Q3 2021 Nautilus Biotechnology Inc Earnings Call
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Good day, and thank you for standing by and welcome to the anonymous third quarter 2021 earnings conference call.
All participants on this.
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Back to hand, the conference over to your Speaker today magazine.
And it can Investor Relations. Please go ahead.
Thank you.
Earlier today Nautilus released financial results for the quarter ended September 32021, if you haven't received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investor relations at Nautilus Dot bio <unk>.
Joining me today from Nautilus are studio Patel, co founder and CEO per <unk>.
<unk> Malik co founder and Chief scientist and Anna Murray Chief Financial Officer.
Before we begin I'd like to remind you that management will make statements. During this call that are forward looking within the meaning of the 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 appear in the section entitled forward looking statements in the press release Nautilus issued today.
As required by law, Nautilus disclaims any intention or obligation to update or revise any financial or product pipeline projections or other 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 November 2nd 2021.
With that I'll turn the call over to Suzhou.
Thanks, Alex Good morning, and thank you to everyone for joining us on the call today, We'll review our results for the third quarter of fiscal 'twenty, one and provide an update on a range of recent activities.
Since our call in August I've been pleased with the progress we've made against our key annual objectives that progress is the result of outstanding work being done by our talented and innovative teams in San Carlos, California, and Seattle.
Every member of the Nautilus team understands that our goal as a company is to provide ubiquitous access to the proteome to every lab every researcher and every clinician around the world.
That is an important and achievable goal worthy of their full commitment and focused effort.
And as we will discuss today that commitment is delivering continued progress.
As I speak with potential customers partners and key opinion leaders.
Energized here, what's becoming common refrain.
Primary role they see for next generation proteomics is to drive revolutionary improvements in drug discovery diagnostics and human health in the coming decades.
There is no doubt in my mind that Nautilus is helping to drive and should be a key contributor to a vibrant and valued space.
Current estimates are that the proteomics market is worth approximately 25 billion and growing at a 12% CAGR. While this opportunity is an immediate and exciting area of focus for US, we believe that technologies that improve accessibility and reproducibility and deliver faster turnaround time with produce.
<unk> like Nautilus will be the catalyst to expand this market opportunity.
As you know our vision is to bring to the market a complete end to end massive scale proteomics analysis platform comprised of instrumentation reagents and software, which takes sample in and returns unique biological data and insight.
As we've shared in the past, we expect to move through a number of milestones related to our proteoform and broad scale proteomics profiling capabilities.
Today, we're working with partners on Proteoform quantification beyond that our next goal is to quantify 2500 proteins per run in 2022 on the way to comprehensively quantifying the proteome in 2023.
We believe that every step of this journey represents a fundamental advancement of what's possible in terms of unlocking the value of proteomics data.
From Biopharma customers to academics and researchers we believe our instrument will fit the needs of a wide range of proteomics users with a common thread being their need to dig deeper and more quickly into proteins and protein forms of interest.
Doing so will enable them to develop more effective therapeutics to build more precise diagnostics or to pick the best therapy for a particular patient.
As we shared on our last earnings call. The substantial technological progress. We've made has allowed us to transition into the partnership phase of our commercial strategy.
As you know last year, we signed a research collaboration agreement with Genentech to use the novelist platform to analyze and map the proteoform landscape of a particular protein target in which they have an interest.
We continue to work together on this important and demanding work and hope to jointly submit a paper for publication by the end of the year.
Recently, we entered into a research collaboration agreement with Amgen and which the Nautilus platform will be used across a number of projects to investigate proteins and protein forms of interest of the company. We're very pleased to be partnering with Amgen and look forward to our work together.
We've also recently signed a research agreement with an investigator at the University of Texas, MD Anderson Cancer Center, our platform will be applied in measuring the quantity and patterns of post translational modifications on specific oncology protein targets of interest across different settings, such as pre.
<unk> and post treatment.
