Q4 2021 IsoPlexis Corp Earnings Call
Good day and welcome to the ICL Flex since fourth quarter 2021 earnings Conference call. At this time all participants are also only mode. After the speaker's presentation. There will be a question and answer session and instructions will be given at that time.
If anyone should require assistance during the call. Please press Star then zero switching operator.
As a reminder, this call may be recorded I would now like to turn the call over to Karen Mandeville Investor Relations you may begin.
Thank you earlier today.
<unk> financial results for the quarter and year ended 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 investor Isopiestic Dot com.
Joining me today from ICL practice, or Sean K, Chief Executive Officer, and John <unk>, 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 ICL practice issued today.
For a more complete list and description. Please see the risk factors section of the Companys quarterly report and Form 10-Q filed on November 12 2021.
The Companys other filings in the Securities and Exchange Commission.
<unk> intends to file its annual report on Form 10-K for the year ended December 31, 2021 next week.
That does required by law ISO partners 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 March 2022.
That I would like to turn the call over to Sean.
Thanks, Gary.
Morning, and thank you everyone for joining us I'm pleased to welcome you to our fourth quarter and full year 2021 earnings call.
On today's call I will provide an update on our commercial execution and discuss our investments to drive future growth.
Then I will turn the call over to John will review of our financial results and outlook for 2022.
2021 was an exciting year for <unk>.
We've made significant progress across multiple fronts as we drove commercial adoption of our single cell proteomics instruments and consumables.
Finished the year with $17 $3 billion revenue, 66% year over year growth over 2020.
And I saw flexes, we've developed a proprietary technology platform based on the unique intersection of proteomics single cell biology, and functional multi omics as we work to enable a greater understanding of the legal biology.
There is a clear need for understanding functional proteomics. It is not able to be captured in the genome and to utilize single cells really signals. The response disease cannot be detected at the bank level.
We look at single cell indicators to understand really the sources of therapeutic response and disease activity to drive novel and advance curative medicine for our customers.
We are creating a unique position within the proteomics market.
Today, we have launched our isolate nice to spark instruments and are seeing adoption across many different areas, including the high growth segment of cell therapy.
<unk> immuno oncology and inflammation research.
As the pioneer of single cell proteomics, we recently unveiled our Super human cell library and industry first mapping of the proteomics driven self determined how the human body responds to complex disease.
In addition longer term really developing our single fault multi well make dual make platform, which will expand the multi homework's molecule with a uniquely clinically relevant solutions.
For the first time, researchers will be able to sequence the supercharge proteomics falls.
You detect which will enable them to model and predict much deeper layers of clinical immune biology.
Our strategy is focused around a set of key themes that will drive our growth and laid the foundation for long term success.
These areas include scaling customer adoption by expanding the installed base of instruments as well as driving increased utilization within each customer account.
Michigan, we expanding our test menu through the expansion of our Super Human cell Library.
Increasing the number of high impact clinically relevant publications, demonstrating differentiated utility of our technology in large end markets.
Executing on our innovative product roadmap, including the Blake <unk> will make system targeting uniquely clinically relevant multi omics.
And finally, demonstrating operational excellence and supply chain management.
We've demonstrated tangible progress in each of these strategic areas throughout 2021, and we will continue to drive further progress throughout the course of this year.
Starting with customer adoption, we sold 98, new instruments in 2021, bringing our total instruments in the field to 200 million.
We experienced a strong fourth quarter shipments with instrument demand driven by the differentiation of our proteomics single cell platform.
<unk> will be around the large areas.
Answer immunology and cell and gene therapy.
To drive lasting growth, we are continuing to execute on our land and expand strategy.
Laid out on our last earnings call.
First we focus on landing key accounts across top pharma companies and comprehensive cancer centers, which we have demonstrated meaningful progress throughout 2021.
Starting with the top pharma as of year end, we passed an important milestone with 100% of the top 15 pharma companies now using Ico places for functional cell analysis.
We have already begun expanding into these key accounts and several pro forma companies now have multiple high complex instruments.
In fact, we have now placed or seven system into one of the top five biopharma companies demonstrating the value of our instruments are bringing to these customers.
This is the core of our customer adoption strategy.
Laser focused on getting a high degree of champions within these companies, which is a critical part of the first few months of the utilization. Once these customers are generating data in establishing normal usage, our salesforce start promoting the value of our technology across different application areas.
We are heavily investing in this expansion strategy, which allows us to create a robust pipeline within a wide number of large accounts.
Ultimately this strategy demonstrates the utility of our system as we are able to leverage our customer success across multiple sites as well as across numerous groups and applications.
On the academic side, we're making great strides on our key account strategy as well with 67% of U S comprehensive cancer centers now using wafer pricing technology.
We have now placed a full system at one of these major centers with additional orders coming in this is a great proof point that although the first system can be the most challenging to place.
