Q4 2021 Singular Genomics Systems Inc Earnings Call
[music].
Good day, and thank you for standing by and welcome to the singular genomics fourth quarter results and business update conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. Please be advised today's conference may be re.
Recorded if you require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today Philip Taylor. Please go ahead.
Thank you operator, presenting today are singular genomics founder and Chief Executive Officer, Bruce presenter and head of Finance Dadeland meeting earlier today, <unk> genomics released financial results.
For the three months and full year ended December 31, 2021, a copy of the press release is available on the company's website.
Before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's view as of today March <unk> 2022, only and will include forward looking statements and opinion statements, including predictions estimates plans expectations and other information.
Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission or SEC filings can be found on our website or on the SEC's website.
Investors are cautioned not to place undue reliance on forward looking statements.
We disclaim any obligation to update or revise these forward looking statements.
Please note that this conference call will be available for audio replay on our website at singular genomics dot com on the events page of the news and events section on our investors page with that I'll turn the call over to CEO Bruce <unk>.
Thank you trip and welcome everyone to singular genomics fourth quarter 2021 conference call.
I'm excited to share our recent accomplishments business updates and commercial progress of the <unk> launch.
Prepared remarks will touch on a few key areas.
The <unk> production system and its differentiated value proposition the latest results from our early access program and an update on the commercial progress as we near our first G for customer shipments.
Provide some additional color on our product roadmap and how we are positioned to serve our customers' needs deliver cost benefits and tap deeper into the significant opportunity in front of us.
Lastly, I will provide more detail on pricing and value. In addition to the value proposition inherent in the <unk> core tenants of power speed flexibility and accuracy, we will share our goal to lower our customers cost by delivering high throughput level pricing on a bench top instrument for the first time.
Genomics based research biological discovery and medical advancements continue to progress largely powered by Ngls clinics.
Clinical adoption is ramping and Jess is driving the adoption of precision medicine as a standard of care.
And multi omics is emerging as the next frontier of biological discovery.
The life Sciences tools and diagnostics space has experienced its most active market cycle on record with over $30 billion of capital raised in public markets between 2020 and 2021 with this we are seeing increased investment in biological tools strong company creation and record utilization of sequencing technologies further substantiated.
The large ngls and multi omics opportunities in front of us.
Garrett singular genomics, we are seizing the opportunity to enable and accelerate discovery and this ecosystem. We are in a strong position to develop manufacture and commercialize transformative life sciences tools that will empower research and clinical work in genomics and multi omics, we continue to execute on our roadmap and timelines.
And we are confident in our position for both near and long term success.
Our first product the <unk> bench top sequencer sets, a new benchmark in power speed flexibility accuracy and cost in December of 2021, we announced the commercial launch of the <unk> system. Today, we are happy to announce that we have taken initial customer orders and remain on track to.
<unk> the first production <unk> system in the second quarter, along with <unk> flow cells supporting 100, 203 hundred cycle kits.
Also remain on track to launch the <unk> flow cell in the fourth quarter of 2022 for higher throughput applications with four at <unk> III flow cells running in parallel a single G. Four can produce approximately one two to $1 3 billion reads and up to 400 gigabases of data in less than 19 hours establishing itself.
The world's most powerful bench top sequencer.
As we've outlined previously the <unk> was purpose built based on direct feedback from the field to meet customer needs over the past year. We've improved all four of the key performance metrics, including number one faster run times. We're currently achieving $2 five minutes cycle times are commercial target.
Number two accuracy, we are achieving accuracy on the high end of our published target range of 99, 6% to 99, 9% single pass accuracy and above and at or above Q3 scores for 75% to 90% of base calls.
Number three number of reads, we are achieving recounts above our target specs of $150 million paired reads for <unk> flow cells.
Number four read lengths, we are now achieving our accuracy and Q score targets for novel 150 base pair read sequencing runs.
To demonstrate and optimize these capabilities we initiated the early access program or EAP, where partners ran G. Four systems in their labs.
<unk> has validated our technology in a wide range of customer lab settings and applications on.
On our last conference call, we reported results from our first three EAP partner sites, including labs running applications, such as space will transfer <unk> targeted sequencing and liquid biopsy reporting results of up to 170 million reads per flow cell and greater than 80% of basis at or above Q3 0.
<unk> was previously revealed as Harvard Beth Israel Deaconess Medical Center today, we are pleased to share the identities of sites, two and three and adaptive Biotechnologies and exact sciences. We have received orders from both adaptive and exact and look forward to delivering value for these early access partners as key members of our initial customer group.
