a beta product what's in the hands of our limited release customer is basically the commercial product that's going to be in the hands of the.
Sure.
The broad release customers.
There is going to be various permutations of that product over time now.
These are early days, but we are seeing some trends emerging for.
For example, we're seeing different customers, having preferences for their workflow parameters dependent.
Depending on the EMS systems that they're using in their labs like gravy in time or the choice of analysis from data acquisition through the use of data independent acquisition or does it depend on acquisition.
These are going to guide other follow on customers, which is going to allow other customers to scale faster.
So.
So it isn't that we're getting standard critical come on some customers, but we're definitely seeing that customers have their preferences.
Working through that and a lot of that is going to be guidance for others, we're going to scale.
And I think this is actually going to be.
An important part as we shift from our limited release phase to a broad commercial strategy.
Is there anything you want to add to that from a customer perspective.
Yes, maybe just a couple of things actually one of the things that we did invest a ton of effort and time and I think the team has done an exceptional job.
He is creating what I'll call. These standardized canned workflows. So the weakness is actually working out in the case of certainly nearly in every customer to date is we delivered a product to them.
It's a standard workflow that configuration with their existing maps back.
And what they are used to running including some of the data analysis, and so customers can get up and running with that and what we're finding is and again as you would expect is as we were working with the customers. We are taking in some of their input and refining some of those some of those workflows, but but I want to be really really clear teaser like well tested tried and true work.
Clothes that customers are getting so that they can actually go ahead and get on with the with the process up.
Evaluating biological samples as opposed to tinkering with technology development right and so so we are definitely not in that phase of people are tinkering with technology development actually using the technology in the way. It was intended on biological samples as they do that we and they are gaining insights that are helping us refine those workflows.
I would actually expect what's going to happen and in the case of subsequent product in.
And David Warren has brought this up a couple of times one of the advantages of it.
Geographically is that we have the ability to deliver a package of consumables and assays that run on the same existing automation workflow and the same set of detectors. So customers the ability to be able to adopt and integrate new sets of nanoparticles new sets of assays is going to be very very straightforward and simple.
To a large extent because it literally is substituting one set of amount of protocols in an assay protocol for another.
So in that respect what we're seeing is it is playing out as we had hoped in the hands of these customers that as I mentioned earlier their ability to drop in a part of your graph and get up and running with very little customization has been fantastic.
Okay. Thanks, that's helpful and if I could ask a follow up.
Regarding your announcement earlier today.
And like medical and China.
Previously you had the non exclusive commercial agreement the broker was thermal.
You've got the distribution agreements in Hawaii could you walk us through sort of the commercialization strategy, how that's evolving.
Why you decided to move in this direction in China sort of any additional thoughts about U S expansion and.
And how that is going to get built out.
Yeah, Mike look China is a substantial market for us.
And we see substantial potential for our business over time, we had originally anticipated and you may recall, a few months ago, when we talked about it.
Into China, maybe second half of 2022, but really three things came up faster than we had expected that allowed us to go to China earlier first was.
We were observing basically product performance that has been exceptional.
Which made it clear to us that the product is ready for international customers.
At cost.
Every metric robustness run success uptime data quality.
Critical product suite has been performing exceptionally well at customer sites.
Second reason was.
That the.
The high caliber established commercial and academic institutions that were really demanding access to the platform.
In that geography.
And we've been frankly very encouraged by the caliber of interest of the customer.
And we wanted to.
Access to the peripheral graft with them sooner.
And then the third.
Which I think was also very critical that we're able to identify a phenomenal distributor partner with expertise in the life sciences on the clinical market.
Really with a broad range of capabilities.
As I said earlier included regulatory compliance.
<unk> been manufacturing, if you ever need to in China.
This is someone by the way that that <unk> had known.
The founder.
For a number of years from his time at Illumina ruling.
So maybe I'll have actually Amit comment on that relationship, which actually with an important part of our decision as well.
Yes, I mean I think as.
As you would expect.
It's really important that when you get into an agreement with the distributor it is with any partner, but certainly distributor.
That there is a high level of familiarity trust that there is alignment of philosophies and a high degree of confidence that not only are they going to be able to sell and service the product, but they're going to do it in a way that really represents our brand and what we want to.
What we want to represent to the customers and having worked with <unk> at Illumina for a little over four years. He was the general manager for Illumina business in greater China.
I've worked with him have traveled with them I've seen them with customers.
I Couldnt think of somebody who will be a better partner for us in China and.
So that helped massively right because otherwise you usually youre spending a bunch of time trying to vet distributors and find the right partner, so being able to come across.
Being able to work with right. Lynne was also another significant driver that gave us a high degree of confidence that we can not only go into China, but do it very successfully and havent representation of Crs a brand and company that we will be very proud of and obviously that was a critically important factor to us.
Got it thank you so much.
Our next question coming from the line of Tycho Peterson with Jpmorgan. Your line is open.
Hey, Thanks, maybe another angle on the last questions around China I'm, just wondering if you could help us.
Size of the opportunity there if you could also talk a little bit about the funding environment are they potentially ahead or behind us in terms of funding proteomics.
What kind of applications do you think would be emerging per se or is it more research versus clinical.
Let me have maybe David ticket profit that David Yes.
Sure Tycho I think just from a.
I think if I got your different.
Pieces market opportunity.
Types of research and funding.
Look obviously the market opportunity, we feel is sizable and it goes without saying, which is obviously why we want to we want to get there is both of them each talked about we're moving there a little bit sooner than maybe we planned.
But I think we are going to take a similar strategy Tycho, which is this is this isn't.
Just sell it to anyone that comes I think we're going to be very measured in terms of finding the right partners.
The limited release strategy.
We already have.
Had have beginning conversations with folks there and I think theres a lot of interest as you might expect on the on the research side right just fundamental research.
Target discovery.
Also.
Folks who may want to be.
More commercial services to provide broader access to folks who may not want to bring it in house again very similar strategy to what we're doing here.
So again I think I think there is.
Feel like again big opportunity.
There is funding there we are going to be measured and then over time.
Again, as we think about it I think again over the long term, we would expect China to kind of be in the similar realm of percent of revenues as other life science tools companies right.
I'm sure that I know you are very familiar with so again, we just feel like it's a great opportunity to to get a foothold there.
To begin again, a measured rollout.
Okay, and then on the clinical front.
A couple questions I'm just curious if you could talk contraction here in the U S. Preclinical partnerships I know one of your partners by Odessa.
I think the preclinical over to data so curious what you're seeing from them.
Any any traction with liquid biopsy partnerships and then the IPO model I think had about two thirds of placements next year on the commercial side about a one third on the academic side is that still kind of the right ratio in your view.
Tycho Amit here.
Look liquid biopsy, obviously, it's an area where.
You are going to see folks moving into multi omics, there's some that R&D and multi omics.
We spun off prognostic, which is.