Able to gather momentum with subsequent systems.
This brings confidence in our sales strategy and our performance for the coming year.
This is just the beginning as we are laying the foundation to continue to proliferate our system.
We are well positioned to continue growing our installed base to meet the increasing demand for our tools.
Importantly, although our focus remains on placing instruments or consumables business is also growing and we are pleased with the positive utilization trends, we're seeing with customers so far.
Moving onto our Super human cell library.
A big focus over the last year has been to move beyond T cell profiling.
To characterizing the various proteomics driven cell types that affect you in health.
We have significantly expanded the number of cell types customers can analyze which has expanded our testing.
Our system can now profile a wide variety of critical immune cells in the captive emanate areas as well as structurally important cells to blood flow and tissue formation.
We've categorized the sell price into a super human cell library, which we unveiled in January .
Industry first mapping of proteomics, we grow themselves.
We are leveraging our growing expertise of single cell proteomics.
What a superhero cell looks like and then developing a massive so library based on our customer's findings across the cell types in the human body.
This expansive platform allows our technology to be more broadly applicable across research areas and lays the groundwork for.
For customers to continue to add on to the characterization of these unique we predict themselves to advance human health.
Turning to publications.
100 publications, demonstrating the necessity of our unique single cell proteomics platform to drive the earliest signals that response.
In key high growth markets, such as cell therapy cancer, immunology and infectious disease.
There are a wide range of use cases for our unique single cell Proteomic analysis in Super human cell biology.
Zempel fine tune, increasing velocity of ultra high impact clinically relevant journals.
We believe the growing collection of peer reviewed publications highlighting the value of the <unk> platform is a leading indicator of traction in key end markets.
You've previously highlighted various nature medicine publication demonstrated our expanded cell therapy offerings and showed that our superhuman proteomics cells are indicating the earliest sources of long term response.
Today I would like to highlight two recent publications that go beyond cell and gene therapy to underscore how we are advancing the pipeline into immune health and immune monitoring for cancer immunology as well as COVID-19 and other infectious diseases.
Immune health and a new monitoring for cancer immunology represents a larger end market and cell and gene therapy for predicting response.
Publications have shown or Polyfunctional super human cell metric to be key element and the ability for the immune system to orchestrate a long term response in cancer patients.
This indicator as valuable as we demonstrate the utility of our technology to customers.
Last six months multiple studies have been published that indicate the changes in polyfunctional superhero himself.
Cancer Immunology therapeutic response against cancer in a durable fashion.
Studies in journal of clinical oncology <unk>.
Arnold for immunotherapy of cancer and blood advances conducted at Memorial Sloan Kettering, MD Anderson and more.
Right the role of these predictive polyfunctional super cells.
The second area I want to highlight is advancing the pipeline more deeply into immune health and immune monitoring for COVID-19 and inflammatory disease.
We recently announced the publication in itself, where researchers used our single cell functional proteomics technology to identify factors that may indicate patient information. After COVID-19 infection also known as post acute second lot of <unk>.
COVID-19 task for long coded.
In this study our technology was used the profile of the inflammatory immune response of Covid patients.
Which may be key to the development of preventative measures and treatments.
These high impact publications are a leading indicator of strength in larger markets like cancer immunology and also in new markets as we demonstrate a broader ability to access the superhuman cell library as it is applicable to infectious in autoimmune disease <unk> biology.
Any areas, where patients have a hyperactive autoimmune response.
Turning to our product pipeline.
Making significant advancements in our four core product families, which include the single trial Secretary.
Intracellular signaling our multi omics do won't make platform as well as our bulk proteomics platform complex keep in mind all of these four platforms one of our installed base of system, meaning that the channel's rebuilt provide us the opportunity to deliver these new chip platform to a high growth existing.
End market.
First we are advancing our single cell Secretary test menu with the comprehensiveness of the superhuman felt library.
Second we've made advancements in our single cell signaling platform a single cell alternative to the traditional bulk proteonomic western blot.
<unk> added pipeline assets for immune signaling to complement tumor signaling both of which represent a need.
For deeper Proteonomic pathway single cell resolution.
Third our new single cell multi only platform nuomi.
As demonstrated advancement at a rapid pace.
The need for novel high utility single cell multi omics solutions began in earnest.
<unk> was highlighted as nature's method of the year recently in 2019.
We are excited about expanding the single cell mobile makes market with a uniquely clinically relevant solutions.
For the first time customers can connect our unique functional proteomics data from single cells with the genetic drivers of these highly sought after proteins pro forma in clinical research applications.
In November at the annual meeting of the society for immunotherapy of cancer or.
We demonstrated that <unk> now has the ability to capture concurrent T cell gene expression and functional proteomics information simultaneous Permian cell profiling in particular car T profiling.
Effectively we demonstrated proof of concept and sequencing the variety of our proteomics supers calls for the first time, which lays the groundwork for key discovery and development application at the intersection of immunology and cancer.
