Q4 2021 Seer Inc Earnings Call
Yes.
Good day, and thank you for standing by and welcome to the fourth quarter and full year 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 star one on your Touchtone telephone please be advised that today.
This conference May be recorded if you require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today, Carrie Mendivil Investor Relations. Please go ahead.
Thank you earlier today <unk> released financial results for the quarter and year ending December 31 2021.
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 tier is ALLETE stock bought chairman, Chief Executive Officer, and founder and David Horn, Chief Financial Officer.
Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.
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 Companys yearly report on Form 10-K for the year ending December 31, 2021, and its other filings with 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 February 28 2022.
With that I'd like to turn the call over to Amit.
Thanks, Kevin and thanks, everyone for joining us this afternoon.
'twenty one what's a momentous year for <unk>, we had a strong first year as a publicly traded company with the commercial launch of our product and tangible progress across all areas of our strategic plan.
These significant efforts resulted in $6 $6 million in revenue for the year and laid the foundation for broad release of the <unk> product suite.
We shipped 17 instruments to our collaborators and customers by the end of 2021.
We completed the first two phases of our commercialization strategy and onboard that lighthouse customers across multiple market segments.
Which paves the way for future market adoption and exemplification of the unique capabilities of our technologies.
We demonstrated the power of this technology together with our customers with more than 25 abstracts across a number of scientific conferences.
We established partnerships with industry, leading mass spec providers Thermo Fisher broker and <unk> and presented results on our joint workflows.
We made great strides in strengthening teams across organizations, including commercial operations quality data science and R&D.
We made significant progress building, our operational infrastructure, including systems lab space and executed contracts with key suppliers and partners to support our growing customer base globally.
All while minimizing disruption to the business during the Covid pandemic.
<unk> also continued to build our board of directors, adding strong operating leaders, representing a cross section of industries company sizes and market segments.
I couldnt be more pleased with the progress we made in 2021 and are more confident than ever as we are squarely focused on the customer experience and a broad release of the <unk> product suite.
I have previously shared at the Jpmorgan Healthcare conference in early January that we officially entered into broad release and have built a strong pipeline up demand for the <unk> product suite.
I'm encouraged by the depth and breadth of discussions, we're having with potential customers.
We believe we are well positioned to become the definitive tools leader in proteomics.
We envision a future in which the entire ecosystem end markets will be created were extended with customer using the <unk> product suite to access unbiased deep rapid and scalable proteomics across a myriad of applications.
Heading into 2022, we are continuing to ramp our commercial efforts to meet this expected demand.
Over the course of the year, we will be focused on five key objectives first.
Growing our installed base of instruments.
Second <unk>.
Expanding our partnership efforts to continue to extend our global reach making it easy to access our technology and allow us to serve a diverse customer base.
Third.
Supporting customers with an industry, leading onboarding and user experience. So they can get up and running quickly.
Fourth.
Continuing to build out our commercial capabilities geographic footprint and team.
And fifth.
Driving the product roadmap and exploring more applications for our proprietary engineered nanoparticles in 2022 and beyond.
We have a strong pipeline of prospective customers with a roughly equal mix of academic and commercial entities.
We're seeing interest across a broad range of applications, including biomarker discovery and target identification for drug development.
For diseases, such as Neurodegenerative diseases oncology cardiovascular and other complex diseases.
And four market areas, such as reproductive health aging veterinary direct to consumer and population scale initiatives.
The <unk> product suite is performing exceptionally well in customers' hands.
We routinely receive positive feedback about the product usage installation and support experience and this I'm very proud of.
We have built the foundation for customers to logging and self serve.
And we're launching a customer portal to enable this capability in the first quarter.
The ease of Onboarding and the power of our technology to deliver insight is demonstrated by how quickly limited with these customers are presenting the data even small proof of principle studies using the prototype products, we have generated exciting results and presentations at conferences.
Larger studies are beginning an aging cancer and complex diseases.
Oregon Health Sciences University, one of our collaboration sites is running their study of approximately 1000 samples in the first quarter and there are currently about halfway through processing their samples.
We expect they will submit abstracts later this year.
During this week's U S. Cupo conference in New Orleans, we are presenting seven posters southern collaboration with our customers demonstrating the power of unbiased proteomics at scale.
In addition, there was an eight posted that will be presented by product we'll make.
Sharing the analysis of Enlink like in cancer patients using the <unk> product suite there.
<unk> study of 212 subjects inclusive of 96 healthy controls yielded hundreds of glycoprotein dies.
Importantly, this demonstrates the peripheral graft product suites ability to detect black calculated proteins.
Constellation is a comment post translational modification and involved in the normal functioning of the cell.
And then the development of diseases, such as cancer.
Previously these glycoproteins could only be robustly identified utilizing specific enrichment strategies.
And one of our own posters being presented at the Usu Po.
We're demonstrating our new software package, the prettier graph analysis suite, which leverages, our scalable cloud based software for large scale genomic data allowances and visualization.
And other posters being presented demonstrate the high purity on depth ability to identify new protein variance and we produced the ability of our technology in customers' hands.
1% fall discovery rate for protein identification.
This was shown in this study with the cohort of 200 individuals, including Alzheimer's disease patients and healthy controls.
Across this cohort we identified at least 5500 protein variance inclusive of 4700 unique protein groups at the 1% false discovery right.
Looking at this data a peptide level resolution.
Identified over 63000 peptides inclusive of more than 1350 unique peptide illegal variance.
Importantly, more than 500 of these peptides areas have not been previously reported in the major public peptide repository or in the Clinton bar genomic variant database.
This is a key benefit of our technology.
Our solution is the only available at scale technology to deliver peptides and amino acid level resolution, which is needed to match with nucleotide level genomic information in order to broadly enable protium genomics.
Ah studies scale to larger cohort, we expect to find increasing catalogs of protein variance, including illegals splice forms and post translational modification to enable increasingly more powerful proteus genomic analysis.
At scale, we believe this kind of novel biological insights will be key to unlocking the perennial unlikely to applications and therapeutics not otherwise possible.
Geographically, we're seeing a growing interest across North America, Europe , and Asia, and as a result of our expanding commercial footprint.
In addition to our ongoing efforts in North America, and Europe , we are diligently working through cobot constrained to establish a presence in China.
Installation and training occurring this month at our distributor and like medical.
We're in an excellent position to expand our installed base in 2022 and are eager to.
Continue to get the project got product suite into customers' hands and see that biological insight grow.
Earlier this year at the Jpmorgan Healthcare conference, we announced the launch of our center of Excellence program at <unk>.
Program that partners sphere, with select Premier multi youll make service providers to offer unbiased proteomics services to customers around the world.
We have strategically selected each Coa based on geography and expertise.
In North America, we are by <unk> Discovery Life Sciences, and Sanford Burnham Medical Discovery Institute with services and expertise targeted and pharma genomics and academic customers group respectively.
Outside of the U S. We have partnered with <unk> in Europe , and sole brain and South Korea.
These partners are at varying stages of commercializing their services using the <unk> product suite.
And the majority of them are ready to go and have already received inquiries since our announcement at JP Morgan.
We also announced a key collaboration.
To expand access of deep unbiased proteomics for genomics customer to enable put neogenomics and multi omics studies I previously unimaginable scale.
Together with discovery life Sciences, and genomic service provider and one of our Coes.
<unk> one of our current commercial partners and a leading provider of mass spec platforms.