I think there's going to be one that does fuel mix and unbiased way versus some of the others.
That do some targeted panels will help your mix. So certainly liquid biopsy is an area of very significant interest.
In the proteomics.
Let me have will need may be kind of build on that as well and give you. Some of the other customer types on the clinical views that we're going to see coming Tycho.
So Tycho I think the guidance.
Roughly two thirds.
Commercial a third economic flashing on profit definitely holds if anything I'd say halfway through the year.
I think I think the commercial side opportunity is quite frankly, really substantial and and not only that but I think their ability the commercial partners to move to scale is so significant that I wouldn't be surprise ending the year at the mixes even more heavily weighted towards commercial and in that.
Connecting to the first part of the question that you asked.
They are going to be representative of their key applications as we've talked to you guys about for some time, which is early detection is certainly complex disease, we have a number of licensing.
Expect biomarker discovery.
As well as therapeutic development and the other category that's important for us are.
These cro's that serve a variety of pharmaceutical and biotech company. So I would say, that's where we see the opportunity to shift the way it is going to be more commercially oriented but again remember this is partly driven by our choice, we're driving it towards that more than anything else and then in terms of.
Clinical impact I think what do you think thats again early days of data, but I think if the data that people are generating off of the pretty GAAP is indicative of the potential of this technology and I believe it is.
There is a wealth I believe of novel biologically relevant information.
People are going to access that I think is going to underpin at a minimum significant areas of translational research and ultimately play out in one way or another in the clinical continuum, which is why as a company. We've been continuously focused on building a platform and an organization that can serve across that entire continuum.
From research all the way through the clinic, because we think this product is going to have a definitive roles to play in every one of those stages and again Super early days I want to be cautious about my enthusiasm, but I think if it continues to play out the way it has.
I think youre going to see that happen and I think we are going to see it across the breadth of customers, we're going to have with the clinical focus.
Okay. That's helpful. And then two quick ones before I hop off the commercial organization can you just update us on number of sales reps today, and where you think youll be at year end and any hiring constraints. We hear from a lot of companies that <unk> capital is kind of the bottleneck now not financial capital and then separately on the pipeline you have.
A couple of things higher protein coverage throughput sample volume optimizing from dialog is kind of one or two things.
On top of the wish list for customers.
They are asking for today that youre going to prioritize.
Tycho what was the second part of your question repeat definitely went with that.
Just on the R&D pipeline, you highlighted higher protein coverage throughput sample volume optimizing from model organisms I'm just wondering from customers. If there's just kind of one or two of those that are most important today.
Got it okay. Thanks Tycho.
Okay.
We're both scaling the commercial organization and are also investing in systems.
Allow us to execute efficiently flawlessly.
Commercially on the personnel side.
I would say we're in great shape, we have a fantastic team, we're adding to it.
Now remember this year, we're focused on Onboarding basically high single digit number of limited release customers to add on top of that for collaboration.
Customers and we announced that the last earning call that we have finished that.
So we're going to be.
A little bit lighter.
Later on sales Rep, then we're going to be say bye.
By the end of next year when we're in a broad release now we expect as you move forward.
The ratio of sales rep to application scientists.
At least through the end of 'twenty two to be kind of one to one and I think it's important for us to be deeply engaged with the customers. The science, we not only want to deliver an exceptional customer experience.
What draw from their insights.
Early customers are going to be very important for us Tycho in terms of where we invest in RMB.
And how do we invest in our next commercial product, which actually feeds right into your second part of your question, which is among the areas that we are focused on what are some of the ones that the customers are showing interest look theres obviously.
Desktop protein coverage is one where people are very very interested.
And youre going to see.
An abstract submitted by one of our collaborators that hopefully we presented at the upcoming <unk>.
They compared very deep workflow of there is one of the deepest and plasma proteomics or are published.
That literally takes a very very long time to run very few samples and they compare that to an automated workflow coming off the photographs to predict upfront 16 samples.
Seven hours and so they compared that workflow with the Proteus and.
And the progress delivered a level of performance both in depth of coverage.
We produce stability coefficient of the variance in those assays.
That is on par or in some metrics even better than.
They were able to see some biomarkers at an earlier time point.
In disease progression with even their own assets.
Identify so these are extremely promising so depth of coverage I think is one.
Obviously sample volume is another one.
A lot of these clinical samples are very scared the customer's view them.
Very precious in their mind and so we are working towards decreasing.
Ample volume and then the other area that I would say Tycho, we're hearing a lot from customers in terms of their interest.
Is protein variance so ppm post translational modification other protein variants that just happens that the level of <unk>.
<unk> variance in kind of timed.
These these pts and protein variance.
So with health and disease status. These are the areas that we're hearing from the customer that's important to them. These are also areas that we're heavily investing in.
Okay. Thank you.
And our next question coming from the line of <unk> with Morgan Stanley. Your line is open.
Hey, guys good evening.
So.
One quick follow up on China.
Is there an angle here with clinical adoption, perhaps Mike even.
Broad research market traction versus the U S. I mean, particularly as liquid biopsy companies there look to play catch up but some of our USPS.
Let me take that.
So.
Really good question I think.
Again.
I would be careful about how we answer it because we're just entering the market.
I think the commercial draw in China is very very significant for similar reasons as it is quite frankly outside of China right. I mean, I think getting any depending on what you are talking about.
A lot of these companies are missing a lot of money in genomics and other Omega and it progressed to a certain extent and I think for the next great leap forward that they want to make and particularly to be able to differentiate themselves from their competitors and or get to a place where the efficacy of their test is greater durability to get reimbursement is greater all the rest of it.
<unk> is a very very important area for them, whether it's an early detection or in complex disease cardiovascular neuro degenerative aging you name it.
That's the beauty of it is that we are biology plays out proteins have a critically important role to play and so I would expect that we're going to see a similar pattern as we do in the U S. In that the initial draw and in part quite frankly, the initial focus of our commercial effort is going to be on the commercial side of the customers because I think they can move faster and.
They have more samples and they can process more but that doesn't mean, we're going to do it at the expense of academics. So I think I would expect a similar type of the balance thats, what youre going to see in the U S and the rest of the world, but you're hitting on a really really important point and the size of the commercial market in China is really substantial they are extraordinarily well funded and growing fast.
And that is one of the primary reasons why obviously it is such an area of importance not only to us but to just about any company operating in this space.
Very helpful.
And then Amit.
I wanted to drill a little bit deeper on the point you made about throughput being one of the priority areas for your pipeline and how you expect the spec Saturday evolves.
How much of that is driven by perhaps a desire to more rapidly penetrate.
The Tam here in a sense I mean elasticity.
Demand.
And is there any feedback that you can share with us from your limited release.
Collaboration customers on that probably 75% to 800 dollar price point that you've outlined.
Hey, Jeff Let me take the first part of that.
But which as you know customers meet customer demand.