We are pleased with the early support of the program and that the companies of this caliber have elected to take the next step in what we hope will be a growing and mutually beneficial relationships.
In addition today, we are excited to provide an update on EAP sites, four and five site for a government core lab.
Performed microbial genome sequencing and achieved average rig count of $169 million per flow cell greater than 80% of basis at or above Q3 0 accuracy using two by 150 base pair read sequencing on 300 cycle kits.
Slide five our commercial CRO performed liquid biopsy sequencing. They achieved average rig counts of greater than 200 million per flow cell greater than 80% of basis at or above Q3 0 accuracy using 200 cycle kits.
We're pleased to have achieved our target performance specifications at these two additional EAP partner sites further validating the <unk> performance specs across various applications and lab settings that represent some of our target early customers and markets.
In summary between our beta test and early access program, we have installed and validated instruments at seven independent sequencing labs. The successful execution of these programs over the last year provides the necessary foundation for broad commercialization.
In addition to the information shared in our G. Four production system update we would like to highlight the technical report published in connection with our commercial launch. This report is intended to demonstrate system performance for one of the most technical and common applications whole human genome sequencing. The report contains a transparent and comprehensive overview of our performance.
<unk> and data quality.
<unk> produced sequencing data on par with current state of the art and yet performance with single past accuracy of approximately 99, 8% and uniform coverage of the high confidence regions and the reference genome evaluated at 20, <unk> and 40 <unk> coverage.
This was an important milestone for us it has stimulated interest in facilitated discussions with many targeted customers across the industry. We anticipate sharing additional information related to our sequencing performance as we continued to improve.
In addition to the <unk> fourth outstanding performance specifications. There are other aspects of the system's value proposition that are resonating with potential customers. These include workflow integration.
Operational advantages associated with our core tenants of power speed and flexibility and direct cost savings.
Each of these are considerations in our customers' evaluation of a new sequencing technology that <unk> provides a compelling value proposition in each of these areas.
I'll talk about each of these now.
Workflow integration.
We develop the G four to plug seamlessly into existing customer workflows as such we are excited to announce that we have entered into three new partnerships with library prep solution providers.
Adjuvant and Qiagen with Roche, we are validating its cap the evo plus and hyper prep library prep kits with adjuvant, we're validating its highly sensitive sure select target enrichment products for both custom and catalog kits.
With Qiagen, we are validating its KFC kits a product line for both DNA and RNA sample prep.
These are in addition to the previously announced library prep partnerships with twist Bioscience, New England, Biolab, Lexington, watchmaker genomics and dovetail genomics as well as the informatics partnership with the broad Institute to integrate the <unk> with its Tara data platform.
Across all nine of these partners, we plan to optimize compatibility and performance and provide our customers the ability to seamlessly integrate these market leading solutions with the G. Four.
Operational advantages.
The <unk> is the most powerful desktop sequencer on the market.
The G. Four will produce more data per day and any other bench top sequencer up to 400, gigabases or approximately one two to $1 3 billion reads for a single run unless the 19 hours in.
In addition, the <unk> offers unparalleled sample flexibility in the form of four flow cells with individually addressable lanes. The combination of speed and flexibility allows the customer to optimize sequencing run capacity fill flow cells more efficiently and run more frequently this translates to lower cost per experiment and faster results.
Brett cost savings the operational.
<unk> advantages in a related savings that I, just mentioned already established a highly differentiated value proposition yet we intend to further build upon this value proposition by offering additional direct cost savings, especially for high volume customers are customers that need to scale.
These direct cost savings take two forms with price and volume discounting.
First on the G. Four we plan to offer kit based pricing that results in savings on a dollars per gigabit or dollars per REIT basis versus the existing comparable kit offerings.
Second we plan to offer significant volume based discounting providing a cost effective way for customers to scale their sequencing within the bench top segment.
All customer types low mid and high volume, we will see cost savings with the G. Four in some cases up to 50% or more over current bench top offerings.
We are also excited to share some information about the upcoming G. Four by four system. The G. Four by four the configuration of <unk> instruments on a single <unk> bench top with integrated compute and data storage intended for higher volume customers. The G. Four by four will offer a scalable cost efficient solution with near random access capabilities.
<unk> rapid turnaround times and significant cost savings at scale.
<unk> four by four will offer high throughput level pricing on a bench top instrument for the first time at sub $10 per gigabit, providing an unmatched combination of power speed flexibility accuracy and cost.
With the <unk> and the G. Four by four singular offer customers cost effective choices to meet their current needs and their needs as they scale. This has the potential to redefine which applications are suitable and a bench top system and expand the bench top sequencing market as a segment.
