Q4 2021 NanoString Technologies Inc Earnings Call
Yes.
Ladies and gentlemen, thank you for your patience this cold as Jude starts in a couple minutes time.
[music].
Hello, and welcome to today's nano shrimp fourth quarter of 2021 operating results. My name is and I'll be coordinating your call today.
If you would like to register a question. During your presentation you may do so by pressing star followed by one on your telephone keypad.
Now I'd like to hand over to our host Doug Farrell Vice President of Investor Relations. Please go ahead.
Thank you very much operator.
The call with me today is Brad Gray, our president and CEO and Tom Bailey, Our CFO earlier today, we released our results financial results for the fourth quarter and fiscal year 2021.
During this call we may make statements that are forward looking statements about financial projections, the impact of COVID-19, pandemic future business growth trends and related factors prospects.
Thanks for expanding and penetrating our addressable markets.
Our strategic focus and objectives and the development status.
Yes.
And the product offerings.
Forward looking statements are subject to risks and uncertainties, many of which are beyond our control including.
Risks and uncertainties described from time to time in our SEC filings our results may differ materially from those projected we undertake no obligation to update any forward looking statements.
Later in this call Tom will be discussing our financial results and 2022 guidance.
Erinn as a supplement to GAAP financial measures selected non-GAAP adjusted measures the calculation of which are described in detail in our press release throughout this call all financial measures will be GAAP unless otherwise noted.
You can find reconciliations of GAAP to non-GAAP measures as well as the description.
The limitations and rationale for using each such measure in this afternoon's press release.
Analysts and investors in building their models those things.
The financial information tab of our Investor Relations page that include presentation of our non-GAAP or adjusted.
Measures and other selected financial data for the fourth quarter and fiscal year 2021 and for each quarter for the full year 2022.
To remind everyone we will be participating in the Cowen Conference next week, we look forward to having the opportunity to speak with many of you there now I'd like to turn the call over to Brad.
Good afternoon, and thank you for joining us today <unk> exited 2021 on a high note as <unk>.
And our spatial biology platforms during the fourth quarter generated more than 70 instrument orders across our genomics digital spatial profiler at our cosmic spatial molecular inventory.
This robust demand is a testament to the appeal of our unique product portfolio, which addresses scientific questions at any scale of spatial biology and makes <unk>, a one stop shop researchers in the field.
2022 is already shaping up to be another exciting.
We've just completed our fourth annual spatial genomics summit, which was hosted jointly with aluminum.
And then 200 researchers joined on the online event to learn about the cutting edge science is being conducted by our spatial biology customers and to preview the cosmetics spatial volatile imager and the powerful informatic solutions. We will release later this year.
During the call today I'd like to provide a brief review of our 2021 performance before outlining our goals for 2022.
During the fourth quarter, we posted record genomics revenue of $18 million, which put us $2 million above the top of our <unk>.
<unk> range. This was driven by more than 50 genomics instrument orders as annualized consumable pull through of approximately $109000 per installed system.
Year end, we've established an installed base of approximately 255 genomic systems.
We also achieved several important complex milestones, we published a manuscript in the journal of Bio archive, describing cosmic technology and performance. We also released our dataset mapping nearly 1000 Rnas Institute at single cell resolution.
This data was generated using formalin fixed paraffin embedded or <unk> samples and that is the.
And is the largest publicly released data set of its time.
Together these releases have created quite a buzz around cost base as evidenced by the nearly 6000 loads of the manuscript and 400 downloads of our grid application package cost mix.
No statistics provide stronger evidence of customer interest in cosmetics and instrument orders, we generated orders for 'twenty cosmic systems in 2021, the start of an order book that we plan to build out over the course of this year.
The first 20 orders demonstrated the highly complementary nature of our two spatial biology platform at 95% of the cosmic systems order or either bundle with a new geo mix or sold to an existing <unk> customer.
Meanwhile, encounter instrument sales were strong in Q4 and return to pre pandemic levels for the full year. This demonstrates the healthy demand for this platform, even if consumable pull through remains depressed relative to pre pandemic levels.
Turning now to 2022 I'd like to outline our four strategic objectives for the year.
Our first objective is to drive genomics DFT further into mainstream research broadening adoption across multiple areas of discovery and translational research.
When <unk> launched it was initially embraced by early adopters with a strong interest in new technology.
Many of these early adopters were focused on translational research within oncology.