We are focused on three large end market multi homelink applications, which include immune expression in proteomics tumor expression in proteomics and T cell receptor expression in proteomics.
As a reminder, we will be offering our <unk> platform via early access new service.
Second half of 2022 with a full product launch in mid 'twenty three.
We are very excited for what's ahead with our pipeline.
Look forward to providing updates in the near future.
Lastly, we are investing in our operational infrastructure to support our rapid growth over the second half of 2021, our operational team expanding our supplier relationships substantially reduce supply chain risk and ensure our ability to meet increasing instrument demand in 2022.
We continued to build raw material inventory in the fourth quarter of 2021, where necessary to mitigate lead times on critical and single supplier of components further ensuring our ability to execute upon our revenue plan in 2022.
We are committed to operational excellence, we will continue to iterate on our processes to support future growth.
This has been a momentous year at <unk> I'm very proud of our growing team for all their work throughout the year as we transition to a public company we are.
We're looking forward to continuing to provide our customers high utility highly differentiated data it accelerates the working critical areas of human health we.
We will focus on growing our installed base through commercial excellence.
Finally, we will also continue to provide updates on exciting advancements in our differentiated product roadmap all built upon our leadership in leveraging super human cell biology.
I will now turn the call over to John for more detail on our financials.
Thanks, Sean.
Total revenue for the fourth quarter of 2021 was $5 5 million up 63% from $3 4 million in the prior year period.
These results were primarily driven by an increase in instruments. So total revenue for the full year of 2021 was $17 3 million, a 66% increase from $10 4 million in the prior year.
Product revenue for the fourth quarter was $5 3 million or 65% increase compared to $3 2 million in the prior year quarter.
Revenue for the full year of 2021 was $16 2 million, a 74% increase compared to $9 3 million in the full year of 2020.
As a part of that product revenue, we made significant progress with consumables generating $4 8 million in 2021 compared to $1 9 million. In 2020, we are encouraged by the growth in our consumable revenue to date and in the near term we continue to focus on increasing our installed instrument base.
<unk> to create a strong foundation for long term growth of our consumable sales.
Our commercial team continued to drive adoption and sold 37 instruments in the fourth quarter, bringing total instruments sold to <unk> 98 in 2021.
As of year end, we have now sold 209 instruments since initial commercial launch in late 2018.
Service revenue for the fourth quarter was 246000 compared to 201000 for the prior year quarter and service revenue for the full year of 2021 was $1 1 billion in line with the prior year period.
Gross profit for the fourth quarter of 2021 was $2 8 million compared.
Compared to $1 8 million in the same period of 2020.
Gross margin was 51% in the fourth quarter compared to 53% during the fourth quarter of 2020.
Gross profit for 2021 was $8 8 million compared.
Compared to $5 4 million in the prior year.
Gross margin for 2021 was 51% compared to 52% in the prior year.
As mentioned on our last earnings call gross margin expansion is one of our key areas of focus as we continue to scale our business.
Over the next five years, we expect gross margins to gradually improve and settle into the low to mid 70% range.
Operating expenses for the fourth quarter of 2021 were $27 5 million compared to $11 2 million in the fourth quarter of 2020 the.
The increase was primarily driven by head count expansion across the organization and the additional costs of being a public company.
R&D expense was $7 1 million, an increase of $4 million in SG&A expense was $20 4 million an increase of $12 3 million, primarily driven by increased personnel and related expenses as well as marketing and promotional activities.
Total operating expenses in 2021 were $85 1 million compared to $32 7 million in 2020 R&D.
R&D expense for 2021 was $21 million compared to $11 2 million in the prior year and SG&A expense for 2021 was $64 1 million compared to $21 5 million in 2020.
Our net loss was $25 3 million for the fourth quarter of 2021 compared to $8 million in the fourth quarter of 2020.
Our net loss was $81 6 million for the full year 2021, compared to $23 3 million in 2020.
We ended the year with $127 million in cash on the balance sheet as.
As we move into 2022, we will continue to be thoughtful about investing our capital to maximize our ability to service our customers rapidly expand our installed base will continue to expand our clinically relevant product roadmap.
Now turning to our revenue outlook for the full year 2022.
We expect revenue for the year to be between $26 million and $27 million representing growth of 51% to 56%.
At this point I would like to turn the call back to Sean for closing comments.
Thanks, Sean.
As we mentioned earlier, we are excited about the progress we made as we transition to being a public company in 2021 and accelerated our commercial adoption.
Also adding significantly to our product roadmap.
We look forward to another exciting year in 2022, as we believe our unique single cell proteomics solutions, we will continue to make a deep impact on our fast growing customer base and large clinically relevant end markets with that we will now open it up to questions.
If you would like to ask a question. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Tejas Savant of Morgan Stanley . Your line is open.
Okay.