We're excited that this project has the potential to provide new and unique insight on the role of Pts in oncology research by investigating them at the single molecule level.
When we went public earlier this year, we said that we intended to use the additional capital to ramp up our product development efforts and look for opportunities to Derisk. The planned launch of our platform in late 2023.
One of the primary ways, we will Derisk our platform launch is by partnering with third parties on the development and supply of affinity reagents.
To that end, we recently initiated a strategic partnership with add Cam a world leader in the design and production of assay kits reagents and antibodies.
We're excited to be working with such a respected and successful partner and believe our relationship with them provides yet another vote of confidence in the promise of our platform.
The type of development and supply agreement, we have with add Cam is expected to provide nautilus with antibodies additive to the affinity reagents, we're creating internally.
It also highlights the flexible nature of our technology with our labeling kit. Our platform is designed to be able to use a wide range of reagents in the library of biologicals that had been created by Biopharma, and academia, where leading commercial antibody manufacturers like Amp camp.
This flexibility is a powerful aspect of our technology potentially allowing the biological research community to tailor the technology, depending on which affinity reagents are introduced to ask and answer their most pressing research question.
We believe that working with Abbott Cam and other similar relationships. We may establish will enable us to most efficiently achieved broad scale proteomics profiling.
In addition, we anticipate that it'll enable us.
Freescale reagent production as demand for our platform grows we're excited to continue our work with them and look forward to updating you on our combined success and the success in the coming quarters.
Our science team has begun to share their important work through a series of planned publication. The first articulate the value of modular fluorescent nanoparticle DNA probes for detection of peptides and proteins.
Another manuscript a foundational description of <unk> core technology is now available on bio archive and has been submitted for publication you'll hear more on this from parag in just a few minutes.
These and other seem to be submitted papers underscore. The fact that we believe <unk> innovation has the potential to spark a renaissance in proteomics that could unlock high value applications in precision and personalized medicine in drug discovery and in diagnostics, making strong progress across all dimensions of our business.
And while we're just at the start of our journey, we're accelerating towards the large and growing opportunity in front of us genuity in front of us.
With that I have.
I'll now turn the call over to Barak.
Thanks, Danielle I am pleased to report that we continue to meet key internal milestones across a range of R&D and engineering activities ranging from advances in how we scale production of key reagents to hardening, our chip fabrication processes to working with manufacturing partners.
Thanks shared on our last call these initiatives all support our goal.
Platform commercialization in late 2023.
When setting out to create an entirely new approach to proteomics I came to the problem from the perspective of our proteomics insider.
Someone who had russell for many years with the challenges and limitations of existing approaches.
My experiences gave me a distinct point of view on what the goals of any platform should be.
How are you.
It might be used and what it might be used for.
The need for a breakthrough in proteomics was clear and that early vision continues to be at the heart of non illnesses current innovation.
Building upon our foundational perspective, we recognized that it was critically important to fully understand the needs of a broad range of researchers and to ultimately build a platform to address their needs and wants not just mine.
So back in 2016, when we founded the company we began listening.
And we have not stopped listening ever since.
From our earliest conversations through a series of lengthy interviews, we've recently completed with kols and potential customers across a number of domains.
We've heard about a wide range of use cases, and we've also consistently heard some common themes that have helped us refine the characteristics of our initial product offering.
Specifically researchers want to be able to access a substantial portion of the proteome with quantitative measurements in a reproducible accurate and.
And highly sensitive across a wide dynamic range.
You want a platform that is easy to use with data that is straightforward to interpret.
And then once sufficient speed and throughput to crunch through thousands of samples.
We believe the design and implementation of our platform is uniquely differentiated on these critical axes.
Our recent and planned publications are aimed at elaborating the key scientific attributes of our platform and enable us to achieve the specifications most requested by our future customer base.