We have created a first of its kind prettier genomic consortium.
This is a multiyear collaboration that incorporates a three phased expansion, where discovery will set out expand and offer deep unbiased proteomics capabilities to their existing genomic customers ramping toward an annual capacity of over 100000 samples per year.
This is of course, not using the <unk> product suite and the <unk> 7600 platform.
We expect the consortium to become operational in the second half of 2022 and look forward to updating you on its progress.
I'm extremely pleased with the execution of our commercial strategy over the past year.
None of this would have been possible without the critical talent.
To drive progress across these important fronts.
And we have more than doubled our organization in 2021.
We have also continued to build a diverse and experienced board with new members, including me.
Beyond these seasoned life science, and pharma leader with global experience across markets, including Asia.
And Rachel Horowitz.
A highly accomplished and distinguished scientists and CEO in a high growth emerging area of gene editing.
We're very proud of our progress in attracting top performing passionate people to Sia team and we believe this is the fuel to drive our business as we head into 2022.
We are engaged with top institutions and scientists across the world to enable unbiased the proteomics at scale.
We're seeing first up there.
Bias large scale projects being planned and funded.
We're seeing robust performance on the product and customers had with compelling data being presented just months after gaining access to the technology.
And we're building a strong pipeline across markets and customer groups as.
As we continue to scale, our commercial organization to open up a new gateway to the podium and unlock this exciting opportunity ahead and we.
With that I will now turn the call over to David.
Thanks, Amit total revenue for the fourth quarter of 2021 was $3 1 million compared to $336000 in the fourth quarter of 2020. This brought total revenue for the full year 2021 to $6 6 million compared to $656000 in 2020, the increase in <unk>.
Quarter revenue was primarily due to sales of products related to the protein graft product suite.
Product related revenue for the fourth quarter of 2021 was $3 million.
Including related party revenue of $1 2 million and consisted of sales of SP 100 instruments consumable kits and platform evaluations related party revenue of $1 $2 million represents product sales to <unk>.
And other revenue from our SPD IR grant from the NIH and research related collaborations was $34000 in the fourth quarter of 2021, representing a decrease in these activities from the fourth quarter of 2020.
Total gross profit inclusive of grant and other revenue was $1 4 million for the fourth quarter of 2021, representing a gross margin of 47%.
Gross profit for the year was $3 $4 million.
Representing a gross margin of 52% full year gross margins benefited from strong consumable kit sales platform evaluations service projects and grant revenue and.
In 2022, we expect gross margins will be dampened due to an anticipated larger percentage of instrument sales a significant reduction in service and grant revenue and our continued investment in scaling of our operations as we have discussed previously we continue to target long term gross margins between 70 and 75%.
Total operating expenses for the fourth quarter of 2021, or $21 3 million compared to $13 4 million.
In the fourth quarter of 2020.
Total operating expenses for 2021 were $74 9 million includes.
Inclusive of $25 9 million and.
Stock based compensation compared to $34 $3 million inclusive of $7 3 million in stock based compensation in 2020.
Research and development expenses for the fourth quarter of 2021 were $8 2 million compared to $5 4 million.
In the fourth quarter of 2020 research and development expenses for 2021 were $29 1 million compared.
Compared to $18 $9 million in 2020, the increase in R&D expenses was primarily driven by an increase in product development efforts related to the progressive product suite, including increased head count and other expenses related to employee compensation, including stock based compensation.
Selling general and administrative expenses for the fourth quarter of 2021 were $13 1 million.
Compared to $8 million in the fourth quarter of 2020 S.
SG&A expenses for 2021 were $45 8 million compared.
Compared to $15 4 million in 2020, the increase in SG&A expenses was primarily driven by increased head count and other expenses related to employee compensation, including stock based compensation. In addition, we incurred increased marketing costs related to our commercialization efforts as well as increased costs related to being a publicly traded company.
Net loss for the fourth quarter was $19 7 million.
Compared to $12 9 million in the fourth quarter of 2020.
Net loss for 2021 was $71 2 million compared.
Compared to $32 8 million in 2020.
We ended the year with approximately $493 million in cash cash equivalents and investments.
Turning to our outlook for 2022, we expect revenue to be in the range of $14 million to $16 million we.
Revenue consists primarily of sales of the pretty graft product suite, which includes SP 100 instruments consumable kits and software at this time, we do not expect significant revenue from service oriented projects or grant revenue.
In 2022, we also expect to continue to increase our investments across commercial operations and R&D activities in order to scale, our business and drive long term revenue growth. We believe we are adequately capitalized to execute on our strategic plan and remain thoughtful and prudent with our deployment of capital in order to drive long term value.
<unk>.
At this point I would like to turn the call back to <unk> for closing comments.
Thanks, David.
As we move forward in pursuit of our vision. This year, we will continue to drive execution against our core strategies I'm.
I am excited and humbled to lead such an amazing team.
<unk> by the passion to hard work and dedication that has allowed us to commercialize such a transformative product I believe we have the technology the team and the strategy to bring the next phase in all mixed to labs around the globe.
We're paving the way for a portfolio of products that will open a new gateway to the proteome.
We look forward to sharing updates on our progress over the course of the year and with that we'll now open it up for questions.
Thank you if you have a question at this time. Please press Star then one on your Touchtone telephone and ask your.
My question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Could you please limit yourself to one question and one follow up our first question comes from the line of Tycho Peterson with Jpmorgan. Your line is open. Please go ahead.
Hey, Thanks, I'd like to start with the guide wondering if you could just give us any more color in terms of how youre thinking about instruments versus consumables and then you did call out a step up in Opex curious if you could just help us frame.
The magnitude of how you think about that step up and anything you could point to in terms of where the dollars are going how much is going into the commercial channel versus R&D.
Sure Tycho, it's David Thanks for the question.
In terms of instrument versus consumable, we do feel like it's going to again be majority instrument relative to consumable we're not going to give you exact percent, but again I think it would be something.
We still see good consumable pull through in revenue, but again, we think its going to tip the balance towards instruments next year.
And then in terms of Opex.
Again, we're not going to give you a specific guidance on that but again I think we are going to continue to see.
Good investment across the organization both in terms of operations and commercial I think that's probably going to be the key investment area.
Product development, we're continuing to invest in our in our product pipeline.
And then obviously R&D to kind of continue to see the efforts and investments for long term growth, but again, we do see opex, increasing obviously head counts increased.
We will again be prudent with those investments we feel like we're very well capitalized today to execute on the plan.
And then a follow up on just the the roadmap you are currently doing around 2000 and flex some of your competitors are higher Plex I'm. Just curious if you could talk about plans to increase multiplexing overtime.
Is there a roadmap you can kind of point to in terms of what you might do from a multi question perspective.
Tycho Thank you.
So from a product roadmap perspective, Tycho, we're focused really on kind of three areas in the near term and then some additional areas that further out in the near term.
As we put the cost.
Product in the customers hand.
The feedback that we received which by the way obviously mirrors the programs that we have internally.
Where that customers were looking for increased throughput.
And the <unk> really.
Significantly add.
The ability to do larger larger studies, but you still have some limitations at the mass spec level. So.
The one is increased throughput even at the mass spec level. So that was one second area was reduction in sample volume.
So that if you are a precious sample, especially a biobank samples we can start up with a lower amount and then third was increased content.
And by that I mean, a larger number of protein ivs on.