Demonstrate encountered customers for years and.
In 2021, the introduction of the genomics whole transcriptome Atlas for Wpa provided a universal assay the rebound on the vast installed base of Illumina Sequencers.
This is allowing genomics to reach scientists studying the fundamentals of biology in areas outside of oncology.
During 2022, we will push adoption into these groups even further with a three pronged approach.
First we are providing RNA assays that cohort virtually every area of biology.
The centerpiece of the genomics portfolio or the whole transcriptome assays, which served the needs of the two most common.
Model systems.
Our human WTS was launched last year. It quickly became the most successful launch of any consumable product ever offered.
Followed with the launch of the mouse Wpa accelerating genomics uptake as the mouse is the primary model system for discovery research.
For 2022, we're expanding our offering to cover the long tail of discovery research by launching fully customizable RNA assays.
Second we are enhancing the genomics workflow.
Last week, we announced the expansion of our partnership with Leica, enabling full automation of the genomic RNA assay workflows.
This will reduce the hands on time of our RNA assay protocol to less than four minutes per slide and allow customers to prepare up to 30 samples at a time using the LIFO on Rx auto standards systems.
In addition, we've introduced a protocol for the co detection of both RNA and proteins from a single <unk> section.
We have demonstrated the co detection of over 145 proteins alongside of our human wth from a single colorectal cancer tissue section.
And finally, we've expanded our customer experience team to accelerate genomics installation customer training and site activation.
Third we will publicize datasets and publications that illustrate the power of genomics and.
In Q4, we released the first installment of the spatial organ Atlas containment data from six organs for which key structures had been profile with a whole transcriptome Atlas.
These data have generated industry interests from researchers across diverse fields of applications who've downloaded the datasets more than 1700 times.
During 2022, we plan to expand the spatial atlas's to include additional organs and we expect these to become popular referenced datasets that customers can access to quickly discover how oregon's function and both healthy and disease States.
In addition, we recently saw the publication of the 100 peer reviewed paper Deleveraged spatial biology, using genomics and we're tracking many more papers being prepared for submission.
Finally, we're looking forward to an action packed <unk> meeting in June that will be drilled three oral presentations and nine abstracts using genomics.
Our second goal for 2022 is to launch cause mix as the industry, leading molecular imaging platforms.
<unk> provides a single cell and sub cellular resolution that perfectly complements genomics, enabling a wide variety of experiments the.
Cosmetics launch will double the size of the spatial biology market that we serve covering virtually all of the $6 billion Tam for spatial research.
In a noisy imager market cosmetics stands above the competition.
Cognex provides the highest plex assays of any imagery available already covering up to 1000 Rnas.
Kosmos is the only platform to demonstrate the ability to image, both RNA and protein.
<unk> has demonstrated compatibility with the most important sample type and medical research, which is FTE tissue.
Hospice will come with a dual run mode capability that allows the system to be tuned to the specific needs of a particular experiment regardless of whether it is for discovery or translational applications.
With tunable run modes cosmetics enables discovery research by providing high plex and unbiased whole slide analysis.
As well as translational research with low Plex high throughput biology, driven analysis.
<unk> will also benefit from NATO <unk> brand reputation established commercial channel and leading portfolio of spatial solutions that spans the entire continuum of applications.
When we put all of these attributes together, we believe that confidence is poised to become the market leading imager.
Yeah.
The constants launch will be supported by a steady cadence of data presentations and releases throughout the year.
Yesterday, our fourth annual spatial biology summit featured several leading researchers who are applying the cockpit system to solve important biological questions.
Jody corner from the Mayo clinic presented a study that verified the highest fidelity of cosmic <unk> segmentation until pricing as well as the strong correlation between cosmic data and the PDL one clinical assays she had applied in triple negative breast cancer.
Jacob <unk> of Oregon, Health and Science University presented a study that use the sub cellular resolution of conflicts to distinguish those cells with viral infection from those with virus simply bound to the cell surface and then he studied the gene expression differences between these cells.
We are now actively promoting <unk> and we expect to accumulate dozens of orders ahead of the commercial shipments in the fourth quarter we.
We plan to ship, our first beta systems to customers during Q2, allowing us to get feedback on installation training and workflow.
Around the same time, when we use beta systems.
<unk> the capacity for our Cognex technology access program or tap.
<unk>, which is currently fully subscribed.
Overall, the constants launch strategy, followed the same playbook that we used successfully with genomics.