And then the price elasticity in their feedback on the <unk>.
We're going to charge them.
Answer that.
Look we're seeing customers.
Being very interested in and almost very surprised by the quality of data that's coming off the proteome Beth.
If we take Oregon health.
They are about to embark on a study that is.
Over a log larger than any study that institution has ever been able to do before in terms of deep unbiased proteomics.
And they could do that at a cost price time.
<unk> makes it possible to do those type of studies.
And what does that work for a customer will look they are paying for those types of studies in terms of accessing the transcriptome or the genome and they pay for that all day long.
The issue Hasnt been there.
Sure.
And market there to be had that you could charge people for the issue has been there was just no technologies that could deliver them.
So I think as the <unk> prunier graft enhance our customer is delivering the kind of value the kind of data that we had anticipated would be possible.
There is going to be a massive demand and I think we're seeing that and I think Amit you comment on that in terms of accessing it and the kinds of studies.
Going to do with it I think those are just going to grow let me help when we talk about maybe pricing and elasticity of Venezuela sure. So I think.
Again early days, so I want to.
Continue to be careful about making statements that are brought in to general but.
In part because of I think what <unk> said the capability, where this technology is affording customers is something that they just can't fundamentally access any other way and the value of the resulting output. So the insights they are getting.
Is novel.
And it is orthogonal and it's highly valuable to understanding biology.
And I think for a lot of it I would say the key opinion leaders have you been talking to.
They are more focused on that quite frankly than the unit price of a sample in part because we're operating in a unit price of the sample is.
An area they are familiar with in terms of genomics and transcriptome extent epigenomics right. So we're not creating new price points in the era of biological molecular biological research or translational that aren't familiar with it is a matter of helping them understand that the value of the data that they're getting out of this approach is.
At least on par and in my guess is in most cases more helpful than if they were to spend that money say doing another biological approach and so again it is a little bit of self selection process. Because we are talking with key opinion leaders right. So I want to be careful about that but so far price in terms of adoption of the technology. Among these customers.
<unk> has not been an issue really the driver has been I want to be able to do properly powered studies and be able to discover things I can't with any other methodology and we provide them with a mechanism to do that and Thats whats exciting people and that's what's bringing them to the table and thats whats getting them to scale this status.
Very helpful. Thank you.
Then one final one for me.
The first part of it is more of.
In an industry question not not a <unk> specific question.
But can you talk a little bit about the amount of proteomics work today that happens outside of the mass spec setting.
And then my second question is.
It will mean that you're starting to have any early conversations with potential population proteomics customers at all in terms of just socializing them with the perennial grass.
So let me let me take a crack at the first part of it.
Which is.
We live today in the era.
You did not have access to.
Two deep unbiased proteomics at any scale that actually matter to any customers.
And so if you're a customer.
In need of.
Accessing the content.
Any scale that is relevant to put that in the context of some genomic information that you may have where you do have access to scale you were forced to go down an alternative path, which is really a targeted path.
I think the.
I think we can.
Saw that movie play.
15 years ago.
Where we're at we had provided access.
And then when mgs and genomic came up.
Well from a revenue perspective, they were below once customers gain access to that technology.
They adopted it and it went forward.
I think we're going to have to see.
What the revenue growth is going to look like <unk> and then we can kind of model that out for you in predicting how much of those targeted uses are going to come become part of an unbiased approach.
From a discovery perspective.
Content that gets generated using biased approach. It's just you can even compare that to what is possible to do using a targeted panel.
And today pays us.
Other than the customers that have the <unk> in the lab no other customer account access.
On by proteomics at any scale.
So maybe let me tackle the second part of the question.
You'll have to forgive me can you repeat the second part of your question I'm, having short term of course.
Just curious if you started having any early conversations with potential population proteomics customers, just socializing them with the technology and the pretty aggressive.
Certainly in terms of in terms of discussions yet I think.
As I think we mentioned it.
There is.
There's a high level of awareness around our technology, particularly in the broader community.
And that includes folks who are involved with population genomics. So yes, but those are those are awfully early conversations.
I said, our focus right now, especially in 2021, establishing that base of limited release customers for this specific subset of applications that we had highlighted to you all and <unk> and we're making excellent progress around that but obviously, we're talking to other groups as well because those up those other opportunities. We expect are going to materialize in the future.
But certainly that's not where our focus is right now in 'twenty one.
Perfect. Thanks, so much guys.
Thank you Jeff.
And I'm showing no further questions at this time.
Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect everyone have a great day.
Okay.
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Okay.
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Okay.
Yes.
Yes.
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Ladies and gentlemen, thank you for standing by.
Welcome to the SEC, Inc. Second 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 this session you will need to press. The Star then the one key on your Touchstone telephone.
If you recall offer assistance. Please press Star then zero.
I'd now like to turn the conference over to your speaker host.
Gary Mandeville up Investor Relations. Please go ahead.
Thank you.
Earlier today <unk> released financial results for the quarter ending June 32021.
If you have not received this news release or if you'd like to be added to the company's distribution list.
Please send an email to investors at fear that bio joining.
Joining me today from here is there a need for oxide Chairman Chief Executive Officer and founder.
Sudan, President and Chief operating Officer, and David Horton 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 then the meaning of federal securities laws.
These 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 in the section entitled forward looking statements in the press release issued today.
For a more complete list and description. Please see the risk factors section of the company's quarterly report on Form 10-Q for the quarter ending June 32021.
And then its other filings with the Securities and Exchange Commission.
Except as required by law.
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 August 12.2021.
That I would like to turn the call over to Amie.
Thanks Kerry.
Could not be more pleased with the positive trajectory of our business as we continue to build on our strong start to the year.
Market response to the potent product suite has been strong and we.
We're engaging with an increasing number of potential customers, representing a wide range of end markets across a broad set of geographies.
This quarter, we achieved an important commercial milestone reporting our first revenue related to the sales of the paragraph product suite.
Coming into 2021.
We set high expectations for our team.
Two quarters into the year, we're already ahead of where we thought we would be on a number of fronts. These include one the breadth and the depth of our customer pipeline.
The overall performance of our product in the hands of customers through the quality and the depth of data generated from our customers even with relatively small sample sizes that they've used to date and for the level of interest from geographies across the globe.
I'm encouraged by our continued commercial and operational execution as we move through our three phased commercialization approach building on the collaboration Phase. We're currently in limited release phase and we expect to enter a broad release phase in early 2022.
We are well underway and making excellent progress in limited release, working with a select set of customers across our key market segments.
A rich funnel of prospective customer continues to expand and mature we've now shipped and installed the proto graft product suite at multiple limited release sites, including our first international customer and we're on track to onboard at high single digit number of limited release customers in 2021.
Customers are excited by the performance at a paragraph product suite.
Speed with which they are getting up and running and the day that theyre generating using their own samples.