On a per sample basis.
Remember when we talked about.
In theory, when we talk about protein Ivs, we're talking about the proteins that are identified in a given sample.
At a 1% false discovery rig this is an important point.
So for example, the five nanoparticle panel that we have if you look at it across the various different studies.
They can identify.
To date, we have identified that we've actually discussed that types of weather.
One conference just a couple of months ago North of 12000 proteins in that number by the way is increasing so for example, if you just look at the Alzheimer study that.
<unk>.
My prepared remarks.
That study, we're now north of 5500 proteins inclusive of sub protein billions.
So I think from a content perspective Tycho.
<unk> technology allows us to access a very meaningful number of protein including protein variance.
Very valuable path discovery rate of 1%.
You can expect our follow on products.
To essentially address the three areas that I mentioned.
The additional throughput.
The reduction in sample volume and the additional content that comes now if I look a little bit further out. So those three areas are areas that are being heavily invested on now and they should also give you guidance in the product and it's going to be forthcoming.
If you look a bit further out than areas that we're actually investing in our multi omics. Both in terms of nanoparticles that can drive multiple mixed signal and also investing in our analysis suite for multi omics analysis, so putting a genomic analysis for example.
So I think when you look at the way that product behave if you compare it to some of our.
Alternative products out there on the targeted side again, you have to be careful of that that you might have a panel of ligand that identifies that is designed to identify a certain number of protein, but not all of those proteins are going to be identified in a given sample. So if we were going to say how many protein.
The platform identifies the current existing five critical panel what that number is north of 10000.
Any given sample it that number is two to 3000, depending on the sample type.
Okay. That's very helpful. And then maybe just one last one before I hop off cost per sample as we think about early customers scaling up has that come up as an issue at all and where do you think cost per sample needs to go ultimately.
They drive the market.
Hi.
Look I mean, I think customers are always going to say I like it I like.
It would be cheaper, but if you look at the price point.
It's exactly where these customers are used to spending.
Getting the kind of content.
On the genomic funds so the product is priced.
Somewhere between an exome and genome.
<unk>.
Other product in the market are priced very similarly.
But that all said.
This year is really the only solution that can give them.
Unbiased proteomics and the ability to access new content at that scale. So I think the price point is right Tycho I'm not sure if theres going to be a lot of pressure for us to reduce the price at this point, but I think what you're going to see over time.
Additional value being being given to the customer in terms of additional content that we've got.
The price point that we're at.
Okay very helpful. Thanks.
Thank you and our next question comes from the line of Tejas Savant with Morgan Stanley . Your line is open. Please go ahead.
Hey, guys good evening.
Just a couple of quick ones for me to kick things off.
Amit can you shed some color on the order funnel now that the broad releases underway.
Where are you seeing the most interest.
Yes.
Yes.
We went into the broad release with.
Is there a meaningful interest in the pipeline of demand for the product and we're seeing interest from other regions other than U S. Although I think for 2022, you can expect most of the revenue to be from.
From U S.
A little bit early I apologize for us to.
Discuss what percent of revenue is going to be from outside of the U S. But if you think about that funnel of demand right now there's basically three buckets, obviously the largest.
And really the most significant portion of it as a U S demand in Europe .
We're going to have a direct commercial operation. We also have Evo tech at the center of Excellence. That's an area that we're very focused on and then also from Asia.
Asia is going to be an indirect through our distributor.
<unk> medical in China, and then through a Coa in Korea.
So I think.
The demand is coming.
Globally I think you can assume most of that the sales in 2022 are going to be driven in the U S.
Got it.
Yes, the only thing I would add Tycho is just obviously, we're seeing interest broadly across commercial and academic just given the way. These folks tend to operate we do think the commercial folks will probably be a.
Little more quicker to be able to fund enact than the academics.
So we do kind of expect more more sales to commercial organizations over the course of the year.
Got it David that's actually a great segue into my.
Follow up here.
On the on Biopharma R&D spending are you seeing any sense of some hesitancy around capex sales and on your point on academic.
I know you've talked about commercial being the dominant portion of the funnel here, but any any sort of signs of sales cycles be long getting further thanks to all of micron or not really.
Why don't I take the first part of it.
Hey, Josh in terms of just Capex demand from Biopharma, we continue to have good.
Good interest teach us we haven't in our own experience to date seen any.
Any significant pullback.
People I mean again these sales cycles take a while right, but but again there is still interest in the technology and interest too.
To explore and potentially acquire it so.
We haven't seen any broader macro funding impact from Biopharma at this stage.
And then your second part of your question Tito.
That was on just academic customer trends any elongation of sales cycles, there thanks to omicron until on or not really.
I would say look.
Academic folks.
The sales cycle is going to be longer anyway, just by virtue of the fact that.
The whole ground cycle.
And but I think that the impacted a bit more because in their case. They also have to access.
To get access to samples in some cases, not so much in the U S push us, but at least ex U S. We also have kind of difficulty getting to them for install.
Think that if anything the academics are.
Probably impacted a little bit more.
But but but the cycle, we would expect it to be longer for academic.
And then pharma I think thats going to be the case I think if I look at the funnel of demand.
More or less split down the middle in terms of.
Heartland academic folks.
Got it helpful. And then David just just one quick question for you on the guide here.
Can you share a little bit color around what you're assuming for instrument sales to the <unk> genomics consortium here I think you mentioned it.
Ramping up in the second half.
And should we be assuming sort of standard esp's on those.
Cement sales into the consortium as well or should we be thinking of a lower price point.
As you look to get it off the ground.
Yes, Thanks, Tim.
We assume kind of little to minimal revenue T. Josh in terms of the produce genomics consortium.
We do expect it to get up and running in the back half of the year, but we've been very conservative in terms of our overall timing there and the amount of volume that goes through there. So very very little is the answer on that front and if you remember how the deal.
Is structured.
As a.
Sure.
A deal where it.
It's kind of a pay overtime for the instrument. So we will be selling them consumable kits and part of that over time will be used to pay for the instruments. So they won't pay upfront, but they will pay overtime and so that's the way to think about that piece of it.
Got it very helpful. Thanks for the time guys.
Thanks, Josh.
Thank you and our next question comes from the line of Derik de Bruin with Bank of America. Your line is open. Please go ahead.
Hey, good afternoon, Hey, just curiosity, what's the where did you end your.
Installed base number at the end of the year end.
So what sort of like pending and sort of give us some idea on the backlog just basically trying to get a sense of how should we be thinking about instrument growth in 'twenty two.
Yes.
We ended the year.
With 17 of instruments shipped I don't think were going to be.
We're not going to be disclosing what the expectation is in terms of instrument.
In 2022 towards the end of the year Derek will give you one more update.
Terms of the number of instruments that ended up getting placed in 2022.
You want to add to that.
Derek probably the way to think about it is.
A slightly higher percentage of instruments and consumables this year.
And so.
We've given you the guide and then you kind of know generally what the with the <unk>.
General selling prices instrument is so you can kind of.
Do your math, there, but again.
That's kind of.
And again I think Amit said, we're not going to be giving specific guidance quarter to quarter on an installed base of instruments.
Yes, that's fine just was trying to get a ballpark figure to make sure that were true it up at the end of the year.
<unk> and related I've had some people asking about the related party and sort of like how that trends in 2022.
Sure I think we are.
Been around a third of revenue is generally what it's been.