So we are confident in our success.
Our third strategic objective of the year is to launch our cloud based spatial biology portal.
With this launch we are aiming to provide a seamless informatics solution for both genomics and cosmic <unk>.
<unk>, allowing them to access the massive computing and storage capabilities that are required for spatial genomics.
Spatial research typically involves a team approach integrating the lab technician pathologist biostatistician and principal investigator.
Migrating to the cloud will allows us to collaborate and share data in real time within an institution or across broad networks of researchers.
This quarter will include a suite of state of the art tools for data analysis and visualization.
We will integrate with industry standard platforms, such as aluminum based space as.
As well as a growing universe of open source software.
During our spatial genomics summit, a panel of experts from Wild Cornell Medical College, Boston University, and alumina identified benefits of migrating spatial biology data to the cloud.
Including scalable compute and storage capabilities that can leverage the power of AI for complex spatial datasets.
We believe that this powerful cloud based informatics solution will be another important competitive advantage for us.
<unk> our portfolio of spatial capabilities.
Our spatial biology portal is expected to progress and debate of testing in Q2, and we plan to launch this offering in the fourth quarter.
Our fourth objective for 2022, just to sustain the growth of our encounter franchise or.
Our encounter analysis system provides rapid highly multiplexed bulk gene expression.
The encounter franchise and provides a solid foundation on which we are building, our spatial business and funds our global commercial channel.
Our instrument business has returned to pre pandemic levels and we expect the healthy pace of instrument placements to continue in 2022.
Consumable pull through has decreased during the pandemic, especially among biopharma customers. We have a number of initiatives in place to help revitalize this customer segment over the year ahead.
We also have a roadmap to expand our encounter consumable portfolio into new applications that are important in.
In Biopharma.
We recently introduced a new T cell repertoire or TCR diversity panel that allows researchers to measure the usage of TCR variable regions and shifts in TCR diversity with a simple assay that can deliver results in less than 24 hours.
During 2022, we also plan to target cellular and gene therapy applications with new features and assays tuned to that application.
In addition, we have recently expanded our biopharma sales team to ensure that these important customers are being well served.
Now I'd like to turn the call over to Tom to review the details of our operating results and to provide our financial outlook for 2022.
Thanks, Brad and thanks, all for joining us today for.
For the fourth quarter of 2021 product and service revenue was $42 million at the upper end or Q4 guidance range representing year over year growth of 18%.
Do for genomics revenue was 18 million, 48% growth as compared to Q4, 'twenty and above the upper end of our guidance range.
$11 9 million was from approximately 50 instruments shipped and $6 1 million was from consumable sales.
<unk> Q4 genomics consumables pull through was about $109000 per installed system.
And counter and service revenue was $24 million in Q4.
Instrument revenue was $5 7 million approximately in line with Q4 of last year.
<unk> encountered consumables revenue was $13 8 billion about flat year over year, reflecting lower pandemic impacted utilization trends, we've detailed previous quarterly calls.
Annualized encountered consumable pull through was about $53000 in Q4, but at the same as we recorded in Q3.
Service revenue was about $4 6 million for the quarter, representing 20% year over year growth driven by genomics DSP tap and increased service contract revenue from our growing installed base of systems.
Turning to margins and expenses I'll provide results on a non-GAAP or adjusted basis, which removes the impact of stock based compensation depreciation and certain onetime items. Please refer to our press release as well as the exhibits we have posted to our Investor relations webpage for detailed information on our non-GAAP or adjusted measures are prepared.
Q4, adjusted gross margin was 54% or about flat as compared to Q4 of last year.
Margins were positively impacted by the growth in genomics DSP with that impact offset by investments we continue to make in manufacturing capacity to support <unk> growth and the expected 2022 launch of prospects.
Adjusted R&D expense was $15 7 million, an increase of 28% year over year.
R&D growth was primarily driven by increased personnel and product development costs related to genomics and cosmetics development activities, including investments, we are making in software and technology to support data storage and analysis across our spatial biology platforms.
Adjusted SG&A expense was $26 6 billion, an increase of 40% year over year. Our Q4 SG&A expense increase was due primarily to investments made in our spatial biology related commercial initiatives, including investments to expand our salesforce service and customer support groups as well as costs related to life.
Wincing and implementation of new information technology solutions to support our commercial operations and finance functions.
Our adjusted EBITDA loss was $19 6 billion in Q4.