Hi, guys. Thanks for taking the question. This is Edmund on potatoes. This morning, a few questions from me first on the guidance. The guidance range is relatively tight I was wondering if you guys could provide some details on the puts and takes that could get us to the low end and the high end of the range and where do you see the most room for driving upside in the guidance.
Okay.
And then Sean.
Thanks for that question. So let's start here our range of $26 million to $27 million is based on really continued expansion of our installed base at a rapid rate and we're excited to grow it at least 50% plus growth rate for the year and put up another strong year in the evolution of ISO Texas has a meaningful player.
And the fast moving single cell proteomics basis.
We do we do expect to continue the strong pace of instrument sales.
In accordance with the guidance, we put forth. So this would be at least 130 instruments placed this calendar year. This means we'd be at around $3 40 instruments by yearend and exciting position to be in given our expanding consumable pull through.
We're excited also about the ico spark in particular continuing to be a key catalyst of our growth in the academic centers of biotech beyond that pharma base, where of course, we sold to <unk> 15 of the top 15 pharma.
While this product was launched in 2021.
We expect the system to be over half of our instrument sales in 2022 as it was in Q4 of 2021 as.
As far as the timing goes our revenue ramp is expected to be similar to what we've done in the past, which is typically more heavily weighted towards the second half of the year.
We also see consumable pull through increasing throughout 2022, taking into account the large increase in placements, which makes consumables a more significant portion of our revenue as we discussed our 100 publications are strong leading indicators purchases for high utility use cases in our large cancer immunology.
<unk> and cell therapy and markets and as we move into other key research areas, we expect pull through to be at least 40000 per unit on the basis of our single cell proteomics leadership with upside coming from expansion of our Super Human cell Library, which we outlined on the call as well as new applications like.
Single cell signaling.
This progress on our business that's up for an attractive longer term financial profile as we move towards the higher margin razor blade model, we seek this recurring and predictable higher margin consumable revenue.
Really demonstrates the purpose of why we are so focused on investing to expand the installed base now.
As far as our Salesforce goes as you mentioned what are some of the catalysts are.
A key driver of our ability to deliver this year and exceed expectation is our maturing salesforce with total commercial head count of 190 as of the end of 2021. The vast majority of these sales force have now been season did the company well trained and it will produce results that can have each major U S.
In the international region, creating more predictable revenue monthly.
Which is very important for us exceeding our goals. This year you also asked a little bit more about upside, perhaps youre alluding to the pipeline. So we do have our do make revolutionary first of its kind clinically relevant mobile mix offering coming in the second half of this year Hasnt really access service, which is very exciting.
After our acquisition of a wide body of sequencing IP last year and our investment in development. We're now generating novel data in key end markets that is generating significant customer interest as I mentioned on our call.
While this is pretty exciting we're not actually baking this into our revenue profile for the year consistent with what we discussed.
The last couple of quarters.
We're really using the service launched this year and a half two for.
Customer learning in the primary market for much broader launch in 2023, therefore again as you alluded to there is some limited upside in the services aspect of our business due to the revolutionary genomic platform coming online as a service in half two of 2022.
And we're excited to bring this to what we think so far is very excited.
Customer base.
I'll stop there.
Great. Thank you. Thank you for all the color there.
Im not sure if I missed this on the call, but can you remind us what your current academic and pharma square does right now and on that have you seen any signs of spending conservatism, particularly on the pharma side with the recent chatter about cash constraints.
And just you mentioned one of them I'll get you the split which end market did you say on the constraints.
Biopharma is snicker biopharma.
Mid cap Okay, yes, so right now we are.
We're still maintaining at that sort of roughly two thirds biopharma biotech one third academic as we have consistently.
From our perspective.
The budgetary sort of outlay for what we expect this year.
<unk> been significantly constrained by let's say broader changes as you mentioned in conservative conservatism potentially driven by the capital markets I think a couple of factors to think about.
One cancer immunology and cell and gene therapy for Biopharma in particular continues to be at the high import.
For at least expanding.
Their markets from an end market basis, and as you know.
<unk> in particular has had.
Influx in cash over the past.
Let's call it couple of years to invest in.
Expanding their pipelines I think the second thing is we continue to see our differentiated publication profile in these two key end markets as driving significant.
Let's call it allocation of mind share and then allocation of budget for our technology. So.
While there may be some.
Some broader conservative in the future, we don't see that really.
<unk> instrument demand as it is today.
Great and one last one from me and I'll hop back in the line I was wonder if you can comment on some of the recent trends you've been seeing is that we do from a corporate perspective.
The lab operations side and I appreciate the color that you guys provided on the actions that you've taken to reduce supply risk, but has there been any signs, indicating that there will be improvements or deteriorations in the supply chain pressure side.
Wanted to do this I'll speak to the lab operations.
Pass to John more broadly about Covid impacts on our guide for the year, but just specifically about lab operations.