And they were 35% at the year I think in the first couple of quarters, you may see a similar percentage and then as we ramp.
The non related the other customers basically that that percentage will start to come down.
Great.
On your experience of your customers so far.
How.
How quickly are they coming back to start additional programs or is there.
A digestion period, where they've got to look at the data analyze it publish it before theyre coming back basically I'm, just sort of thinking about what's the experiment cycle time, if people wanted to go back and do iterations.
Experiments.
Yes, Gerrick I would say.
If you look at the Oregon Health, it's probably a good <unk>.
A good example.
So remember they've got their instruments.
In December of 2020 that that instrument.
Up and running.
In early 2021.
They did a pilot study.
That they presented data on.
Kind of.
In Q3.
Based on that pilot study then.
So that they were going to do a larger study. So they are happy then kind of.
Get the resources, both financial resources and also the samples.
To get that study done that will just study.
As an example.
And they are now underway that thousand sample.
Should be done in Q1.
And then build processor data presented so I think if you look at kind of the cadence of that which is.
You spend a few months.
Got to know the system, you're running a pilot study.
You'd love what you see.
What was the basis to do something substantial that follows.
And I'd say, Oregon is a good example on the back of Oregon.
These two other studies that are now starting off very similar scale.
And of course someone like <unk>.
Our.
Our own Spinout.
Those guys did not need to have that initial gating phase if you would in understanding the platform because obviously you want to spin up and they understood that certainly hit the ground running at scale and in fact Theyre now Derrick.
Gail as they are.
Magnus <unk> of growth for them in terms of the kinds of studies that they will be doing is going to mirror some of the larger genomics studies.
And by the way Youre going to begin to see data presented.
From them as well.
Thank you Eric.
At the end of the day.
Science and the data is going to drive demand you just have to get folks to do that but I think Oregon is a good example.
Great great.
Thank you very much.
Thanks Darren.
Thank you and our next question comes from the line of Dan Brennan with Cowen. Your line is open. Please go ahead.
Great guys. Thanks, Thanks for the questions maybe first one would just be on your commercial plans can.
Can you just walk us through a bit like where you are with field sales force.
Give us a sense of like what the plans are this year in terms of how many customers you're you plan to target what is that targeting strategies or like an 80 20 rule just give us some flavor about your go to market strategy with the full commercial launch.
Yes.
Dan. Thank you. So then we have said that we arent going to be disclosing the number of reps that we have.
Provided that.
We're hiring about two quarter ahead of need both in terms of sales and support.
So we're basically doing that and we're on schedule with that.
And we're also building a sales team not just in the U S. But also in Europe .
With feet on the ground.
A team that I'm Super proud of that is coming together in this product.
And what was the second part of your question there.
Yes.
Certainly it could go to market like give us a sense of.
Are you going after the highest mass spec labs, obviously, just just kind of give us a sense of who the types of customers in the first year. The full commercial launch it you are targeting.
Yeah.
So that if I look at the.
If I look at the pipeline of demand that we have right now.
Actually sort of mirrors exactly what we had in terms of customer type that we said we were going to have.
In the limited release, but with a limited release.
Supposed to be a guide for these lighthouse customers, but that includes customers in academia.
Customers in large biopharma.
Customers in the early detection of diagnostic space.
Customers in.
Biotech company focused on drug development.
As you just mentioned.
And then obviously our own coes.
The biggest one is the.
It includes also our Produc genomic consortium with discovery life Sciences, albeit other coes, including EBITA in Europe are going to be.
Are you starting to take.
To take off.
Others as well.
So it's.
It's basically across that entire spectrum.
Not just the.
The mass spec focused.
Core labs as you mentioned.
Okay.
Great. Thanks, and I think the question was asked earlier, but I'm just wondering in terms of the placements that you expect to make in 'twenty two.
Is there a firm backlog in place for any of that like how would you characterize I know the qualitative adjectives were very constructive but is there any more granular view towards a start of our placements. We feel like we've got good visibility on or anything of that sort.
Yes, I think that David mentioned that.
Which is you can assume that in 2022.
That is a healthy part of our revenue is going to be instrument base, we need to have that installed base. In other words. This is a razor razor blade model, we got to have an installed base that's large enough.
So that the pull through begins to be meaningful for us to hit our target.
Margins that were interested in having when sphere is a mature commercial entity.
If I look at that six different customer segment, if you would.
The expectation is that the distributions that we had in terms of our limited release, it's actually been a more or less play out meaning I expect for us to have.
Customers across every one of those segments in terms of <unk>.
As of.
2022, and then the exact number of instruments. Then we're just not we're just not going to do that right. Now we will we will tell you.
The numbers at the end of the year and kind of provide more granular information and then the reason for that is at this point, we just need to understand it better ourselves. So that we can give you information.
That is at least based on some sound assumptions, let me see if David wants to add to that yes, Dan the only thing I would add just in terms of the visibility point recall that.
Quite a few of our limited release customers did enter into multiyear agreements with us and so we do have some visibility on some of the pull through relative.
Relative to this year and what the anticipated.
Agreements with those entities to say so we do have some visibility on.
2022.
Okay.
But again I just wanted to we're not going to be providing quarterly instrument placements or the like but we do we do have some visibility.
And maybe just one final like what what are some of the early learnings that you've had like with the with the first year and kind of eliminate launch now as you go into the full launch what are some of the things that you've learned in your.
Year, one that you're taking ahead to year, two that will help with the commercial rollout.
No.
And I would say.
Yes.
On the.
On what is better what we're now doing better is alright.
Install time has materially.
Become more efficient since we started not only if I look back at.
The time that it took us to install the Oregon instrument.
And to validate it as you get those guys up and running.
Where we are today.
We're probably four X faster in terms of our install times and are highly reproducible way.
And getting these customers up and running so that from the time to get the instrument to the time.
They can actually start running pilot studies is much shorter than when we started I think that's quite positive.
Have to say that on the.
On a more positive note.
Instrument really behaved extremely well in the hands of customers.
They were doing runs.
We're kind of like batch to batch runs and different days.
Inntravel variability so those numbers are all super tight so the instrument behaved really really well.
Super proud of our product development team, our operations team and our commercial team.
But the areas that I think we noticeably improved our.
Getting the customers up and running faster.
And my expectation by the way is that that is probably at.
At a point, where we're comfortable with I don't see a ton of improvement there because from the time that the instrument hits the ground there.
Till the time that it's valid that they can use it it's just around the month.
Hard to kind of beat that timeframe.
Let me know if you have another question.
Yes, the only thing I would add Dan is just.
It's really fun to watch.
Putting a disruptive technology in the hands of these different types of customers and I think some of the learnings as people are going to do.
A variety of things I mean, we've got just the flexibility breadth of the platform I mean, we've got.
Folks not only doing all of the biomarker work and target development work in that type of thing.
Early detection, but also people looking at animal models.
Using the same nanoparticle panel.
Plant and other types of things. So it's just exciting to see people, taking the technology and using it ways that.
Net.
Is very encouraging and also really interesting in terms of potential.
Things, we hope to see down the road from a data perspective.
Great. Thanks, Dave Thanks, Thanks, Amit.
Thank you Dan.
Thank you and this does conclude today's question and answer session, Ladies and gentlemen. This also does conclude today's conference call. Thank you for participating you may now disconnect everyone have a great day.
[music].
[music].
[music].