Turning to full year 2021 product and service revenue was $144 million representing year over year growth of 29% and in line with the upper end of our updated guidance range.
Our genomics results landed above the upper end of our updated guidance range and represented 49% annual growth.
In Canada results landed near the middle of our updated guidance range and represented 20% annual growth as compared to a pandemic impact in 2020.
For the full year 2021, adjusted gross margin was 54% in line with our updated guidance range two.
2021, adjusted R&D expense was $59 3 million representing year over year increase of 11% and adjusted SG&A expense was $93 million representing year over year increase of 24%.
Total adjusted operating expense growth in 2021 was about 18% as compared to our 29% revenue growth.
Adjusted EBITDA loss was $73 $8 million and we exited the quarter with approximately $349 million of cash cash equivalents and short term investments.
We expect that our current cash resources will be sufficient to achieve cash flow breakeven, while sustaining the key investments in our business.
Transitioning now to our 2022 outlook, we expect 2022 product and service revenue of $170 million to $180 million, representing annual growth of 18% to 25%.
Our genomics, we expect revenue of $73 million to $78 million, representing annual growth of 41% to 50% or similar to the genomics revenue growth achieved in 2021.
We expect <unk> instrument revenue growth of about 25% to 30% year over year, we expect genomics consumables pull through to be between 95 and $100000 on an annualized basis.
We're genomics overall, we expect to see a quarterly and seasonal revenue pattern.
Substantially similar to what we experienced in 2021 with roughly 40% of genomics revenue to be recorded in the first half of the year and about 60% in the second half with pull through similar to last year being seasonally lower first quarter and then ramping through the course of the year.
For encounter which includes all service revenue, we expect $97 million to $102 million or about 5% to 11% year over year growth.
In 2022, we expect to encounter instrument revenue to remain approximately flat as compared to 2021, our guidance assumes encounter consumable pull through of approximately 50000 to $55 per installed system for the full year. It makes no assumptions as to the timing of any recovery and encountered consumables pull.
Group to pre pandemic levels.
We expect to see quarterly and seasonal revenue pattern and counter that are substantially similar to what we experienced in 2021.
Lastly to be clear, we expect to record our first cosmic revenue in 2023, and therefore, our 2022 guidance does not include cosmic revenue.
We expect adjusted gross margin to be in the 56% to 58% range in 2022 with our revenue mix in 2022, continuing to be instruments heavy given the growth of genomics.
2022, we expect operating expenses to grow more modestly as compared to 2021 as we begin to harvest the benefits of the substantial investments we've made in R&D and our commercial organization.
Adjusted Research and development expenses, we expect to record approximately 60 to 65 billion or 5% year over year increase at the midpoint, reflecting sustained investments in our spatial biology platforms.
For adjusted selling general and administrative expenses, we expect to record <unk> $95 million to $100 million of 5% year over year increase at the midpoint, reflecting a full year impact of investments. We made in 2021 to expand our spatial biology commercial and customer support efforts.
Adjusted EBITDA loss in 2022 is expected to be about $55 million to $65 million.
For the first quarter, we expect revenue to be in the range of 34% to $38 million, reflecting typical sequential and seasonal patterns. This range includes $12 million to $14 million of genomics revenue and $22 million to $24 million of antenna revenue.
Now I'll turn the call back over to Brad for our closing comments. Thanks, Tom in closing 2022 will be the year that demonstrate news from pioneering the spatial biology revolution to establishing ourselves as the clear market leader.
The momentum provided by genomics gives us a strong growth outlook, while our comp mix and spatial biology portal launches provide additional catalysts as the year progresses.
We believe that our brand recognition more than a decade of serving the market and our global commercial channel for sales and support <unk>. The natural choice for researchers we're investing in new spatial biology capabilities.
With our compelling product portfolio and healthy balance sheet, we are poised to lead the spatial biology revolution over the next decade.
With that we'd now like to open the line for your questions.
Thank you for our Q&A, if you'd like to ask a question. Please press star followed by one on the telephone keypad now.
Do you change your mind. Please press star followed by two one.
And to ask your question and please ensure your plan is on muted Luckily.
Our first question today comes from Tycho Peterson from Jpmorgan. Please go ahead.
Hey, thanks.
Our NGL mix and acknowledging the guide is pretty good and above consensus.
Asps.