For example, the recently published paper in Suzhou mentioned articulate the strategy for using nanoparticle label on our affinity region probes newspaper is notable as it highlights a unique aspect of our platform that allows us to have the wider dynamic range and throughput requested by the community.
And any single molecule platform dynamic range throughput and measurement time are inextricably linked.
Using ultra Brian label gives us substantial signal amplification relative to other approaches thus, enabling us to scan a massive number of protein molecule more efficiently than other methods.
As an added benefit it simplifies the complexity of the instrument, allowing us to bring down the cost.
So Joe also mentioned our second manuscript recently submitted for publication and currently available on buy archives.
This manuscript is the most detailed description of our approach that we have shared to date.
Doing so at this time of firms not allison's commitment to scientific openness.
Scientific community fully understand our unique approach key findings and that manuscript include the ability of our platform to work across multiple organisms, which is critical for translational research.
A potential to efficiently be code greater than 95% of the protium across a dynamic range of 11 five orders of magnitude in plasma.
Far exceeding the capabilities of other approaches.
In addition, as an impact protein platform data interpretation is straightforward and highly quantitative.
In addition to the technical performance criteria I just discussed we have also set out to build a platform that's incredibly easy to use so that any lab in the world can run it not just specialized proteomics lab and has spent years tweaking and tuning their mass spectrometry environments.
Ubiquitous access to deep rich proteomics data is not just something we've heard from customers.
We recognize will be required to achieve the type of market expansion that Sunil mentioned earlier.
As we have been completing designs of our instrument.
We have been extremely mindful of customer workflow and usability ensuring that our platform is tractable for the widest range of life science customers.
As we continue our progression towards the release of our MVP and ultimately a full commercialization of our platform. We are committed to sharing robust data on our platform all of which will be validated against the evolving desirous of the market as such you can expect an ongoing cadence of manuscript submission as we head into 2022 and beyond.
In summary, I'm pleased with the progress we made in Q3 and with the strong effort of our R&D and engineering teams as we continue our journey to deliver a transformative proteomics platform required to meet the needs of labs around the world.
With that I will turn the call over to Ana for more details around our financials.
Thanks, Parag total operating expenses for the third quarter of 2021 were $14 6 million compared to $4.0 million in the third quarter of last year.
Research and development expenses for the third quarter of 2021, or $8 2 million compared to $3 $3 million in the third quarter of last year that increase was primarily driven by growth in personnel costs as well as increases in spending on laboratory consumables as we run a greater volume of.
<unk>.
We also saw an increase in development services tied to the development of our platform.
General and administrative expenses for the third quarter of 2021, or $6 3 million compared to zero point $7 million in the third quarter of last year that increase was primarily driven by growth in personnel costs and professional services related to operating as a public company.
Overall net loss for the third quarter of 2021 was $14 5 million compared to $4.0 million in the third quarter of last year.
Turning to the balance sheet.
We ended the quarter with approximately $374 million in cash cash equivalents and investments.
With this capital we plan to continue to add more staff across our scientific engineering and commercial teams as we accelerate the development of our platform today, we have crossed the mark of having over 100 people as part of our team and continue to be on track to more than double our total head count this year.
As you heard in <unk> remarks regarding our partnership with that can we also intend to use our strong balance sheet to supplement our in house capabilities and Derisk our product development through the addition of strategic relationships with external suppliers and partners, whose core competencies we can leverage.
We expect these partnerships will result in an increased pace of investment in Q4 and into next year.
In addition, we have recently moved into two new facilities in Seattle, and San Carlos growing our footprint to over 60000 square feet across both locations as.
As one of the initial tenants and a significant new Bay area biotech hub, we envision this will be the home for growth over the next few years. These.
These facilities are bringing together our cross functional team that includes protein biochemistry, Nanofabrication engineers software and machine learning engineers and single molecule biosynthesis, along with many other disciplines, allowing them to work side by side to bring this innovation to the world.
That I will turn it back over to Joe.