Good day, and thank you for standing by and welcome to this year's fourth quarter and full year 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 star one on your Touchtone telephone please be advised today's.
May be recorded.
Require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today, Carrie Mendivil Investor Relations. Please go ahead.
Yeah.
Thank you.
Earlier today, you released financial results for the quarter and year ending December 31 2021.
You have not received this news release or if you'd like to be honest with the company's distribution left please send an email to investors at <unk> Dot bio.
Joining me today from sphere is obese backboard, Chairman, Chief Executive Officer, and founder and David Horn, Chief Financial Officer.
Before we begin I'd like to remind you that management will make statements. During this call that are forward looking statements within the meaning of federal securities laws.
Statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
For information regarding these risks and uncertainties appears in his 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 report on Form 10-K for the year ending December 31, 2021, and its other filings with Securities and Exchange Commission.
Except as required by law here 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 February 28 2022.
I'd like to turn the call over to Amit.
Thanks, Karen and thanks, everyone for joining us this afternoon.
2021 was a momentous year for <unk>, we had a strong first year as a publicly traded company with the commercial launch of our product and tangible progress across all areas of our strategic plan.
These significant efforts resulted in $6 $6 million in revenue for the year and laid the foundation for broad release of the <unk> product suite.
We shipped 17 instruments to our collaborators and customers by the end of 2021.
We completed the first two phases of our commercialization strategy and onboard that lighthouse customers across multiple market segments.
Which paves the way for future market adoption and exemplification of the unique capabilities of our technologies.
We demonstrated the power of this technology together with our customers with more than 25 abstracts across a number of scientific conferences.
We established partnerships with industry, leading mass spec providers.
Sure broker and <unk> and presented results on our Julien workflows.
We made great strides in strengthening teams across the organization, including commercial operations quality data science and R&D.
We made significant progress building, our operational infrastructure, including systems and lab space and executed contracts with key suppliers and partners to support our growing customer base globally, all while minimizing disruption to their business during the Covid pandemic.
We also continue to build our board of directors, adding strong operating leaders, representing a cross section of industries company sizes and market segments.
I couldnt be more pleased with the progress we made in 2021 and are more confident than ever as more squarely focused on the customer experience and the broad release of the project graph product suite.
I have previously shared at the Jpmorgan Healthcare conference in early January that we officially entered into broad release and have built a strong pipeline up demand for the <unk> product suite.
I'm encouraged by the depth and breadth of discussions, we're having with potential customers.
We believe we are well positioned to become the definitive tools leader in proteomics.
We envision a future in which the entire ecosystem end markets will be created were extended with customer using the prodrug graft product suite to access unbiased deep rapid and scalable proteomics across the annuity of applications.
Heading into 2022, we are continuing to ramp our commercial efforts to meet this expected demand.
Over the course of the year, we will be focused on five key objectives first.
Growing our installed base of instruments.
Expanding our partnership efforts to continue to extend our global reach making it easy to access our technology and allow us to serve a diverse customer base.
Third.
Supporting customers with an industry, leading onboarding and user experience. So they can get up and running quickly.
Fourth continuing.
Continuing to build out our commercial capabilities geographic footprint and team.
And fifth.
Driving the product roadmap and exploring more applications for our proprietary engineered nanoparticles in 2022 and beyond.
We have a strong pipeline of prospective customers.
With a roughly equal mix of academic and commercial entities.
We're seeing interest across a broad range of applications, including biomarker discovery and target identification for drug development.
For diseases, such as Neurodegenerative diseases oncology cardiovascular and other complex diseases.
And for market areas, such as reproductive health aging veterinary direct to consumer and population scale initiatives.
The protium <unk> product suite is performing exceptionally well in customers' hands.
We routinely receive positive feedback about the product usage installation and support experience and this I'm very proud of.
We have built the foundation for customers to login and self serve online and we're launching a customer portal to enable this capability in the first quarter.
The ease of Onboarding and the power of our technology to deliver insight is demonstrated by how quickly limited with these customers are presenting their data even small proof of principle studies using the protein products, we have generated exciting results and presentations at conferences.
Larger studies are beginning an aging cancer and complex diseases.
Oregon Health Sciences University, one of our collaborations site is running their study of approximately 1000 samples in the first quarter and there are currently about halfway through processing their samples we.
We expect they will submit abstracts later this year.
During this week's use pupil conference in New Orleans, where presenting seven posters southern collaboration with our customers demonstrating the power of unbiased proteomics at scale.
In addition, there was an eight closer that will be presented by product pneumatic.
Sharing the analysis of Enlink like hand in cancer patients using the <unk> product suite.
A study of 212 subjects inclusive of 96 healthy controls yielded hundreds of Glasgow peptides.
This demonstrates the prettier graft product suites ability to detect black calculated proteins black.
Constellation is a comment post translational modification and then involved in the normal functioning of the cell.
And the development of diseases, such as cancer pre.
Previously these glycoproteins could only be robustly identified utilizing specific enrichment strategies.
In one of our own posters being presented at the Usu Po.
We are demonstrating a new software package, the prettier graph analysis suite, which leverages, our scalable cloud based software for large scale Proteus genomic data allowances and visualization.
Another poster being presented demonstrate the high purity on depth.
<unk> to identify new protein variance and we reproduced the ability of our technology in customers hands with a 1% fall discovery rate for protein identification.
This was shown in this study with a cohort of 200 individuals, including Alzheimer's disease patient and healthy controls.
Across this cohort we identified at least 5500 protein variance inclusive of 4700 unique protein groups at 1% false discovery right.
Looking at this data.
Peptide level resolution, we identified over 63000 peptides.
Exclusive of more than 1350 unique peptide illegal variance <unk>.
<unk> more than 500 of these peptides areas have not been previously reported in the major public peptide repositories or in the Clinton bar genomic variant database.
This is a key benefit of our technology.
Our solution is the only available at scale technology to deliver peptides and amino acid level resolution, which is needed to match with nucleotide level genomic information in order to broadly enable proteus genomics.
Ah studies scale to larger cohort, we expect to find increasing catalogs, a protein variance, including illegals supplied forms and post translational modification to enable increasingly more powerful procured genomic analysis.
Scale, we believe this kind of novel biological insight will be key to unlocking the perennial I likely lead to applications and therapeutics not otherwise possible.
Geographically, we're seeing a growing interest across North America, Europe , and Asia, and as a result of our expanding commercial footprint.
In addition to our ongoing efforts in North America, and Europe , we are diligently working through Covid constrained to establish our presence in China with installation and training occurring this month at our distributor and like medical.
We're in an excellent position to expand our installed base in 2022.
Eager to continue to get the project got product suite into customers' hands and see that biological insight grow.
Earlier this year at the Jpmorgan Healthcare conference, we announced the launch of our center of Excellence program, a program that partners sphere with select Premier multi omics service providers to offer unbiased deeper genomic services to customers around the world.
We have strategically selected each Coa based on geography and expertise.
In North America, we are by a desk discovery life Sciences, and Sanford Burnham Medical Discovery Institute with services and expertise targeted and pharma genomics and academic customer group respectively.
Outside of the U S. We have partnered with <unk> in Europe , and sole brain and South Korea.
These partners are at varying stages of commercializing their services using the <unk> product suite and the majority of them are ready to go and have already received inquiries since our announcement at Jpmorgan.
We also announced a key collaboration.