Fourth quarter. It looks like you recognized revenue on 50 instruments, but you're almost shipped only shipped 30. So can you maybe touch on that dynamic and then as we kind of think about the roadmap here with the Wpa in the mouse assays how much of this do you think goes to greenfield customer.
Customers versus kind of existing and then lastly on the Leica automation workflow. How do you think about kind of what the take rate there might look like once you roll that out.
I will take the ASP question first real quickly Tycho and then I'll hand, it over to Brad for the others on ASP you are correct, we did ship.
Fewer systems that we Rev Rec.
In the fourth quarter and so when you do the math on Asps are Q4, ASP was a little bit we'll just below $2 40, so it's pretty consistent with what we've experienced in previous quarters in terms of overall ASP was a little bit lower but not significantly below what we've achieved for genomics asps in previous quarters.
I will take the next two questions.
First we're really excited about what the mouse whole transcriptome Atlas can do in terms of expanding into greenfield customer segments for us.
We estimated that about 30% of the total addressable market for spatial biology is mouse.
And that is not a customer set that net metering has served substantially in the past most of our customers use human tissue on human experiments.
<unk> already begun to see big impact of introducing the mouse assays in the fourth between the third and fourth quarter now assay revenue.
Most doubled.
On genomics and mouse assays are becoming a meaningful part of our technology access program test driving <unk>.
So we're excited about being able to reach those new customers in 2022.
The LIFO auto standing protocol, it's exciting for the power users of spatial biology.
It really enables us large scale processing that takes full advantage of genomics is superior.
Throughput at the spatial biology platform, and where we see it being adopted our in places like Biopharma companies and academic medical centers, who are working with large numbers of samples and we obviously want to encourage those customers.
To run large numbers of samples to drive the consumable pull through on our business. So we look forward to seeing that be adopted more broadly now that it's fully automated.
Okay, and then on cosmic just curious what are you hearing from customers as their reasons for choosing the platform and then with <unk>. How do you think about competitive dynamics and are you willing to comment on the litigation as well.
Sure well I'm not in a position to comment on the litigation other than irradiate a rate what we've already said.
We have studied.
The claims in.
We are confident that we do not infringe.
In terms of why people are choosing cosmetics.
It's the combination of product features.
And trust in our overall brand portfolio that I highlighted in my prepared remarks.
Remember, 95% of those who bought a cosmic <unk> in 2021 are also buying in or had already bought into <unk> spatial ecosystem through genomics. So they know our products. They know they work well they see the complementary nature of multi cellular.
Resolution at the whole transcriptome with genomics and single and sub sell resolution with with cosmetics.
They're excited to kind of increase the overall amount of biology, they are doing on our system.
In terms of the competitive dynamics I do think the imagery field is going to be highly contested with a number of offerings.
We feel that we are the natural leaders by virtue of both product specification and corporate capabilities and the power of the portfolio.
And we look forward to demonstrating that with continued growth in demand.
In the quarters ahead.
Okay, and then just before I hop off a quick one on that space for a cloud solution, you're launching in the third quarter or is that a revenue opportunity or will that be complementary.
Yes.
Spatial biology portal will ultimately provide a revenue opportunity. So we're still working out what the pricing of that capability will be obviously, our first objective is to enable our customers to do great science, so that they will adopt our instrumentation and run large amounts of consumables.
But there will be an incremental revenue opportunity related to informatics, it's probably more of a it's not a 2022 revenue opportunity into 2023 and beyond revenue opportunity.
Okay. Thank you.
Our next question comes from Dan Arias from Stifel. Your line is open.
Afternoon, guys. Thanks for the questions Brad during the spatial summit yesterday.
Women from the Mayo clinic talked about wanting single cell resolution for gene expression work and then wanting the sub cellular resolution for her protein work is that a preference or a set of preferences that you're seeing or you think you might see when it comes to the specs and applications for cosmetics I'm just wondering.
Where the breakpoints might come when we start thinking about protein versus RNA and who is looking for different features on the boxes.
Yes. Thanks for the question Dan I think time is going to tell what the relative demand for single cell and sub sell resolution will be clearly RNA.
Profiling at the single cell level has demonstrated utility of single cell genomics has been a very productive line of inquiry for the last several years and being able to do that in space, It's very natural.
Don't think there are yet any strong demonstrations of the power of sub cellular resolution in RNA.
That are that are broadly recognized we had one yesterday that was mentioned related to viral Rnas and sort of being able to tell whether the viruses inside the cell and therefore productively infected or whether it's stuck on the surface, but it's still really early days on the value of sub cellular resolution for RNA.