We're working closely with our customers to demonstrate the power of the paragraph across a wide range of applications, including discovery research early detection and biomarker discovery.
The early data being generated is affirming that the Purdue graph is truly a disruptive product that will enable unprecedented access to the proteome with amino acid level of resolution.
This level of resolution at this scale and speed is only enabled by the paragraph product suite and is essential for understanding the enormous complexity of the proteome and the role specific protein various play in affecting health and disease.
Initial data from our customers and prospective customers has exceeded my expectation and is demonstrating the depth and the breadth of proteomics access that can be easily generated from our platform.
<unk> Knight Cancer Institute was the first customer to receive a project graph products late last year.
They were able to successfully used data from the pilot project in Q1 to secure funding for prostate cancer study of at least 500, and possibly up to 1000 samples.
This would be at least an order of magnitude greater than any unbiased and deep plasma proteomics studies undertaken at the Institute to date, they expect to initiate this project sometime in early fall.
Another of our customers the broad institute user producing a product suite to study patient samples that we had previously analyzed using extensive depletion and fractionation workflows for unbiased proteomics in essence, they were aiming to compared to pornograph to the workflow, where we stated was already known.
With the protium graph, they were able to detect low abundance proteins of known significantly the disease area as well as novel candidates Biomarkers.
This study was completed in a small fraction of the time compared to the original fractionation and depletion workflow importantly, the portio graph provided this depth and breadth of proteomic coverage with reproducibility speed and ease of use which will enable much larger stuff.
He has previously not possible.
Another example would be a global CRO with deep expertise and unbiased proteomics, who compared a set of samples run the paragraph products suite.
With samples previously won under existing deep unbiased proteomic workflow.
When comparing the result, the samples processed under <unk> graph yielded three times the number of proteins identify.
Compared to their existing workflow and they were able to detect the majority of FDA approved biomarkers.
While most of these biomarkers on the higher side of proteins abundant scale. They were also able to detect a very large number of low abundant proteins such as cytokines that are of interest in disease pathogenesis.
This data is another example of the access to the broad dynamic range of the plasma proteome that the protium <unk> uniquely provides at speed and scale that is unprecedented for unbiased proteomic.
It is clear that our customers are eager to move forward to perform large scale studies using unbiased deep plasma proteomics with immuno acid level resolution in fact as customers are seeing the early data, they're expanding their vision of what's possible with their research.
Despite the fact that many of the project GAAP product suites were only installed mere weeks or months ago. Our customers already have generated compelling data that have resulted in this submission of numerous abstracts for upcoming fall conferences, we expect to see more of this activity, including peer reviewed publications from sphere and potentially from customers as.
We head into 2022.
We also continue to see significant interest from geographies outside the U S, especially from Asia Pacific region and in particular, China.
Given the high level of interest for immediate access to our technology in China and given the robust performance of the <unk> product suite across our customers sites, we've decided to accelerate our entry into this market.
We were excited to announce this afternoon that we've established a distribution partnership in China with enlighten medical we view, China as a significant opportunity for us and we're delighted to partner with and like to enable institutions across the region to access to produce our products suite.
In light is not only a region specific distributor, but also a partner with significant market access and regulatory expertise across the <unk> space in China. We believe this expertise will be valuable for our strategy of establishing the <unk> product suite as a critical component of the entire research to clinical continuum.
In China.
As we expand our footprint across an increasing number of customer types with what is already a disruptive product. We're also pushing the envelope with the next set of innovations to further extend the capability autograph product suite.
And I expect over the coming months, you will hear more from us about some of these innovations which include driving a protein coverage, increasing throughput driving down sample volume and optimizing use of model organisms.
We're absolutely committed to driving a continuous stream of new products and product enhancements that will set the pace for innovation in proteomics.
I'm extremely proud of our team.
Genuity and their commitment to delivering products.
That allow us to access the proteome in ways never before possible.
We're making strong progress across all dimensions of our business. We have reached a significant milestone with our first quarter of product revenue.
And where we are at the onset of our journey and there is still much to be done and to execute we're accelerating towards the opportunity in front of us.
So inspired by the enthusiasm of our customers the early successes with the <unk> product suite there.
They are growing ambitions for future projects.
The impact we can have together to enhance our understanding of health and disease with that I will now turn the call over to a need for more detail on our commercial progress.
Thank you.
I'm excited by our strong commercial progress as we execute against our objectives for the year.
We have an expanding installed base of customers across discovery research translational research clinical development and biomarker discovery to name a few.
<unk> products suite is performing exceptionally well in the hands of customers, enabling them to generate data in ways previously not possible.
We are well on our way to meeting our target of high single digit limited release customers for the year and are expanding our funnel of prospective customers in advance of broad release.
We are growing our commercial team and along with it our commercial footprint.
I am, particularly excited we have entered into a distribution agreement with <unk> medical and are poised to enter China with a partner who has expertise and capabilities will enable us to reach the most impactful customers efficiently and expeditiously.
We are taking the right steps to broaden to footprint and impact of our technology and to deliver the type of customer experience that will set us apart from others in our industry.
Despite the significant demand for our product we remain committed to executing our three phased commercial approach, which we believe is ideal for commercialization of truly disruptive product such as the protein graft products suite.
We are already seeing the benefits of this strategy in action.
We have signed multiple limited release customers, who have committed to undertake large scale studies demonstrating the unique power of the paragraph product suite across a broad range of applications.
These are generally multi months and in some cases multi year agreements, which include a commitment to scaling to large cohort sizes in a relatively short timeframe gives.
Given the nature and extent of these commitments. It is important to ensure mutual alignment and fit to create a foundational partnership that can expand over the course of time.
As these customers scaled our studies, we anticipate the pace of abstract presentations and publications to accelerate and lead to even greater demand for access to defer to graft product suite.
As Amit mentioned a number of these customers submitted abstracts have already been accepted by leading industry conferences. This fall, including <unk> at the end of October.
We are delivering a highly differentiated customer experience and enabling our customers to rapidly expand our scientific vision.
The experiences of these customers are creating blueprints that others can follow to adopt and rapidly scaled refer to GAAP product suite during a broad release.
A number of our collaboration in limited release customers have begun to serve as reference sites for prospective customers and are willingly sharing their experience and their excitement with others, who are interested in accessing the power of the FERC GAAP product suite.
The relationships insights and proof points, we're establishing during the first two phases of our commercial release are enhancing our ability to develop applications fine tune our approach to enable new markets and drive the next phase of product adoption.
With each new data set generated using the protein GAAP products suite, we are seeing the power of this platform in action.
Importantly in every case, we're aware of data generated from the protein graft product suite is exceeding the data generated using any other approach coupled.
Coupled with the ease of use scalability and reproducibility of the platform. The <unk> product suite is demonstrating a level of performance that is unparalleled.
I believe this unprecedented access to the proteome will drive novel insights from large scale unbiased and deep proteomics studies using our technology.