Expand access of deep unbiased proteomics for genomics customer to enable neogenomics and multi Omics studies I'd previously unimaginable scale.
Together with discovery life Sciences, and leading genomic service provider and one of our Coes.
And <unk> one of our current commercial partners and a leading provider of mass spec platforms.
We have created a first of its kind prettier genomic consortium.
This is a multiyear collaboration that incorporates a three phased expansion, where discovery will set up expand and offer defund bias for genomic capabilities to their existing genomic customers ramping toward an annual capacity of over 100000 samples per year.
This is of course, not using the <unk> product suite and the <unk> 7600 platform.
We expect the consortium to become operational in the second half of 2022 and look forward to updating you on this progress.
I'm extremely pleased with the execution of our commercial strategy over the past year.
None of this would have been possible without the critical talent.
To drive progress across these important fronts.
And we have more than doubled our organization in 2021.
We have also continued to build a diverse and experienced board with new members, including meter Giuliani his seasoned life science and pharma leader with global experience across markets, including Asia.
And the ratio Horowitz.
A highly accomplished and distinguished scientists and CEO in a high growth emerging area of gene editing.
We're very proud of our progress in attracting top performing passionate people to Sia team and we believe this is the fuel to drive our business as we head into 2022.
We are engaged with top institutions and scientists across the world to enable unbiased the proteomics at scale.
We're seeing first of their kind of unbiased large scale projects being planned and funded.
We're seeing robust performance in our product and customers.
With compelling data being presented just months after gaining access to the technology.
And we're building a strong pipeline across markets and customer groups.
We continue to scale, our commercial organization to open up a new gateway to the protocol and unlock this exciting opportunity ahead and with that I will now turn the call over to David.
Thanks Hamid total revenue for the fourth quarter of 2021 was $3 1 million compared.
Compared to $336000 in the fourth quarter of 2020. This brought total revenue for the full year 2021 to $6 6 million compared to $656000 in 2020, the increase in fourth quarter revenue was primarily due to sales of products related to the protium <unk> product suite.
Product related revenue for the fourth quarter of 2021 was $3 million, including related party revenue of $1 2 million and consisted of sales of SP 100 instruments consumable kits and platform evaluations.
<unk> party revenue of $1 $2 million represents product sales to prime Gnomic Grant and other revenue from our <unk> Grant from the NIH and research related collaborations was $34000 in the fourth quarter of 2021, representing a decrease in these activities from the fourth quarter of 2020.
Total gross profit inclusive of grant and other revenue was $1 4 million for the fourth quarter of 2021, representing a gross margin of 47% total gross profit for the year was $3 4 million reps.
Representing a gross margin of 52%.
All year gross margins benefited from strong consumable kit sales platform evaluations service projects and grant revenue and.
In 2022, we expect gross margins will be dampened due to an anticipated larger percentage of instrument sales a significant reduction in service and grant revenue and our continued investment in scaling of our operations as we have discussed previously we continue to target long term gross margins between 70 and 75%.
Total operating expenses for the fourth quarter of 2021, or $21 3 million compared to $13 4 million in.
In the fourth quarter of 2022.
Total operating expenses for 2021 were $74 9 million includes.
Inclusive of $25 9 million and stock based compensation compared to $34 $3 million inclusive of $7 3 million in stock based compensation in 2020.
Research and development expenses for the fourth quarter of 2021 were $8 2 million compared to $5 4 million in the fourth quarter of 2020.
Research and development expenses for 2021 were $29 1 million compared.
Compared to $18 9 million in 2020, the increase in R&D expenses was primarily driven by an increase in product development efforts related to the protein graft product suite, including increased head count and other expenses related to employee compensation, including stock based compensation.
Selling general and administrative expenses for the fourth quarter of 2021 were $13 1 million.
<unk> to $8 million in the fourth quarter of 2020 SG.
SG&A expenses for 2021 were $45 8 million compared.
Compared to $15 4 million in 2020.
The increase in SG&A expenses was primarily driven by increased head count and other expenses related to employee compensation, including stock based compensation. In addition, we incurred increased marketing costs related to our commercialization efforts as well as increased costs related to being a publicly traded company.
Net loss for the fourth quarter was $19 7 million compared.
Compared to $12 9 million in the fourth quarter of 2020.
Net loss for 2021 was $71 2 million compared.
Compared to $32 8 million in 2020.
We ended the year with approximately $493 million in cash cash equivalents and investments.
Turning to our outlook for 2022, we expect revenue to be in the range of $14 million to $16 million. We expect revenue to consist primarily of sales of the Proto graph product suite, which includes SP 100 instruments consumable kits and software at this time, we do not expect significant revenue from service oriented projects or grant revenue.
In 2022, we also expect to continue to increase our investments across commercial operations and R&D activities in order to scale, our business and drive long term revenue growth. We believe we are adequately capitalized to execute on our strategic plan and remain thoughtful and prudent with our deployment of capital in order to drive long term value.
Sure.
At this point I would like to turn the call back to Amit for closing comments.
Thanks, David.
As we move forward in pursuit of our vision. This year, we will continue to drive execution against our core strategies.
Im excited and humbled to lead such an amazing team.
I'm inspired by the passion hard work and dedication that has allowed us to commercialize such a transformative product I believe we are a technology the team and the strategy to bring the next phase in all mixed to labs around the globe.
We're paving the way for a portfolio of products that will open a new gateway to the proteome.
Look forward to sharing updates on our progress over the course of the year and with that we'll now open it up for questions.
Thank you if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Could you please limit yourself to one question and one follow up.
Our first question comes from the line of Tycho Peterson with Jpmorgan. Your line is open. Please go ahead.
Hey, Thanks, I'd like to start with the guide I'm wondering if you could just give us any more color in terms of how youre thinking about instruments versus consumables and then you did call out.
Step up in Opex curious if you could just help us frame.
The magnitude of how you think about that step up and anything you could point to in terms of where the dollars are going how much is going into the commercial channel versus R&D.
Sure Tycho it's David.
For the question.
In terms of instrument versus consumable, we do feel like it's going to again be majority instrument relative to consumable we're not going to give you exact percent, but again I think it would be something.
We still see good consumable pull through in revenue, but again, we think it is going to tip the balance towards instruments next year.
And then in terms of Opex.
Again, we're not going to give you a specific guidance on that but again I think we are going to continue to see.
Good investment across the organization both in terms of operations and commercial I think thats, probably going to be the key investment area.
Then product development, we're continuing to invest in our in our product pipeline.
And then obviously R&D to kind of continue to see the efforts and investments for long term growth, but again, we do see opex, increasing obviously head counts increased.
We will again be prudent with those investments we feel like we're very well capitalized today to execute on the plan.
And then a follow up on just the the roadmap you are currently doing around 2000 and flex some of your competitors are higher Plex I'm. Just curious if you could talk about plans to increase multiplexing overtime.
Is there a roadmap you can kind of point to in terms of where you might go from a multiplexing perspective.
Tycho Thank you.
So from a product roadmap perspective, Tycho, we're focused really on the kind of three areas in the near term and then some additional areas that further out in the near term.
As we put the <unk>.
Product in the customers hand.
The feedback that we received which by the way obviously mirrors the programs that we have internally.
Where that customers were looking for increased throughput.
And the previous graph really.
Significantly add.
The ability to do larger and larger studies, but you still have some limitation that the mass spec level. So.
They want an increased throughput even at the mass spec level, one secondary there was reduction in sample volume.