We see that.
I think typical to what's happening around.
The United States.
Folks have been one more accustomed to dealing with varian, so whether it's wearing masks are getting vaccinated.
Being able to continue operations as such so.
I think that's sort of one key aspect to why we didn't see a significant blip in let's call. It the instrument driver, which again is as we spoke to is our.
In our in our guide that's the significant driver of this year secondarily with lab operations of course coming in at the beginning of the year. There was some caution, especially one of the very early part of January but it doesn't stop the projects that are supposed to be occurring with milestones for our customers throughout the first quarter and as people have come back after the <unk>.
<unk>.
And the variant.
We still see those.
<unk> continuing significantly with the same let's call it expectations of our customers throughout the year, which from a lab perspective dredge the similar amount of usage due to what we would've expected John why don't I just pass it to you on.
How COVID-19 impacts our guide for the year is yes, yes, and so.
Our revenue ramp for 2022 should look similar to what we've done in the past so typically more heavily weighted to the second half of the year Edmunds. So roughly 40, it's about a 40% 60% mix between the first and second half of the year for us and so from our perspective, given everything Sean just described we feel comps.
The guidance, we just gave that 26 $27 million for the full year. We are here. We are March 2nd. So we provided the guidance two months into the year and we're using all available information regarding the impact of Covid over the last several quarters.
And we do think that most labs are back to their normal cycle at this point, just lastly insurance at it.
At this point the Covid impacts have not changed the demand for our instruments from a budgetary perspective from our customers and we continue to see strong end markets for our technology.
Great. Thank you guys very much.
Thank you.
Our next question comes from Max Masucci with Cowen <unk> Company. Your line is open.
Hey, guys. Thanks for taking the questions.
Maybe shifting over to the software side.
Just big picture here can you just speak to the audit automating analytic software how much of a differentiator the software capabilities are or should be in the future and then any feedback you've received from customers around ease of use quality of insights and whatnot.
Thanks, Max Yes, I think I think it's so when you think about products and you think about end market.
There is.
You've sort of harken back to what we just discussed as far as our end market being pretty heavily weighted to that.
Pharma biotech.
Part of that is driven by our ability to actually have.
Proteomics <unk> single cell system, that's pretty easy to use as you know.
Our software and our hardware proteomics automation plays a big part of that and its why as far as you look around any single cell company as far as the revenue mix weird. The most heavily weighted to the biopharma biotech area because of because of this let's call it mix of clinically.
Element solutions, so thats kind of weighted towards more.
Preclinical phase one phase II as we know in our Tam and also this sort of ease of use of accessing the data from our single cell proteomics systems.
As far as the software goes we think this is an important growth driver this year as well because.
When people get access to our publications as a leading indicator of let's say directly what they can apply.
For you to their cell therapy programs in the cancer immunology programs today.
Next thing we do is we're taking them through an initial sort of let's call. It <unk>.
<unk> dive into our technology. After we've confirmed interest in our tech is that.
They go through a software demonstration and that software demonstration is basically to illustrate this is not downloading six open source pieces of software from online and trying to cobble together your own informatic understanding which is actually.
Pretty typical in our industry. This is taking a really big together push-button software suite pushing a few buttons on the left side of the screen.
And kind of combining and comparing samples with yes.
Big data platform, but you can actually use specific buttons and just compare five samples and 10 samples or 20 samples and come to conclusions on differentiation of these kind of what makes a better sell product or what patient is a higher probability of being a responder is in accordance with your biomarker research. So as you probably.
Guests that ease of use factor.
Automate that you're very unique automation, we have on our proteomics instrument and a unique end to end nature to our single cell software is.
The driver of why we're excited about our clinically relevant end markets.
Okay, Great and then for the single customer that's brought in I think it was seven system. So far I'm just curious if.
Is that the mix of ISO spark, an ISO light and just how they're using all of those systems.
Independently.
Together.
In terms of the research projects are pursuing.
Yes. So it is a good question I think if you look at specific customers like that you might surmise that a lot of them, especially on the biopharma side are pretty heavily.
The isolate side of things, it's also a function of.
Like if you purchased $5 something across labs, and you like them you might want to just stick with that specific kind of type in throughput a product because you have success with it right so that.
Maybe a little more heavily weighted towards the isolate mix, but as far as the usage of it you can look across.
Obligation literature, and say Hey, you can last and I alluded to this on a call on the last six months we've had.
A number of pretty exciting.
Major clinical publications, which take checkpoint inhibitor drugs that.
Obviously the main focus.
A lot of the top pharma to combine drugs on top of that to get a longer term durable response and their patients.
Various solid tumor indications, we've shown that our supercell polyfunctional predictors are key to sort of uncovering or.
<unk> the mechanism of what makes a good responder across a number of these PD one anti PD one combination trials.
And what that does is sort of demonstrate that.