With that I will now turn the call over to David for more details around our financials.
Thanks, Amit total revenue for the second quarter of 2021 was $1.3 million compared to 71.
In the second quarter of 2020, the increase in revenue was a result of initial sales of our <unk> product suite and services performed for a prime gnomic.
Product revenue for the second quarter of 2021 was $837000 and consisted primarily of products related to the <unk> product suite, including SB 100 instruments consumable assay kits and platform evaluation studies. In addition to product revenue related party revenue was $380000 and consisted of consumable sales and <unk>.
<unk> performance for Greg Gnomic Grant revenue was $117000 and represents reimbursement of research costs related to our SBR grant from the National Institutes of health.
Total gross profit inclusive of grant revenue was $748000 for the second quarter of 2021, representing a gross margin of 56%.
Total operating expenses for the second quarter of 2021 were $17.4 million.
Compared to $6.4 million in the second quarter of 2020.
Research and development expenses for the second quarter of 2021 were $6.9 million compared to $4.5 million in the second 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 additional compensation benefit and stock based compensation expense related to an increase in personnel and cost for expansion of facilities as well as increased costs associated with laboratory equipment.
Selling general and administrative expenses for the second quarter of 2021 were $10.5 million compared to $1.9 million.
In the second quarter of 2020.
The increase in SG&A expenses was driven primarily by increased compensation and benefits and stock based compensation expense associated with an increase in personnel and an increase in costs associated with becoming a publicly traded company.
Net loss for the second quarter was $16.6 million compared to $6.1 million in the second quarter of 2020.
We ended the second quarter of 2021 with approximately $518 million in cash cash equivalents and investments.
As I shared on our last call we plan to significantly increase our investment to grow and scale. The company as we work to realize our vision of providing novel biological insights that will lead to new discoveries and ultimately improve human health.
As our work progresses, we continue to see numerous attractive investment opportunities across all areas of the organization that will allow us and our customers to unleash the full power of the <unk> product suite and its unique capabilities.
These areas include assay application and software development. In addition, we are continuing to scale up our commercial and manufacturing operations ahead of broad release in early 2022.
At this point I'd like to turn the call back to <unk> for closing comments.
Thanks, David.
Incredibly proud of our team and the progress, we're making to transform proteomics and empower the scientific community.
Our continued execution has been fantastic and I'm extremely excited about the early data our customers are generating with the pornograph product suite.
This growing setup customer data further substantiates my belief that our approach to deep unbiased rapid proteomics at scale will open up a new gateway to the proteome, we look forward to continuing to update you on our progress and with that we will now open it up to questions.
Ladies and gentlemen, as a reminder to ask a question you will need to press. The Star then the one key on your Touchtone telephone to withdraw your question press the pound key.
Standby, while we compile the Q&A roster.
And our first question coming from the line of.
Doug Schenkel with Cowen Your line is open.
Hey, guys. Good afternoon, and thank you for taking my questions.
I wanted to I think given some of the progress you talked about over in terms of what you've done since the last quarterly update.
I think some of these questions are fair if it's still too early of course, I think that'll be understandable too, but let me let me take a shot so.
We understand that your current early customers span.
Areas like discovery research oncology complex disease, and then just core protein protein genomics I'm wondering if you could share how some of these these early users are either thinking about or actually integrating protean graph into.
There are existing in house mass spec based workflows.
Actually how they are actually moving these towards production.
It's not too early to maybe talk a little bit about a number of workflows for customer.
Volume.
Volume of each workflow, particularly for large scale biomarker studies, such as over 1000 samples and across these parameters.
Or would you how.
How would you expect these to ramp over the coming quarters again, maybe it's a little bit too early for that but really anything along those lines would be really helpful to hear about.
Doug Thanks, so much.
Let me maybe tackle the front end of it.
<unk> also comment as well.
As we have mentioned what are the key advantages of the <unk> graph is that it's.
MFS and frankly more broadly just detect the agnostic.
And so it can really sit in front of just nearly any mass spec and our customers with a wide range of mass spec systems can and frankly, our integrated product suite as part of the overall workflow.
And they are having great success, I think youre going to see some of that.
In terms of abstract presentations from that in the upcoming conferences.
Now as much as we're encouraged.
By the way that we should customers are utilizing the program. Some other questions that you asked for example, the number of workflow.
Port mass spec or their pull through adjusting is too early to comment on it.
I do think that we're going to see a steady state kind of pace of.
Integration of this workflow in front of them aspects.
And then we're going to get embedded sensor the pull through revenue overtime.
With regards to how much utilization are we seeing this really depends on the customer type for example, we expect.
Academic sites.
To run at a slower pace than if you would commercial sites.
Can also expect that within commercial we will have some very high throughput users.
Some other ones and some low throughput users I think very similar to what we saw in genomics or sequencing.
I think your question is a perfectly fair one Doug, but I would ask you to maybe just hold until we have a larger installed base.
And a clear set of customer indicators that I can give you.
More color and be more accurate in my.
And my sense of customer utilization of I don't know if only wants to add to that.
Or not but Thats my perspective.
Well, certainly definitely nothing to add other than just to reiterate in.
Doug having lived through this at least on the sequencing side of it.
Introduced a variety of different products I think as you know.
It does take a few quarters worth of sort of developing an installed base and getting a sense for the rhythm of the customers for us to be able to have a good enough feel to give you color.
The other thing I'd say is just.
Couple of things that are standing out to me is the ease with which the system is not only getting sort of installed but the ease with which customers are coming up to speed in using it as a part of that integrated workflows to the point that you made earlier.
Part of it is good.
It was designed to do exactly that but still I've been very pleasantly surprised by the ease of that and the second piece of it is to a point that we made a little bit early actually in the prepared remarks as they are turning to beginning to turn to crank and generating data. It is very clear that the data is.
It is very positive for our customers. So I think what you'll likely see is that we're going to get to a sense where customers are going to get their arms around the types of projects. They want to do in in a course of a couple of quarters and I think at that point, you're going to be in a better position to give you some indicators.
That's great.
Is helpful I know youre, making a lot of progress.
Even acknowledging that I know some of that question was probably a little bit early but I figured I'd take a shot at that.
Color you could provide was helpful. So thank you for that.
Maybe just one more kind of I guess more focused on your.
Pipeline initiatives.
And specifically just thinking about where you are in nanoparticle design and optimization efforts I think you previously mentioned.
The fact that there is 275 distinct nanoparticles now and that there is.
Ill comment publication, which will give us a little bit more detail on the profile of those and I'm just wondering as we.
As we hear more about that what are the potential implications for pipeline development from here.
Just on that are we going to be able to.
Understand your ability and maybe boost our confidence in your ability to generate additional data particle panels.
<unk>.
Pacific applications more quickly.
And also along those lines how are you learning about platform breadth.
What we learned more about the confidence you have in working with different biological sample types different disease indications different R&D workflows.