We are actively scaling our commercial team hiring sales and customer service and support personnel to engage with and support our early customers.
We expect to ramp our sales customer service and support and marketing head count to approximately 40 people by the end of the year.
In connection with the buildup of our commercial team and infrastructure, we are setting up an internal customer care lab to help validate customer applications via simple optimization and testing.
This will be a courtesy service offered to prospective new customers, who are interested in seeing data prior to purchasing a system and is designed to streamline the adoption of a new technology. This will also serve as an opportunity to work with customers on specialized kits, such as HTC and XR seek.
As a reminder, our <unk> and core <unk> and <unk> III consumable kits will be applicable to all sequencing applications and compatible with existing library prep and informatics workflows as validated through our EAP program <unk>.
In addition to the <unk> II <unk> III kits, we're progressing development of two unique specialized application kits HD seek.
<unk>.
<unk> is an integrated sample prep and sequencing that can generate Q 50 accuracy for where variant detection sequencing accuracy. The critical aspect of our variant detection applications in oncology, especially in the detection of somatic mutations in tissue and liquid biopsy. We continued to advance the development of HTC and are now demonstrating 99.
<unk>, 996% accuracy for 100 base reads and anticipate target specs of $99 99, 9% accuracy or Q 50 quality scores for greater than 100 base read at commercial launch, which is on track for the fourth quarter of 2022.
Extended rate sequencing for XR seek as a specialized application kit for targeted sequencing of up to 3000 base pairs that we believe can fill unmet needs in areas such as immunology for diagnosing and monitoring of blood cancers therapeutic antibody and T cell discovery and vaccines for infectious disease, we continue to advance.
Our development of this kit internally and are on track for commercial launch in the fourth quarter of 2022.
We look forward to sharing more about these specialized applications and anticipate publications being issued on these techniques towards the middle of the year.
Looking beyond the G. Four launch we are excited about the products under development in our pipeline. We continue to believe that our R&D capabilities and team are unmatched for a company of our size and age our ability to integrate and leverage the broad range of scientific and engineering disciplines as a core competency the distinguished singular from the competition.
We are continuing to make progress on the development of the PX system, expanding the number of in situ RNA and protein targets and demonstrating concurrent protein detection in RNA sequencing in the same cells.
We are assembling our first beta instruments now and expect to have a handful of working beta system in the second quarter of 2022.
We are planning to open a technology access program or tap for our early PFS collaborators later this year offering early customers and thought leaders the ability to work with singular to develop assays and application solutions in advance of the planned commercial launch in 2023.
In addition to all the operational and business progress we made some important updates to our team.
We added a lane modest to our board.
Alain is a pioneering researcher internationally recognised in cancer genomics. Our focus has been in the application of genomic technology to improve the understanding of human disease, and the precision of medical diagnosis prognosis and treatment.
A modest serves as co executive director of the Institute of Genomics Medicine at nationwide Children's Hospital. Additionally, we launched our scientific Advisory Board. This group is comprised of distinguished academic and industry experts, who are advising the companys product and service offerings and R&D pipeline, we look forward to their contributions as we deliver the next generation of Ngls.
The scientific and medical community.
With that I will now turn the call over to <unk> to go over the details of our fourth quarter financial results.
Andrew.
I'll start by covering the Q4 2021 financials, followed by a few comments on 2022, including brief remarks on initial orders and expected revenue recognition timing.
Then I'll conclude with an update on our operational infrastructure buildout to support future growth.
Operating expenses for the fourth quarter of 2021 totaled $19 7 million compared to $7 6 million for the fourth quarter of 2020.
These totals included noncash stock based compensation expense of $2 $9 million in Q4 2021.
$3 million in Q4 2020.
The year over year increase in total operating expenses was driven primarily by our head count growth investments to support the <unk> launch continued investment in our product pipeline and R&D roadmap and the costs associated with being a public company.
Net loss for the fourth quarter of 2021 was $19 8 million or 27 per share compared to $7 9 million.
Or <unk> 73 per share in the fourth quarter of 2020.
Ending cash cash equivalents and short term investments excluding restricted cash totaled $339 2 million as of December 31, 2021.
Our weighted average share count for the quarter used to calculate net loss per share was approximately $72 2 million.
Looking ahead through 2022, we expect total operating expenses, including stock based compensation to continue to increase as we invest to support the scale up of manufacturing add head count in sales marketing and customer service and support and progress future innovations and R&D.
We expect our Q1 weighted average share count used to calculate net loss per share to be approximately $71 million.
Turning to orders, we have begun to take initial orders and are encouraged by the positive reception from our early customers.