In contrast protein standing it's been around for a very long time and microscopy has enabled sub cellular resolution for protein standing in the past so I think Pat.
<unk>.
Right.
Jody Carter are accustomed to looking at sub cellular resolution for protein and I think that's going to be something that people naturally want to see because they're used to seeing that with conventional platforms.
Yes, okay.
Helpful comments.
And then maybe just on cosmetics.
Expectations for the year I mean, obviously you have some orders pretty early in the year here. So is the reason that you don't anticipate revenue in the back half because of the installations will just be coming later in the year because you don't think payment in and recognition will be worked out as quickly.
I think you had made the comment that yes.
Omics playbook.
They're in genomic testing revenues in 2019 in the back half of the year. So just curious.
So I think we haven't we have a lot of confidence that we're going to continue to accumulate orders for conflicts instruments over the course of 2022 and I'd point you back to the trajectory that we had with genomics, where we were doing.
Pins and then Doug.
10, 12, and 15 or so per quarter that kind of trajectory as what we would expect for <unk>.
Complex orders.
But the revenue recognition rules for when we will be able to recognize a new platform are not yet worked out with our auditors. So.
We will be shipping those first systems in the fourth quarter.
It wouldn't be surprising if the accounting rules required us to have installed and trained in vaccinated all the system before Rev. Rec, We just don't know and therefore, we've kept it completely out of guidance.
Okay. Just last one on that I mean, just the guys that have placed the orders early in the year is it fair to assume that they might have boxes.
Earlier in <unk> and could therefore be generating data by <unk>.
No I think we will not ship commercial instruments until the fourth quarter, Dan We will have beta instruments in the field beginning in the second quarter, and certainly work generating data through those as well as our technology access program, but.
No. We don't expect the first wave of instruments to be shipped commercially in Q3 that will happen in Q4.
Yeah.
Okay very good thanks, guys.
Thanks, Dan.
We now turn to Dan Brennan from Cowen. Please go ahead.
Hey, guys. Thanks for the questions.
Maybe first one just starting with genomics pull through in the guidance. So I would've thought maybe we can go a bit higher on that with wth. The AMA comment back behind us to talk a little bit of the math on the 22 pull through guidance for genomics.
Yes, I'll take that Dan so.
I'll remind you.
The impact of the whole transcriptome Atlas has already been felt in our pull through guidance, we raised in the way of <unk>.
Our success.
A successful launch last year up to the 95 to 100 K range that we sort of ended 2021 west. So we're initiating a 2022 at that same range recognizing that.
It is customary for pull through to dropped sequentially from the fourth quarter to the first quarter and that you were still in the early days of seeing what customer behavior on the use of the WTO is over time.
I remain hopeful that overtime, we're going to see great uptake of <unk> and all sorts of science and that the workflow improvements that are a part of our initiative. This year will drive pull through even higher.
But for now we're model, we're guiding based on the customer behavior that we have line of sight.
Got it and then thanks, Brian and then I think during the prepared remarks, you mentioned something along the lines of.
400, NIH grants or something along those lines can you just put that in context that I hear that correctly and what is that how are we supposed to think about that in terms of what that could mean for orders.
Yes, I think the remark you are referring to and is that.
We have seen already.
400 downloads of our grant support package for cost mix. So this would be the kind of information that would be needed to be included and grant application to the NIH or otherwise that describes what the platform is and helps a researcher justify getting a grant to purchase it. So I think it is.
Really great leading indicator of demand.
Grant cycles are long in.
Those types of grant applications that would be going in now yielded.
And later this year or in 2023 and drive future demands are seeing that many.
Researchers express serious interest in applying for grant funding is a nice leading indicator.
Great and then I know at the time of your Investor day. Thank you.
Cosmetics and your size genomics I believe you didn't know you signs of different market, but I'm wondering now that you are here and you just hold the spatial summit yesterday Scott.
Data download and you've got some early the bio archive publication and you've probably got a lot of feedback from customers.
How are you thinking about the relative.
Size of this opportunity versus Geo mix do you think the comparable do you think cosmic she is going to be bigger just trying to get a sense of while it's still early you probably have some more insight into this.
Yeah, Dan we initially sized them as equal opportunities of $3 billion, each together FERC Geo mix in cosmetics, together, making a $6 billion research Tam we said at the time of our Investor day that we believe those pans were overlapping with respect to the <unk>.