At a high level I guess I'm, just trying to get at how important.
The upcoming publications are coming in at an even higher level, where you are in this process.
Thanks, Doug.
Look by the way.
Last time, we announced it was 275 that number has grown.
Im not prepared to give a new number now, but suffice it to say that I think literally every call will have a growing number.
Locations that is growing nanoparticle library prep portfolio I can kind of break it down into two parts. One is having this large library is going to give us a ton of optionality.
In terms of what could be done in terms of product development and also give us speak to the market.
Now.
I would say the area of research and discovery efforts has been an area of extreme progress I would say even since the last time we spoke.
So the slope of progress has been Super sharp.
What we're seeing really is.
We're observing almost a network effect, if you will in our understanding and progress because of the additional samples nanoparticles.
Providing just an incredible level of insight into the design engineering, where for example different combinations of different nanoparticles different asset conditions.
And then this set of data is going to be highly enabling.
In terms of different products to address different applications now some of what I just said, Doug you should see.
In an upcoming publication from Thier.
I would say in the second half of the year.
Hopefully you won't have to wait too long in that second half of the year to see it.
More importantly, I think a lot of that work is going to find its way into the market that next set of products from <unk>.
And Doug I think once you see the papers once you began to see what's coming.
<unk> has a very clear understanding of what's possible using this platform.
Okay.
That's great. Thank you again.
Ill, let others hop in and have a good night.
Thank you so much Doug.
Our next question coming from the line of Derik de Bruin with Bank of America. Your line is open.
Thanks for taking the question. This is Mike risking on for Derek.
I want to follow on a little bit on Doug last question there.
Approach it from a slightly different angle.
The way, we kind of think through it as.
Anytime you have a new product rollout, especially something that's near the Proto graph theres going to be a learning curve. There is sort of an experimentation phase where.
The customers even the early active customers work out the Kinks not just in the protein itself, but also in their workflows and their experimental design and their own processes.
Now that you're now that you're into the first quarter of <unk>.
Direct interactions with these customers and they have the product on hand.
Any thoughts on how that's rolling out any updates on sort of timing on.
When youre going to start seeing some of the more.
Some of the protocols get worked out.
And go from the sort of early beta testing experimentation phase until little more routine work and you'll get some of the.
So more regular feeds.
Feedback and response from customers.
Eric I wanted to make one one.
If you remain editorial before I respond, which is this is not a beta product what's in the hands of our limited release customer is basically the commercial product that's going to be in the hands of the.
The broad release customers.
There's going to be various permutations of that product over time now.
These are early days, but we are seeing some trends emerging.
For example, we're seeing different customers, having preferences for their workflow parameters depending.
Depending on the EMS systems that they're using in their labs like gravy and time.
The choice of analysis from data acquisition through the use of data independent acquisition or does it depend on acquisition.
I think these are going to guide other follow on customers, which is going to allow other customers to scale faster.
So.
So it isn't that we're getting standard critical come our phone customers, but we're definitely seeing that customers have their preferences.
They are working through that and a lot of that is going to be guide for others, we're going to scale.
And I think this is actually going to be.
An important part as we shift from our limited release phase to a broad commercial strategy.
Anything you want to add to that from a customer perspective.
Yes, maybe just a couple of things actually one of the things that we did invest a ton of effort and time and I think the team has done an exceptional job. He is creating what I'll call. These standardized canned workflows. So the way. This is actually working out in the case of certainly nearly in every customer to date is we delivered.
The product to them.
He is a standard workflow that configures with their existing maps back and and what they are used to running including some of the data analysis and so customers can get up and running with that and what we're finding is and again as you would expect.
We are working with the customers we are taking in some of their input and refining some of those some of those workflows, but but I want to be really really third user like well tested tried and true workflows that customers are getting so that they can actually go ahead and get on with the with the processor.
Evaluating biological samples as opposed to tinkering with technology development right and so so we are definitely not in that phase of people are tinkering with technology development actually using the technology and the way. It was intended on biological samples as they do that we and they are gaining insights that are helping us refine those workflows.
I would actually expect what's going to happen as indicated in the case of subsequent product.
And David Horn has brought this up a couple of times one of the advantages of the Cardiograph is that we have the ability to deliver a package of consumables and assays that run on the same existing automation workflow and the same set of detectors. So customers the ability to be able to adopt and integrate new sets of nanoparticles new sets.
Assays is going to be very very straightforward and simple.
To a large extent because it literally is substituting one set of amount of protocols in an assay protocol for another.
And so in that respect what we're seeing is it is playing out as we had hoped in the hands of these customers that as I mentioned earlier their ability to drop in a protium graph and get up and running with very little customization has been fantastic.
Okay. Thanks, that's helpful and if I could ask a follow up.
Regarding your announcement earlier today.
And like medical and China.
Previously you had the non exclusive commercial agreement with broker was thermal.
You've got the distribution agreement with the Hawaii could you talk us through sort of the commercialization strategy, how that's evolving.
Why you decided to move in this direction in China sort of any additional thoughts about O U S expansion.
And how that's going to get built out.
Yeah, Mike look China is a substantial market for us.
And we see substantial potential for our business over time, we had originally anticipated and you may recall, a few months ago, when we talked about it.
Into China, maybe second half of 2022, but really three things came up faster than we had expected that allowed us to go to China earlier.
Was.
We were observing basically product performance that's been exceptional.
Which made it clear to us that the product is ready for international customers.
Across nearly every metric robustness run success uptime data quality.
Critical product suite has been performing exceptionally well at customer sites.
Second reason was that.
<unk>.
The high caliber established commercial and academic institutions that were really demanding access to the platform.
In that geography.
And we've been frankly very encouraged by the caliber of interest of the customers.
And we wanted to.
Provides access to the protium graphically them sooner.
And then the third.
I think it was also very critical that we're able to identify a phenomenal distributor partner with expertise in the life sciences on the clinical market.
Really with a broad range of capabilities that.
As I said earlier included regulatory compliance even manufacturing if you ever need to in China.
This is someone by the way that that will meet had known.
The founder.
Otherwise for number of years from his time at Illumina ruling.
And so maybe I'll have actually Amit comment on that relationship, which actually was an important part of our decision as well.
Yes, I mean I think.
As you would expect.
Sure.
It's really important that when you get into an agreement with the distributor it is with any partner, but certainly distributor.
That there is a high level of familiarity trust that there is alignment of philosophies on a high degree of confidence that not only are they going to be able to sell and service the product, but they're going to do it in a way that really represents our brand and what we wanted to.
What we want to represent to the customers and having worked with Roland at Illumina for a little over four years. He was the general manager for alumina business in greater China.
No I've worked with them I've traveled with them I've seen them with customers.
I Couldnt think of somebody who will be a better partner for us in China and.
And so that helped massively right because otherwise you show that you are spending a bunch of time trying to vet distributors and find the right partner, so being able to come across.