We're a major pharma that's very interested in that next wave of where theyre going to get a more personalized response, they are checkpoint drugs against the law.
Largest oncology drugs in the world, we have a significant contribution to that so it's not just one lab sort of.
Running five systems, and saying I need a six it's more like there's so many avenues, even within one pharma trying to attack this problem.
It is spreading that you need the <unk> solution to uncover the super cells and that sort of.
Makes it a lot kind of I wouldn't call the word easy, but a lot more straightforward to sort of say, here's a customer referenced within your own institution.
Thousands of people hear is theyre demonstrated utility here's not only there is published literature showing that you need this from the major clinical trial centers, but even within your own company regenerating real time high impact data. So it makes that sort of.
Customer reference call that you need when you're in our stage, which is not in the early adopter stage, we're really in the early majority and some of these places you need those customer references to just increase the volume of that sort of virtuous circle of customer expansion. If you know what I mean Max.
Yes.
Got it and then just final quick one just would be curious if conversations.
Procurement folks have rebounded.
The current impact as stated just the latest dynamics youre seeing.
Youre still seeing any disruption in procurement facilities or if that's largely rebound at this point.
So there was from our perspective, it's it's.
Its rebounded because.
There was that I think it's pretty broad based in our industry, but in December there was a bit of a.
Especially in academics.
A short period, where people wanted to.
Pause on anything that would not specifically sort of COVID-19 diagnostic related and had something to do with equipment.
We've seen as from our Biopharma perspective biotech.
<unk> been no pauses on procurement and if anything the academics.
Back to.
Utilizing the funding that they have especially the growth in NIH funding, which is well known this year.
To sort of accomplish their organizational goals, which really involves.
<unk>.
Success in their clinical trials and our clinical programs. That's the measure of every that academic medical center across sort of indications because of course cancers towards super.
I need.
The area of research that they all want to expand in.
Great. Thanks for taking my questions.
Our next question comes from Vijay Kumar with Evercore ISI. Your line is open.
Hey, guys. Thanks for taking my question.
Sean maybe back on the guidance question.
Can you talk about the visibility you have you're obviously, we've been hearing about supply chain.
Pack I think CQ did it have.
Push out of the system placements, so talk about the supply chain.
Situation and your visibility into this guidance.
Hey, Vijay it's John Let me, let me just take that on the supply chain.
You are right as it is we did share on the last call supply chain issues and logistic issues.
Did.
Present, some increased pressures on primarily on prices for materials as well as extended lead times for certain items. So in response to those pressures we've built up our inventory we did that throughout the second half largely of last year, including into the fourth quarter and the goal there was to fulfill instrument demand in 2000.
22 without disruption.
Okay.
Okay.
Yes.
Vijay.
Hi, John Sorry can you hear me.
Can you guys hear me.
Yes.
Maybe just.
It looks like <unk>.
Yes.
Yes.
Okay.
I'm sorry.
Yes, we can hear you.
Hi, Sean I apologize is this better.
Yeah.
Ladies and gentlemen, please standby.
I'll try to you speakers.
You may begin.
Yeah.
Hey, everyone, sorry about that that dialing in to a landline I think the Oh for some reason the internet dropped off at our Branford headquarters apologies for that.
Everyone hear me Vijay.
Okay.
P. J your line is still open.
Okay.
Hey, guys.
Sean John can you hear me.
We can hear you now yes.
Fantastic.
I think a lot you guys there for a bit there John was talking about the visibility and supply chain.
Yes, so just a couple of things quickly.
On the supply chain end of things as you mentioned last year, we did have.
Some impact on a pricing basis than a supply basis, just to sort of you mentioned the Q3 impact what we did was really built up our inventory.
And and prepare for 2022, so that we would have no impact on customer demand you see a little bit of that in the sort of cash increase throughout that.
The inventory increase throughout the second half of the year and so now we're comfortable with we'll be having what we need to sort of execute.
In 'twenty two without disruption.
Gotcha, and then one related question Shannon.
What is.
I guess are there any gross margin impact sure we're sharing button.
Shipping costs going up.
What are your operating expense assumptions here for.
Fiscal 'twenty two a lot of inbounds from getting.
On the liquidity position and Youre Catherine needs.
Just given the cash balance you have right now.
Is there is there a situation where you feel like you have enough.
Cash on hand.
The business or.
Perhaps talk about the liquidity position in general and then what kind of Opex ramp are you assuming.
Yeah, So what I'll do first.
To the first question you had.
Because I can answer the Opex question what was the first question you had just dealing with them.
Technical difficulties over here.
Alright.
Are there any gross margin impact here on increasing that freight costs et cetera.
From our perspective.
We really do have some faith in being able to expand our gross margins as we look forward I think we wouldn't expect like you alluded to that sort of Q3 dip in the gross margin was largely largely due to supply chain.
Still at this stage our revenue mix is mostly impacted by selling instruments and had mentioned.