Thanks, Anna we all recognize that despite its enormous value. The world has had such an incomplete picture of what's going on at the protein level Nautilus and the advancement of the proteomics space more broadly.
<unk> has the potential to see biology in a way that has never existed before and that in short is our primary goal for fiscal 'twenty two.
To measure the protein more deeply and more broadly than has ever been done before with.
We fully anticipate that the depth and richness of that data they fundamentally change what biologists believed as possible and may set a new gold standard for measuring the proteome.
I'm incredibly proud of our team and the progress, we're making to transform proteomics and empower the scientific community and equally confident that non list is well positioned to achieve the ambitious goals, we set out for ourselves and we look forward to updating you on our progress as we knocked down key milestones on our journey towards <unk>.
<unk>.
With that we'll now open the call up for questions operator.
Okay.
And then let's see.
You need to press star one on your telephone.
To withdraw your question press the pound key.
And while we compile the Q&A roster.
Our first question will come from line of Tejas Savant from Morgan Stanley.
May begin.
Hi, This is Hugo <unk>, Thank you for taking our questions.
Just a couple of questions from me what are the key publication outside of Genentech collaboration paper that we should be watching for over the next 12 months and link will we see data updates from these new collaborations announced today.
Thanks <unk>.
With that over to parag and have him must address that.
Great. Thanks, Thanks, so much for the question.
I think what Youll see over the course of the next year or.
Our several foundational.
Manuscript describing different aspects of our platform so both showing experimental detail.
Elaborating on the approaches that we use for single molecule type position and generally trying to walk through all of the all the key elements of our platform. You'll also see an increase in publications.
Working with our partners so.
Right.
As Sunil mentioned our.
Our hope is to submit the genentech publication by end of year.
And I can't comment on on future publications with other partners.
Got it. Thank you and then your recent publication outlined potential to introduce two affinity regions at a time to accelerate time to protein identification.
Anticipated dual color imaging could be a feature of the first instrument that you'll launch or do you anticipate this as something that might be introduce down the road.
Yes.
Hum.
So we are constantly looking at ways to improve the throughput of the platform and so.
Hi.
Whether it's whether dual color imaging as a feature of the of the first iteration of the platform that we launched.
Is an area that we're looking at very closely.
Great. Thank you we haven't.
Thank you.
Thank you. Our next question will come from the line of.
Max Max.
So chi from Cowen and company you may begin.
Hi, Thanks for taking the questions and congrats on a on a nice update.
So first on the IBM partnership if you think about the time and resources required to develop aptamer solutions internally versus partnering with an external antibody platform.
The key driving factors in signing the strategic partnership, but wasn't centered more around and developing higher performing affinity binding.
Relationships are more around securing reliable access to these products in an environment, where there is clearly some manufacturing and supply bottlenecks.
Probably going to get you want to take this one first then I'll add to it.
Sure I guess I'll start off by mentioning that inside of Nautilus, we've been working on a number of different classes of probes.
So <unk> being one of them but.
Protein based probes as well and one of our excitements around working with <unk> as they have.
They really have two different.
The components one as you mentioned they have a tremendous catalog that they have been developing over many years that.
Allows us to bring that content in the future potentially to our platform, which is really exciting. The second is about developing taking advantage of their experience.
And scale in the development of <unk>.
Probes or other other reagents that are split for our <unk> platform and really giving us.
An additional stream to complement the internal work that we're doing and then third and longer term.
From a supply chain perspective, giving us.
A partner.
In.
In developing manufacturing, creating the reagents that will work for our platform. So there are really multiple exciting components of the of the relationship as well as.
A company of their stature.
It's a real vote of confidence in our platform.
To have have relationships with them.
Great.
<unk> biopharma collaborations with Genentech.
And Ken as well today as well as todays partnership puts an investigator at MD Anderson. So I know we're still in early days here, but would be curious to hear what portion of any inbound interest is coming from biopharma companies versus researchers and how this may compare to <unk>.