Situtions and researchers and I think the first 20 orders of confidence that really strongly validated that the same labs will adopt both systems. So it's all playing out very well.
Do we have any signals at this point that suggest cosmic could be bigger I am not sure, but I will share that.
The cost mix funnel has been sales funnel has been growing at twice the rate that the genomic sales funnel was growing at the same point in the genomics Laurence So we're adding twice as many opportunities per week into the cosmetics funnel that may reflect of course, the expansion of our own commercial channel the maturing.
And the <unk>.
Rod recognition that spatial biology is important but it's a very good early sign that cockpits is going to be an important platform for us.
Got it and maybe just a final one just on on the Com in Biopharma.
Obviously, you pre announced the quarter and then you come out today with.
Details on the guide and whatnot, but just where are we there like there's some rattling about.
Emerging biopharma demand being weak due to macro concerns and privacy.
Getting to our Macau now, but just how are those two kind of factors figuring into either your <unk> guide or as you look ahead to 2022.
Yes, I mean first just to remind we're biopharma small biopharma small private or.
We're recently public Biopharma sits in our customer base.
<unk>, 25% of overall placements go to Biopharma broadly speaking most of those go to big pharma companies, who are not subject to the ebbs and flows of the capital markets to the same extent that smaller companies too.
I do think that.
Those smaller companies, who represent a small fraction of our overall.
Demand are taking longer to make capital allocation decisions and it's easy to understand why.
That could be a small part of.
The story behind the slow January but overall most of our demand comes from the academic market and academic funding is poised to be very good in 2022.
So it doesn't change any of our full year outlook.
Yeah.
Got it and the slow January that was very slow January or you're referring to my my leading question about what's some other small players had mentioned.
So we experienced.
January is always slow relative to the rush that happens in December .
I'd say this year's January Fernando string was marginally slower than it has been in years past I think you see that the impact of that slower January reflected in the broader than usual range that we have on our Q1 guidance.
We're at the low end of that range takes into account a slow start to the year in the high end of the range takes into account the recovery that we've begun to see a February continuing and strengthening in March.
Great. Okay, guys. Thanks, I'll get back in the queue.
Our next question comes from Catherine Schulte from Baird. Please go ahead.
Hey, guys. Thanks for the questions.
Any other feedback from this spatial format yesterday.
You saw a number of questions in the chat around do you think cost mix with brain tissue do.
Do you have any sense from the interest you've seen so far how the mix will be between oncology and neurology versus other areas and how that might differ from counter antwacky Onyx.
Yeah, I think so two things the feedback from Yesterdays summit was very strong.
Having.
So many 1700 people dial in live to the event.
And that even excludes China, which we haven't broadcast and yet was a really great outcome, it's larger than any spatial biology summit, we've ever held.
I think the engagement was extremely high in terms of people answering our poles and asking questions.
And we look forward to processing all of those participants as leads that get follow up calls and eventually hopefully get engagement about real instrument purchase. So we're very pleased with the outcome.
I do think that the.
The cosmetics customer base is likely to have a broader set of scientific interests that nano spring has historically served we've been very oncology focus in the past, but a lot of the cost mix.
Interest is going to come from people, who are more traditional single cell biologists theyre, probably doing a single cell RNA sequencing today on more basic discovery questions rather than translational ones.
And we saw that in the mix of the first 20 orders.
That we received for <unk> in 2021, while oncology was the number one reason that people wanted cosmetics areas like neurology, we're higher in <unk>.
Terms of the ranking of applications than we're accustomed to seeing and that's great that means cost mix is really going to help pull nano spring.
From our traditional strength in translational oncology into all the other many productive areas of science, where our technology can be used.
Alright got it.
And then you mentioned you recently expanded your Biopharma sales team can you give us a bit more color there and how big was that team previously and where is it now.
Any other commercial team expansion needs ahead of the cost of lunch.
Yeah, I won't get quantitative in terms of the exact numbers of people, we have addressed and biopharma, but I will say that the expansion represents probably a 50% increase in the total number of people. We have focused on that important customer segment. We also have a new leader of that team who has performed very well.
And some other regions that.
That person's led so we're excited about revitalizing that important part of our customer base.
In terms of other investments in the channel.
It will continue to hire this year.