So that if you are a precious sample, especially a biobank samples you can start up with a lower amount and then third was increased content.
And by that I mean, a larger number of protein ivs on.
On a per sample basis.
Remember when we talked about.
In theory, when we talk about protein Ivs, we're talking about the protein that are identified in a given sample.
At a 1% false discovery right. This is an important point.
So for example, the five nanoparticle panel that we have if you look at it across the various different studies.
They can identify.
To date, we have identified though we've actually discussed that talked about the.
Your own conference just a couple of months ago North of 12000 proteins in that number by the way is increasing.
So for example, if you just look at the Alzheimer study that I alluded to.
In my prepared remarks in.
In that study, we're now north of 5500 proteins inclusive of some protein variance.
So I think from a content perspective, Tycho the current technology allows us to access in a very meaningful number of protein including protein variance.
At a very desirable of discovery made up 1%.
You can expect our follow on products too.
To essentially address the three areas that I mentioned the additional throughput.
The reduction in sample volume and the additional content that comes now if I look a little bit further out. So those three areas are areas that are being heavily invested on now and they should also give you guidance in the product that is going to be forthcoming.
Look a bit further out the areas that we're actually investing in our multi omics. Both in terms of nanoparticles that can drive multiple mixed signal and also investing in our analysis suite offer multi omics analysis. So portio genomic analysis for example.
So I think when you look at the way that product behave if you compare to some of our.
Alternative products out there on the top.
<unk> side again, you have to be careful that you might have a panel of again that identifies that is designed to identify a certain number of protein, but not all of those proteins are going to be identified in a given sample. So if we were going to say how many protein.
Has the platform identifies the current existing.
<unk> particle panel what that number is north of 10000.
Given sample at that numbers is two to 3000, depending on the sample type.
Okay. That's very helpful. And then maybe just one last one before I hop off cost per sample as we think about early customer scaling up.
<unk> come up as an issue at all and where do you think cost per sample needs to go ultimately to really drive the market.
Look I mean, I think your customers are always going to say I like it.
Likely to be cheaper, but if you look at the price point.
It's exactly where these customers are used to spending.
And getting the kind of content.
On the genomic funds so the product is priced.
We're between an exome and genome.
Other products in the market are priced similarly, but that all said.
This year is really the only solution that can give them.
Unbiased Proteomic and.
The ability to access new content at that scale. So I think the price point is right Tycho I'm not sure if theres going to be a lot of pressure for us to reduce the price at this point, but I think what you're going to see over time is it.
Additional value being being given to the customer in terms of additional content that they get.
For the price point that we're at.
Okay very helpful. Thanks.
Thank you and our next question comes from the line of Tejas Savant with Morgan Stanley . Your line is open. Please go ahead.
Hey, guys good evening.
Just a couple of quick ones for me to kick things off.
Amit can you shed some color on the order funnel now thats a broad release is underway.
Where are you seeing the most interest.
Yes, so touch us.
We went into the broad release with.
Is there a meaningful interest in the pipeline of demand for the product and we're seeing interest from other regions other than U S. Although I think for 2022, you can expect most of the revenue to be from.
From U S.
A little bit early.
For us to.
Discuss what percent of revenue is going to be from outside of the U S. But if you think about that funnel of demand right. Now there is basically three buckets, obviously the largest.
And really the most significant portion of it is the U S demand in Europe .
We're going to have a direct commercial operation. We also have <unk> at the center of excellence. That's an area that we're very focused on and then also from Asia.
Asia is going to be an indirect through our distributor.
<unk> medical in China, and then through our Coa in Korea.
So I think.
The demand is coming.
Globally I think you can assume most of that the sales in 2022 are going to be driven in the us.
Got it.
Yes, the only thing I would add Tycho is just obviously, we're seeing interest broadly across commercial and academic just given the way. These folks tend to operate we do think the commercial folks will probably be a.
Little more quicker to be able to fund enact than the academics.
So we do kind of expect more more sales to commercial organizations over the course of the year.
Got it David that's actually a great segue into my.
Follow up here.
On Biopharma R&D spending are you seeing any.
Any sense of some hesitancy around capex sales and on your point on academic.
I know you talked about commercial being the dominant portion of the funnel here, but any any sort of signs of sales cycles be long getting further thanks to all of micron or not really.
Why don't I take the first part of it.
Just in terms of just capex demand from Biopharma. We continue to have good interest teach us we haven't in our own experience to date seen any any significant pullback.
People I mean again these sales cycles take a while right, but but again there is still interest in the technology and interest too.
Two to explore and potentially acquire it so.
We haven't seen any broader macro funding impact from Biopharma at this stage.
And then your second part of your question Tejas.
That was on just academic customer trends any elongation of sales cycles, there, thanks to omicron and so on or not really.
I would say look.
Academic folks.
The sales cycle is going to be longer anyway, just by virtue of the fact that the whole grant cycle.
<unk>.
But I think that the impacted a bit more because in their case. They also have the access they have to get access to samples in some cases not so much in the U S push us, but at least ex U S. We also have kind of difficulty getting to them for install.
Think that if anything the academics are are.
Probably impacted a little bit more.
But this but the cycle, we would expect it to be longer for academic.
And then pharma I think thats going to be the case I think if I look at the funnel of demand.
More or less split down the middle in terms of.
Hardwood academic folks.
Got it helpful. And then David just just one quick question for you on the guide here.
Can you share a little bit color around what you're assuming for instrument sales to the boreal genomics consortium here I think you.
You mentioned it.
Ramping up in the second half.
And should we be assuming sort of standard esp's on those instrument sales into the consortium as well or should we be thinking of a lower price point.
As you look to get it off the ground here.
Yes, Thanks Jess.
We assume kind of little to minimal revenue to Josh in terms of the Proto genomics consortium.
We do expect it to get up and running.
In the back half of the year, but we've been very conservative in terms of our overall timing there and the amount of volume that goes through there. So very very little is the answer on that front and if you remember how the deal.
Is structured.
It is a.
Sure.
A deal where it is.
Pay overtime for the instrument, so we will be selling them consumable kits and part of that over time will be used to pay for the instruments. So they won't pay upfront, but they will pay over time and so that's the way to think about that.
That piece of it.
Got it very helpful. Thanks for the time guys.
Hey, Josh.
Thank you and our next question comes from the line of Derik de Bruin with Bank of America. Your line is open. Please go ahead.
Hey, good afternoon.
Just curiosity, what's the where did you end your instead.
Installed base number at the end of the year and also what sort of like pending sort of give us some idea on the backlog just basically trying to get a sense of how should we be thinking about instrument growth in 'twenty two.
Okay.
Yes.
We ended the year.
With 17 instruments shipped I don't think were going to be.
We're not going to be disclosing what the expectation is in terms of instrument.
In 2022 towards the end of the year Derek will give you one more update.
In terms of the number of instruments that ended up getting placed in 2022.
Joe do you want to add to that yes, I think Derek probably the way to think about it is.
A slightly higher percentage of instruments and consumables this year.
And so we've given you the guide and then you kind of know generally what the with the <unk>.
General selling price of the instrument is so you can kind of.
Do your math, there, but again.
That's kind of.
Again, I think Amit said, we're not going to be giving specific guidance quarter to quarter on an installed base of instruments.
Yes, that's fine just was trying to get a ballpark figure to make sure that we're chewed up at end of the year.