Illogical early adopters of the technology following the broad commercial launch.
Max's decision, let me take that one and.
So first and foremost what I'd say is we have been super pleased with the inbound activity and the excitement of potential partners and collaborators that we have been talking to.
And as you mentioned, we have three now to date that we've announced Genentech Amgen and an investigator at MD Anderson and from my standpoint, I think that those three are pretty representative of the types of conversations that we're having and I think that that is indicative of.
The fact that.
Unlike the genomics world, where the genomics Revolution started in academic and research because.
Frankly, scientists didn't really know what to do with the genome and how to practically apply full.
<unk> genome to improving health of humans.
Poaching more that's really different today all of the large biopharma organizations that we're talking to have sophisticated proteomics efforts underway. They spend millions of dollars on proteomics every single year and so when we are talking to potential partners and collaborators. It definitely is the biopharma companies that were having most of those.
Compensation with and all of those organizations have been feeding into the initial design specification for our product and frankly it is those conversations over the last four to five years that have shaped the first generation products design criteria.
Great. Thanks for taking the questions.
Thanks Max.
Our next question comes from Ryan.
And we are.
Jefferies you may begin.
Hey, Thanks, good morning.
So my question has been answered, but I just want to confirm a couple of pipeline data points. So you talked about 2500 proteins.
Is that still kind of in the first half of 'twenty, two and we still think about early access.
Program sort of beginning of mid next year as well.
Yes. Thanks for the question Brandon I think from our standpoint, there is no new information that is causing us to change those timelines and I think that.
Early access period will start right. After we get to that that 2500 protein milestone that being said we are incredibly excited by the three partnerships that we now have signed and one that we're actively.
I had been working on in the Proteoform space, because we think that Theres a lot of interest from our Biopharma collaborators and partners and party of forums and and targeted protein analysis in conjunction with pretty of forms at single molecule level.
Got you and then just one follow up for Ana. So Opex is tracking a little bit ahead of the targets that you laid out earlier. This year can you just give us an update on kind of how we should be thinking about the fourth quarter and then the run rate.
Moving into next year, particularly in the context of kind of the new external partnership with that which you alluded to.
<unk>.
Bringing in a little bit higher level.
Spending near term.
Hey, Brian.
We are actually.
On track as far as are concerned.
Against our projections that we provide ed which were on a non-GAAP basis.
The.
Partnership.
Were anticipated as part of our planning process. So there is no change to our expectations on total spending.
Okay got you alright. Thanks.
Yes.
And once again Thats star one for question.
Our next question comes from line of David.
David Delahunt from Goldman Sachs you may begin.
Hey, guys. This is David on for Matt.
To hear about the partnerships, especially a highly respected institution like MD Anderson.
You know if they will be looking at oncology broadly or are there any specific subtypes theyre focusing on more.
Yeah. So this is Joe I'll take that one and.
The collaboration with the investigator at MD Anderson.
We can't be very specific about it but they are working on specific ontology oncology protein targets.
And it's a pretty a form based projects it's pretty of forms.
On specific oncology targets.
Got it thanks, and you mentioned that Youre working on hardening the.
Chip fab process could you tell us a little bit more about what that entails.
Sure I can I can take this one I think as you as we mentioned throughout the company, we have been broadly making that transitioned from development to product and part of that involves working with external partners on increasing scale.
As well as quality of of the chips and <unk>.
Part of that is working internally on making sure that we have all of the QA QC.
Validation processes in place for.
For both the patterning and functional <unk> of the chips.
Great. Thanks, guys.
Thank you.
Thank you.
Not showing any further questions in the queue at this moment.
And I'm still not showing any further questions in the queue.
Great well it sounds like there is there is no further questions. Thanks, everyone for taking the time to talk to US. This morning, we look forward to updating you on our next earnings call.
And this will conclude our program for today you may now disconnect. Thank you for your participation have a great day.
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