Our commercial team not at the same pace that we did in 2021, where we had a very substantial expansion of the sales force, but filling out some of the areas like consumable sales reps, who can help us now manage our very rapidly growing installed base of genomic systems and of course, our customer experienced team who can.
Help us accelerate the pace at which those genomic systems are installed customers are trained and the sites are activated.
Okay, great. Thank you.
Our final question comes from Josh <unk> from Morgan Stanley . Please go ahead.
Hey, guys good evening.
Maybe.
I'll start with one on <unk>.
We are holding off from beacon in a recovery here on the consumer front, but are you seeing anything from your biopharma customers in terms of sample collection rates, beginning to normalize or not quite yet.
Hey, Jess it's very hard for us to have visibility into the rate at which farmers are accumulating the samples.
Yes, I do expect.
<unk>.
That eventually the slowdown in patient accrual.
That debt.
That occurred in the past and it's now kind of running through the process of <unk>.
Sample testing for correlate a science will play itself out, but I don't have a lot.
A lot of visibility into what the pace of that playing out is.
Got it fair enough.
And then on the.
The cosmetics beta launch in the second quarter Brad.
Is there anything that's going to be different.
As far as those units Goldberg.
The final commercial instrument than what you're using in the tap program and what's left in terms of the informatics related work on the instrument side does the commercial launch essentially hinge on the launch of that spatial biology portal that you highlighted yesterday at the at the summit.
Yes, so let.
Let me start with the last question first which is really about whats remaining to be done with cosmic <unk>.
Cosmetics chemistry was the first thing we locked data we've generated the data that you've seen publicly presented and police on prototype instruments that are.
That her work at our hands here in Seattle, but which would not be appropriate to box up and shipped to a customer.
In order to do that we need to improve the overall robustness of the system finalizing.
Its layout and importantly, it software interface, so that it's easy to use and that's what represents the predominant amount of engineering between now and launch we hope that the beta systems will be nearly physically identical to the final production systems, but with software that will still not be quiet.
Hundred percent locked on the system, and that's where we'll be getting some feedback and have a final chance to incorporate that full commercial launch.
This spatial biology portal is certainly an important part of the confidence launch, but I would not call. It the rate limiting factor in the launch the rate limiting factor or the traditional engineering of instrumentation and software.
Got it that's helpful.
Then in terms of the protein detection capabilities Brad.
I think one of the points that Joe mentioned that stood out to US was the cyclic encoded protein approach, how does that sort of like translate into the roadmap in terms of flex on the protein side. I think you guys are launching with hundred but hope to increase that over time, so any any kind of timelines and numbers you can share on that.
Yes so.
Our launching with 100 plex protein expression on cosmetics, certainly the chemistry could allow us to go a lot higher than that if we saw demand for it.
I think at some point the eliminate factor on protein plaques will naturally become kind of stearic crowding of antibodies on epitope sites in the tissue rather than the actual chemistry. So that's that's a good place for us to be it's not the conflicts chemistry, that's going to naturally limit flex, it's going to be other factors.
So stay tuned we'll have probably more to say about that overtime.
Got it and one final one on the <unk> side for me.
You've had a few quarters now with the human and mouse whole transcriptome here.
Can you share some color on how you're seeing customers transition to larger scale expanding there.
This came up earlier in the call in terms of that 95 to 100 capable through in embedded into your 'twenty two guide versus where you exited in the fourth quarter yard. So just any color on that and what gives you then the confidence.
Around that number is steadily increasing as we head through 'twenty, three and 'twenty four.
Yes, I think it's still relatively early days for the whole transcriptome Atlas assay I mean, many of our customers began experimenting with that in the second quarter and the third or the fourth quarter, but yes, even three quarters is not enough for a new assay to be fully <unk>.
Implementation of workforce.
For for customer use so I don't think we've seen the steady state or upper limit of what people may may apply that assay with yet.
And of course, we're placing instruments at a very high clip now.
Especially in the fourth quarter, many of which are not yet activated and we haven't seen what the nature of their demand.
In terms of the.
The outlook for further increases in pull through I mean time will tell.
Yes, I don't want to give the impression that we have multi year line of sight on genomics pull through I believe there is more upside to our.
Our genomics pull through than there is downside, but were not at this point, giving a long term guide with respect to where that number is going to go.
Got it very helpful. Thanks, guys appreciate the time.
Thanks, Andrew.
We've come to the end of our Q&A I'll now hand back to Doug Farrell, Vice President of Investor Relations.
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