We expect customer utilization to continue to grow over time and revenue mix will get to more of a 50 50 instrument and consumable split by the end of 2023.
He is going to be leverage as we scale operations to focus on consumables and as our revenue mix because more heavily weighted toward consumable.
A key driver of our margin improvement plan is indeed, this consumable margin improvement process. So well later this year, we're going to be coming out with more information on how we plan to make strides in this area. Our specific strategy has always been to improve our ability to source reagents and use high quality reagents. So we will have more to do.
Scribe there soon.
And importantly, an immediate isn't how we think of the really the mid term and the long term.
As our financial profile.
<unk> towards the higher consumable revenue higher margin razor blade model that we see and this is the easy sort of map function based on the 340 instruments. We expect containers. This year this recurring and predictable higher margin consumable revenue will demonstrate the purpose of why we're so focused on investing to expand the installed.
Base now.
How about with the second question you asked me Jay I can on the Opex consumption zone.
Yes on the Opex assumptions so John once you once you go forward.
Thanks, Sean Vijay just wanted to share with you here me back on.
Yes.
Thank you so much okay. So so opex so for full year 2021, RF opex of approximately $85 million and that's reflecting reflected our continued investment in the commercial team the future technology platforms. In addition to the infrastructure.
And expenses associated with being a publicly traded company. So a couple of points about going forward. One we are maintaining rather than increasing that spend that drove the commercial and operational success last year. So we had success in growing the business by expanding our commercial force generated 66% revenue growth.
Last year and of course now with today's guidance projecting 50 plus percent revenue growth. This year, two we will be doing regular evaluations of the productivity around our three cost drivers. So thats the commercial the operational and development to make sure that capital is most efficiently allocated.
And last thing I would say P. J, we do seek to continue on our path to profitability within the next five years.
Which of course requires expanding our install base and driving that razor blade model that Sean just described.
Sorry, just to clarify that Jon when you say maintaining opex spend is that as a percentage of revenues are from a growth perspective or is that on a dollar basis 85, yes in terms of opex, but yes.
Yes, I think in terms of absolute dollars D J.
Okay.
That's helpful. John .
And maybe Sean one last one for you a bigger picture question for you.
I think one of the questions I get is.
It's an interesting technology isopleth access, but could this become a standard in.
The industry when you look at cell and gene therapies.
Finally, our Super Human cell library, and shared interest and maybe talk about what kind of traction are you getting.
From that initiative.
Our biopharma customers now looking at your platform or perhaps becoming a standard.
What needs to happen before we see broader adoption amongst your customer base.
So yes.
Any topical question for us as we sort of think through.
We plan for the sort of three to five years I think the question of standard.
Even interesting one for what what makes the standard this is Ed.
We've gone through at times looked at the places that have had a thousand and 5000.
Our system.
And part of that.
Two pond.
And as that is the sort of validation and you need the validation and the clinically relevant literature.
Do what you're doing in the high differentiation.
<unk>. We're also of course, you become a commodity and spas.
So on other methodology I think last year was really important for the validation part right.
You and I have personally talked about business with.
With proliferation of nature Medicine after nature Medicine clinical publication cell journal of clinical oncology just shows that if you care about measuring the immune system in response to.
Rmi drugs that activate immune system working ISO places is going to have a place to play.
Relative to the flow Cytometer solution, we use today right because I saw plexus form the functional proteonomic aspects, that's highly differentiated versus the.
The surface immune cell profiling aspects of the flow cytometry make and what that means right.
If the promise sort of of.
Our 100 publications is just a very leading indicator of us becoming a standard relative to flow. What this means is we have.
On a much broader ramp ahead of us than behind US right. Because there's 40000 flow systems every time, even though pharma, where we have seven systems.
When we go tour the we do a walk of the pharma.
You see hundreds of flow cytometer around that pharma right and what that means is people care about immune profiling.
We're offering a whole new aspect of analytical immune profiling, they can't get anywhere else that highly meaningful in the literature for.
Predicting our drug is going to work in a personalized fashion and so we do believe that with the right awareness building with discontinued clinical validation in the literature and with using this 190 person sales team.
Commercial team to our advantage to evangelize our technology, we're on the cusp of being a standard I think the second aspect is.
So the first aspect of being a standard the second aspect of technology differentiation with the Proteonomic barcode, what we've done is created a.
A large step function and what you are able to access from each cell proteomics <unk> where you.
We're only able to look at a few of these.
These highly relevant analytes from proteins that are the business and in the immune cell what matters to sort of Ah patient mounting the response against cancer. For example, we've gone from doing three to sort of orders of magnitude above that right per cell.
What that means is wound covering this highly relevant clinical biology, but in a highly differentiated fashion that no. Other technology can touch and so it creates a confidence in our sales team being able to sell what we do because of how utility high differentiation and thats the basis of us becoming basically.