And related I've had some people asking about the related party and sort of like how that trends in 2022.
Sure I think we.
We've been around a third of revenue is generally what it's been.
And they were 35% at the year.
In the first couple of quarters, you may see a similar percentage and then as we ramp.
The non related the other customers basically that that percentage will start to come down.
Great.
On your experience of your customers so far.
How quickly are they coming back to start additional programs or is there.
A digestion period, where they've got to look at the data analyze it publish it before they're coming back basically I'm just sort of thinking about what's the experiment cycle time, if people want to sort of go back and do iterations.
Experiments.
Yes, Gerrick I would say.
If you look at the Oregon Health is probably as good.
Probably a good example.
So remember they've got their instruments.
In December of 2020 that that instrument was up and running.
In early 2021.
They did a pilot study.
They presented data on.
Kind of.
In Q3.
Based on that pilot study then.
You said that they were going to do a larger study so they're happy then.
Sure.
Get the resources, both financial resources and also the samples.
To get that study done that will be a study of 1000.
Sample.
And they are now underway that thousand sample.
Should be done in Q1.
And then we'll process the data presented so I think if you look at kind of the cadence of that which is.
You spend a few months you get to know the system you run your pilot study.
You Love, what you will see it forms the basis to do something substantial that follows.
And I would say, Oregon is a good example, but on the back of Oregon There is.
At least two other studies that are now starting off very similar scale.
And of course someone like programmatic.
Our own spin out.
Those guys did not need to have that initial gating phase if you would in understanding that platform because obviously when the spinoff we understood. It so to hit the ground running at scale and in fact, Theyre now Derek at scale as they are.
Magnitude of growth for them in terms of the kinds of studies that they will be doing it.
Put a mirror some of the larger genomic studies, I mean, and I, just think that and by the way youre going to begin to see data presented.
From them as well.
At the end of the day.
Science and the data is going to drive demand you just have to get folks tied to do that but I think Oregon is a good example.
Great great.
Thank you very much.
Thanks Derek.
Thank you and our next question comes from the line of Dan Brennan with Cowen. Your line is open. Please go ahead.
Great guys. Thanks, Thanks for the questions maybe first one would just be on your commercial plans can.
Can you just walk us through a bit like where you are with field sales force.
Give us a sense of like what the plans are this year in terms of how many customers you're you plan to target what is that targeting strategies or like an 80 20 rule just give us some flavor about your go to market strategy with the full commercial launch.
Yes.
Dan. Thank you. So then we have said that we arent going to be disclosing the number of reps that we have provided that where we were.
Hiring about two quarter ahead up needs both in terms of sales and support.
So we're basically doing that and we're on schedule with that.
And we're also building a sales team not just in the U S. But also in Europe .
With feet on the ground.
<unk> that I'm Super proud Thats coming together in this product.
And what was the second part of your question there.
Yes.
If only I could go to market like give us a sense of.
Are you going after the highest mass spec lab, obviously, just just kind of give us a sense of who the types of customers in the first year the full commercial launch that youre targeting.
Yes.
So that if I look at the.
If I look at.
The pipeline of demand that we have right now it actually sort of mirrors exactly what we had in terms of customer type that we said we were going to have.
And the limited release, but with a limited release was supposed to be a guide for these lighthouse customers. So that includes customers in academia customer.
Customers in large biopharma.
Customers in the early detection of diagnostic space.
Customers in.
Biotech company focused on drug development.
As you just mentioned.
And then obviously our own coes the biggest one.
<unk>.
Includes also our pro dealer genomic consortium with discovery life Sciences, albeit our other series, including <unk> in Europe are going to be starting to take.
To take orders as well.
It's basically across that entire spectrum.
Just if you would the mass spec focused.
Core labs as you mentioned.
Great. Thanks, Amit and I think the question was asked earlier, but I'm just wondering in terms of the placements that you expect to make in 'twenty two.
Is there a firm backlog in place for any of that like how would you characterize I know the qualitative adjectives were very constructive but is there any more granular view towards a start of our placements. We feel like we've got good visibility on or anything of that sort.
Yes, I think that David mentioned that.
Which is you can assume that in 2022.
That a healthy part of our revenue is going to be instrument base, we need to have that installed base. In other words. This is a razor razor blade model, we got to have an install base is large enough.
So that the pull through begins to be meaningful for us to hit our target.
Margins that were interested in having when sphere is a mature commercial entity.
I look at that six different customer segment. If you would my expectation is that the distributions that we had in terms of our limited release is actually going to more or less play out meaning I expect for us to have.
Customers across every one of those segments in terms of.
In terms of.
2022, and that is the exact number of instruments. Then we're just not we're just not going to do that right. Now we will we will tell you.
The numbers at the end of the year and kind of provide more granular information and then the reason for that is at this point, we just need to understand that better ourselves. So that we can give you information.
That is at least based on some sound assumptions, let me see if David wants to add to that yes, Dan the only thing I would add just in terms of the visibility point recall that.
Quite a few of our limited release customers did enter into multiyear agreements with us and so we do have some visibility on on some of the pull through relative.
Relative to this year and what the anticipated.
Agreements with those entities does say so we do have some visibility on on 2022.
Great.
But again I just wanted to we're not going to be providing quarterly instrument placements or the like but we do we do have some visibility.
And maybe just one final like what are some of the early learnings that you've had like with the with the first year and kind of eliminate launch now as you go into the full launch what are some of the things that you've learned in year. One that you are taking you head to year, two that will help with the commercial rollout.
Then I would say.
On the.
On what is better what we're now doing better is our install time has materially.
Become more efficient since we started another one if I look back at.
The time that it took us to install the Oregon instrument.
Hunter validated as we get those guys up and running and where we are today.
We're probably four X faster in terms of our install time and a highly reproducible way.
And getting these customers up and running so thats.
From the time to get the instrument to the time that they can actually start running pilot studies is much shorter than when we started and thats quite positive, but I have to say that on the.
On a more positive note.
The instrument really behaved.
Extremely well in the hands of customers.
They were doing runs.
Kind of like batch to batch runs and different days.
Inntravel variability.
Those numbers are all super tight so.
The instrument behaved really really well.
Super proud of our product development team, our operations team and our commercial team.
Over the areas that I think we noticeably improved our.
Getting our customers up and running faster than.
My expectation by the way is that that is probably at.
At a point, where we're comfortable with I don't see a ton of improvement there because from the time that the instrument hits the ground there until the time that it's validated they can use it. It's just around the month, it's hard to kind of beat that timeframe.
Let me know if you have another question.
Yes, the only thing I would add Dan is just.
It's really fun to watch.
Putting a disruptive technology in the hands of these different types of customers and I think some of the learnings as people are going to do.
The whole variety of things I mean, we've got just the.
<unk> breadth of the platform I mean, we've got.
Folks not only doing all of the biomarker work and target development work in that type of thing.
Early detection, but also people looking at animal models.
Using the same nanoparticle panel doing plant and other types of things so.
It's exciting to see people, taking the technology and using it ways that.
That.
It is very encouraging and also really interesting in terms of.
Potential.
Things, we hope to see down the road from a data perspective.
Great. Thanks, Dave Thanks, Thanks, Amit.
Thank you Dave.
Thank you and this does conclude today's question and answer session, Ladies and gentlemen. This also does conclude today's conference call. Thank you for participating you may now disconnect everyone have a great day.