Being able to work with right. Lynne was also another significant driver that gave us high degree of confidence that we can not only go into China, but do it very successfully and have a representation of Crs our brand and company that we will be very proud of and obviously that was a critically important factor to us.
Got it thanks, so much.
Our next question coming from the line of Tycho Peterson with Jpmorgan. Your line is open.
Hey, Thanks, maybe another angle on the last questions around China I'm, just wondering if you could help us.
Size the opportunity there if you could also talk a little bit about the funding environment I may potentially be ahead or behind us in terms of funding proteomics.
What kind of applications do you think would be emerging per se or is it more research versus clinical.
Let me have maybe David I'll take a crack at that David.
Sure Tycho I think just from a.
<unk>.
I think if I got your different.
Pieces market opportunity.
Types of research and funding.
Look obviously the market opportunity, we feel is sizable and it goes without saying, which is obviously why we want to we want to get there is both of them you just talked about we're moving there a little bit sooner than maybe we planned.
But I think we are going to take a similar strategy Tycho, which is this is this isn't.
Just sell it to anyone that comes I think we're going to be very measured in terms of finding the right partners.
The limited release strategy.
We already have.
Have are beginning conversations with folks there and I think theres a lot of interest as you might expect on the.
On the research side right just fundamental research.
Target discovery.
Also.
Folks who may want to.
B.
More commercial services to provide broader access to folks who may not want to bring it in house again very similar strategy to what we're doing here.
So again I think I think we feel like again big opportunity.
There is funding there we are going to be measured.
And then over time again, as we think about it I think again over the long term, we would expect China to kind of be in the similar realm of percent of revenues as other life science tools companies right.
That I'm sure.
You are very familiar with so again, we just feel like it's a great opportunity to to get a foothold there.
To begin again, a measured rollout.
Okay, and then on the clinical front.
A couple questions I'm just curious if you could talk contraction here in the U S. Preclinical partnerships I know one of your partners by Odessa actually I think been preclinical over to data. So curious what you're seeing from them.
Any traction with liquid biopsy partnerships and then the IPO model I think you had about two thirds of placements next year on the commercial side about a one third on the academic side is that still kind of the right ratio in your view.
Tycho Amit here.
Look liquid biopsy, obviously, it's an area where.
You are going to see folks moving into multi omics, there's some that R&D and multi omics.
We spun off prognostic, which is.
I think it's going to be one that does put molecule mix in an unbiased way versus some of the others that.
Do some targeted panels will help your mix. So certainly liquid biopsy is an area of very significant interest.
In the proteomics.
Let me have <unk>, maybe kind of build on that as well and give you some of the other customer types under clinical reviews that we're going to see coming Tycho.
Tycho I think the guidance of roughly two thirds.
Commercial a third economic slashing on profit definitely holds if anything I would say halfway through the year.
I think I think the commercial side opportunity is quite frankly, really substantial and and not only that but I think their ability the commercial partners to move to scale. It's so significant that I wouldn't be surprised ending the year the mixes even more heavily weighted towards commercial and in that.
Connecting to the first part of the question that you asked.
They are going to be representative of their key applications as we've talked to you guys about for some time, which is early detection is certainly complex disease, we have a number of.
Essence.
Expect biomarker discovery.
As well as therapeutic development and the other category that's important for us are these.
These cro's that serve a variety of pharmaceutical and biotech company. So.
I would say, that's where we see the opportunity.
The way it is going to be more commercially oriented but again remember this is partly driven by our choice.
You can get towards that more than anything else and then in terms of clinical impact I think what are the things that.
Again early days of data, but I think if the data that people are generating off of the pretty GAAP is indicative of the potential of this technology and I believe it is.
There is a wealth I believe of novel biologically relevant information that people are going to access that I think is going to underpin at a minimum significant areas of translational research and ultimately play out in one way or another in the clinical continuum, which is why as a company.
Many we've been continuously focused on building a platform and an organization that can serve across that entire continuum from research all the way through the clinic because we think this product is going to have a definitive roles to play in every one of those stages and again Super early days.
Want to be cautious about my enthusiasm, but I think if it continues to play out the way it has.
I think youre going to see that happen and I think we're going to see it across the breadth of customers, we're going to have with a clinical focus.
Okay. That's helpful. And then two quick ones before I hop off the commercial organization can you just update us on the number of sales reps today, and where you think youll be at year end and any hiring constraints. We hear from a lot of companies that capital is kind of the bottleneck now not financial capital and then separately on the pipeline.
I waited a couple of things higher protein coverage throughput sample volume optimizing smaller organisms kind of one or two things.
On top of the wish list for customers.
They're asking for today that youre going to prioritize.
Tycho what was the second part of your question repeat that's what's wrong with that.
Just on the R&D pipeline, you highlighted higher protein coverage throughput sample volume optimizing from model organism I'm just wondering from customers. If there's just kind of one or two of those that are most important today.
Got it okay. Thanks, Tycho look.
We're both scaling the commercial org.
We are also investing in systems.
Allow us to execute efficiently flawlessly commercially.
Commercially.
On the personnel side.
I would say we're in great shape, we have a fantastic team, we're adding to it.
Now remember this year, we're focused on on boarding basically high single digit number of limited release customers to add on top of the four collaboration customers and we announced that the last earning call that we have finished that.
So we're going to be.
<unk>.
A little bit lighter.
Later on sales Rep, then we're going to be say bye.
By the end of next year when we're in a broad release now we expect as you move forward the ratio of sales rep to application scientists.
At least through the end of 'twenty to be kind of one to one and I think it's important for us to be deeply engaged with the customers. Their science, we not only want to deliver an exceptional customer experience.
But draw from their insights.
Early customers are going to be very important for us Tycho in terms of where we invest in R&D.
And how do we invest in our next commercial product, which actually feeds right into your second part of your question, which is among the areas that we are focused on what are some of the ones that the customers are showing interest look theres obviously.
Desktop protein coverage is one where people are very very interested.
And youre going to see.
And abstracts submitted by one of our collaborators that hopefully we presented at the upcoming ASN.
They compared very deep workflow of there is one of the deepest and plasma proteomics ever published.
That literally takes a very very long time to run very few samples and they compared it to an automated workflow coming off the photographs to predict Gulf run 16 samples.
Seven hours and so they compared that workflow with the Proteus and.
And the progress delivered a level of performance both in depth of coverage.
Yep.
Reproducibility coefficient of the variance in those assay.
That is on par or in some metrics even better than they.
They were able to see some biomarkers at an earlier time point.
In disease progression with even their own assay.
<unk> identified so these are extremely promising so depth of coverage I think is one.
Obviously sample volume is another one.
A lot of these clinical samples are very scared the customer's view them.
Very precious in their mind and so we are working towards decreasing.
Sample volume and then the other area that I would say Tycho, we're hearing a lot from customers in terms of their interest.