The standard and the last part of being a standard is.
Well you have to have the validation you have to have the differentiation you have to have the execution to back it up and so.
Our job over the next three to five years as well.
As we said is we get this installed base into the.
We get this installed base into the 1000 plus another 1000.
And then were real.
Talking about recurring revenue consumable based business, where our customers.
They are our community right, we don't have significant barriers to entry.
High capital equipment cost.
We solve for that if people have a differentiation between the isolate the license part now it's about showing the utility of our platform as we have and just really expanding.
As John alluded to recognizing that we are starting to see sales leverage.
It sort of managing the cost basis of what we do to sell in every region and a sort of thoughtful fashion.
Hope that out C. J. So we're very excited about everything ahead of us and we see significant upside in the next few years.
That's helpful. Sean Thank you guys.
Okay.
Yeah.
Operator, we still won.
Okay.
Yeah.
Yes. Our next question comes from Puneet <unk> with SBB Leerink. Your line is open.
Yeah, Hi, guys. Thanks for taking the question, but it looks like most of the questions have been covered so with the tough technical difficulties ongoing I'm going to wrap up my questions into one first.
It was really around Asps.
What do you expect the trend to be four isolated so spark an ISO sparked duo if you could elaborate on that and then Sean for I know you had a number of efforts ongoing to improve the technical product marketing and follow ups in field application training improvement. So maybe if you could elaborate where those efforts stands.
And then last one for John on gross margin you highlighted low to mid 70%. So could you maybe elaborate.
Is there any change in timeline for that and when should we expect that and what's the sort of consumables versus instruments mix.
That you have expected those gross margin levels. Thanks, guys.
So let me start with product.
Product mix related to <unk> instruments, and then training so so puneet.
No.
As we've discussed the.
Asps is really reflected by our changing product mix as ICU spark makeup.
Over half of our revenue so while we're not going to give a very direct ASP number.
We're in line with the guidance we're providing.
The mix that we see from ISO spark shifting to a leadership position as far as units goes and then over half of our revenues with the overall instrument sales.
In line with previous expectations on the evolution of <unk> as we expand the installed base.
As we discussed.
The purpose of evolving the spark and offering the customers spark light and sparked dual was to really give us.
More potential to have our razor blade recurring revenue and <unk>.
As we look at the Razorblade side of the consumables, we do see sort of there is no significant differences between whether by someone's right now buying a license barcode isolate driving consumable pull through today and consumable upside as we know the capacity of our instrument.
If needed.
<unk> is high above even our target sort of mid $70000 expectation for <unk>.
And soon we will pull through in the midterm.
So that's at least how we're talking about asps.
Training of course training of the significant aspect of <unk>.
How we won kind of let's say built a really strong Q4, showing but also how we've created expectations for this year.
When you.
Let's call it when you digest so many new hires as we did when we did our crossover round with perceptive brought Blackrock now average early in 2021, and you know that you need to have six to nine months to sort of ramp up and with it with a technology like ours that has the key applications, but in complex end market.
You may need more than that.
So what we did was really investing in internal training program. We term at our corporate training program, which is basically you're trained with the practice catastrophe triangle practice, you test menu practice in the field essentially pilot each person that comes onboard.
We've seen significant success in being able to communicate the product and technology and the value proposition and the clearer fashion and then also we see.
The ability to do the sales aspect of what we do which is the commercial need quoting.
Understanding the sales cycle being able to balance sort of getting the instrument in within the sales cycle. So as you can get the consumable pull through that type of training, we've really gone to team up to speed on the ICL places philosophy. So there's always a lot more training to do especially as single cell signaling into omit come online right because that's just.
New and unique sort of single cell proteomics analytical.
Tool that people need to be educated in the core single cell Cyclotome business, we made big strides on training folks and there's there's really no stopping that as well.
Even.
Even the most astute person in the literature Theres. So many new publications on our tech to come out every sort of month or quarter that training just needs to be accounted in that sort of never stops. So.
Those two questions and John maybe I'll, let you answer the third.
Yeah. Thanks, Puneet. So I think your question the gross margin the long term planned expansion plan any change in the timeline. The answer is no. We're still tracking the bid 70% range for gross margins.
Over the next five years.
And one of the key drivers of that as you know is the mix I think that was your second part of the question between instruments and consumables.
We think is by the end of 2023, our revenue mix will be 50%, 50% instrument, 50% consumables. Obviously you have some service revenue, but roughly a 50 50 split in instrument consumables and just for some context, if you look at the.
Our year end 21, and 2020 numbers the trend is heading that way toward a more favorable or positive mix from consumables. Our consumables were about 18% of our total sales in 2020 and increased about 28% of our total sales in 2020. So we do expect to see that trend continue and again not impacting that.
Homeland, we put forth.
Thank you there are no further questions at this time.
This does conclude the program and you may now disconnect everyone have a great day.
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