Is protein variance, so Pts post translational modification.
Other protein variants that just happens at the level of <unk>.
Genetic variance and kind of timing.
These these ppm than protein variance to two us with health and disease status. These are the areas that we're hearing from the customer that is important to them. These are also areas that we're heavily investing.
Okay. Thank you.
And our next question coming from the line of <unk> with Morgan Stanley. Your line is open.
Hey, guys good evening.
So.
One quick follow up on China.
Is that an angle here with clinical adoption, perhaps Mike even leapfrogged research market traction versus the U S. I mean, particularly as liquid biopsy companies there look to play catch up but some of our USPS.
Let me take that.
So.
Really good question.
Would it be I would be careful about how we answer it because we're just entering the market.
I think the commercial draw in China is very very significant for similar reasons as it is quite frankly outside of China right. I mean, I think getting any depending on what you are talking about.
A lot of these companies are missing a lot of money in genomics and other Omega.
And it progressed to a certain extent and I think for the next great leap forward that they want to make and particularly to be able to differentiate themselves from their competitors and or get to a place where the efficacy of their test is greater durability to get reimbursement is greater all the rest of it proteomics is a very very important area for them and whether it's an early detection of our income.
Z as cardiovascular neuro degenerative aging you name it right I mean, that's the beauty of it is that we're biology plays out proteins have a critically important role to play and so I would expect that we're going to see a similar pattern as we do in the U S. In that the initial draw and in part quite frankly, the initial focus of our commercial effort is going to be on the commercial side.
Of the customers because I think they can move faster and they have more samples and they can process more but that doesn't mean, we're going to do it at the expense of academics. So I think I would expect a similar type of a balance thats, what youre going to see in the U S and the rest of the world, but you are hitting on a really really important point the size of the commercial market in China is really.
Sure they are extraordinarily well funded and growing fast and that is one of the primary reasons why obviously it is such an area of importance not only to us but to just about any company operating in this space.
Very helpful and then EMEA.
I wanted to drill in a little bit deeper on the point you made about throughput being one of the priority areas for your pipeline and how you expect the spec Saturday evolves.
How much of that is driven by perhaps desire to more rapidly penetrate.
The Tam here and there.
Sense I mean elasticity.
Demand.
And is there any feedback that you can share with us from your limited release.
Collaboration customers on that 75% to 800 dollar price point that you've outlined.
Hey, Jeff Let me take the first part of that.
But which is customers new customer demand.
And then the price elasticity in their feedback on the on our.
We're going to charge them.
I answered that.
Look we're seeing customers.
Being very interested in and almost very surprised by the quality of data that's coming off the proteome Bev.
So if we take Oregon health.
They are about to embark on a study that is.
Over a log larger than any study that institution has ever been able to do before in terms of deep unbiased proteomics.
And they could do that at a cost price time.
<unk> makes it possible to do dose phase I studies.
And what does that work for a customer will look they are paying for those types of studies in terms of accessing the transcriptome or the genome and they pay for that all day long.
The issue Hasnt been is there.
The end.
Market there to be had that you could charge people for the issue has been there was just no technologies that could deliver that so.
So I think as the premier graft enhance our customer is delivering the kind of value the kind of data that we had anticipated it would be possible.
There is going to be a massive demand and I think we're seeing that and I think <unk> comment on that in terms of accessing debt and the kinds of studies.
Going to do with it I think those are just going to grow let me help when we talked about maybe pricing and elasticity of that as well sure. So I think.
Again early days, so I want to.
Continued to be careful about making statements that are brought in to general but.
In part because of I think what for me just set the capability, where this technology is affording customers is something that the just can fundamentally access any other way and the value of the resulting output. So the insights there Kevin.
Is novel.
And it is orthogonal and it's highly valuable to understanding biology.
And I think for a lot of the I would say the key opinion leaders that we've been talking to.
They are more focused on that quite frankly than the unit price of a sample in part because where we're operating in a unit price of the sample is.
An area there are familiar with in terms of genomics and transcriptome extent epigenomics right. So we're not like creating new price points in the era of biologic revenue molecular biological research or translational that aren't familiar with it is a matter of helping them understand the value of the data that they're getting out of this approach is.
At least on par and in my guess is in most cases more helpful than if they were to spend that money say doing another biological approach and so again it is a little bit of a self selection process. Because we are talking with key opinion leaders right. So I want to be careful about that but so far price in terms of adoption of the technology. Among these customers.
<unk> has not been an issue really the driver has been I want to be able to do properly powered studies and be able to discover things I can't with any other methodology and we provide them with a mechanism to do that and Thats whats exciting people and that's what's bringing them to the table and thats whats getting them to scale their status.
Very helpful. Thank you.
Then one final one for me.
The first part of this morning.
We are an industry question not not a <unk> specific question.
But can you talk a little bit about the amount of proteomics work today that happens outside of the mass spec setting.
And then my second question is.
You're starting to have any early conversations with potential population proteomics customers at all in terms of just socializing them with the protium graph.
So it gives us let me let me take a crack at the first part of it.
Which is.
We live today in the era.
You did not have access to.
Two deep unbiased proteomics at any scale that actually matter to any customers.
And so if you're a customer.
In need of.
Accessing the content.
Any scale that is relevant to put that in the context of some genomic information that you may have when you do have access to scale you were forced to go down an alternative path, which is really a targeted path.
I think the.
I think we kind of saw that movie play.
15 years ago.
Where we're at we had provided access.
And then when mgs and genomic came up well from a revenue perspective, there were below once customers gain access to that technology.
They adopted it and it went forward I think we're going to have to see.
What the revenue growth is going to look like us and then we can kind of model that out for you in predicting how much of those targeted uses are going to come and become part of an unbiased approach.
From a discovery perspective.
Content that gets generated using biased approach. It's just you can even compare that to what is possible to do using a targeted panel.
And today pays us other than the customers that have the pretty robust in the lab no other customer care and access.
Unbiased proteomics at any scale.
So maybe let me tackle the second part of the question.
You'll have to forgive me can you repeat the second part of your question on having short term of course.
Was just curious if you started having any early conversations with potential population proteomics.
Customers, just socializing them with the technology and the <unk>.
Certainly in terms of in terms of discussions yet.
There is as I think we mentioned it.
There is a high level of awareness around our technology, particularly in the broader community.
And that includes folks who are involved with population genomics. So yes, but those are those are awfully early conversations.
Our focus right now, especially in 2021, establishing that base of limited release customers for the specific subset of applications that we had highlighted to you all and we're making excellent progress around that.
Obviously, we're talking to other groups as well because those up those other opportunities. We expect are going to materialize in the future, but certainly thats not where our focus is right now in 'twenty one.
Perfect. Thanks, so much guys.
Thank you Jeff.
And I'm showing no further questions at this time.
Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect everyone have a great day.