It is still early in our launch cycle and we will plan to share more information on orders. After we have begun to ship and have better visibility into how the sales funnel is transitioning to orders through mid year.
As a reminder, we do not expect to recognize any revenue until after we commenced shipping instruments and consumables.
Revenue recognition on our initial system placements will be contingent upon the completion of customary acceptance or validation process.
This could result in revenue being recognized in subsequent periods for units shipped in Q2.
We will plan to deliver more information on units shipped and associated revenue recognition timing as we gain better visibility into the shipment schedule.
Longer term, we expect the structure or terms and conditions to enable revenue recognition upon shipment.
I will provide a brief update on our operational infrastructure buildout to support initial instruments shipment.
And future growth.
A dedicated 20000 square foot manufacturing facility in San Diego is up and running and we are assembling production instruments as we speak.
Additionally, we are on track to move into our new 80000 square foot headquarters in the second quarter of 2022.
We executed a new lease for an additional 200000 square feet in the life Sciences hub of Torrey Pines in San Diego.
The addition of this space starting in 2024 will support additional demand and meet our capacity needs for the next several years.
In summary, we remain well capitalized to support the <unk> launch activities, we are investing to achieve our commercial goals and scale the business.
We're making progress on our product pipeline initiatives and are confident in the commercial plan that our team has in place to capture the large market opportunities in front of us.
Thank you and back to drew for closing remarks.
Thank you Dylan.
I am incredibly proud of our team and the progress made over the last few months, we have commercially launched the <unk>.
We have demonstrated leading performance specs at two additional EAP partner sites, we progressed development of the system and achieve targeted commercial specs in key areas. We stood up our dedicated manufacturing site assemble initial production units and we are continuing to build out a world class team with industry expertise. In addition, we have take.
Multiple orders from customers and are on track to ship the <unk>.
First instruments in the second quarter.
Lastly, our product pipeline is robust with F. Three flow cells and our specialized application kits expected to launch in the fourth quarter of 2022, we are committed to driving value for all customers through the core features of the <unk> system as well as direct cost savings with the <unk> and even more so with the <unk> four by four later this year.
Enable high throughput level pricing on the bench top sequencer for the first time.
Our value proposition is clear.
Industry, leading power speed flexibility accuracy and cost on a sequencer that spans the mid to high throughput market with the <unk>. There are no trade offs there.
Cited to bring our first products to market and take a major step on our mission to accelerate genomics for the advancement of science and medicine.
Joining me for Q&A, we have Eli Glazer, founder and CSO, Dale and meter head of finance and Dave Daly, President and COO now, let's open it up for questions operator.
Thank you ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish Jim move yourself from the queue. Please press the pound key.
Ask that you please limit yourself to one question and one follow up question.
Our first question comes from the line of Tycho Peterson with Jpmorgan. Your line is open. Please go ahead.
Hey, thanks.
All the color around the <unk> launch I'm curious can you talk on the path to improving accuracy I know you're launching the HD kit later, this year, which will get you to <unk> 50.
Can you maybe just talk about how you think about that opportunity and how important is accuracy and some of these early discussions.
Yes, absolutely.
Tycho this is drilled probably have Eli talked a little bit more in detail about HTC, specifically, but I think accuracy is a term that really matters in the context of what type of sequencing you are talking about meaning that accuracy for counting applications. Our RNA seek is very different and accuracy for whole genome exome.
And then when we think about liquid biopsy, specifically, it's really a very unique accuracy profile. That's required there that most people are turning to our library prep techniques, such as <unk> to really drive the accuracy needed.
To get to rare variants and Thats, specifically kind of what <unk> is designed for and I'll, let <unk> talk more about kind of HTC, specifically current status of where it is.
Yes, I think thats a good summary.
Basic sequencing.
Our generic dates from the latter.
Two sites that we presented.
We're hitting.
More than 80% of debate, causing both for Q3, so kind of.
Industry.
And an industry leading.
Performance there and then the report we published on the whole whole human genome sequencing that takes it up to the next level looking across the entire human genome is looking at our ability to call variance.
That's on par with.
Kind of the state of the art today.
And then.
We continuously improve.
The sequencing quality overtime, we will continue to do that on the basic raw accuracy and then in terms of HDD.
As drew mentioned Thats really intended for rare very detection.
Liquid biopsy or.
Medications and tissue samples for example.
So there we are now hitting Q 50 accuracy of 99 nine.
Nine five.
<unk>.
And.
We intend.
To put out some results on that.
In the middle of this year.
Okay. That's helpful.
I know, we're all going to get the question about orders and I appreciate it's early but.
Yes, you are committing to giving orders next quarter.
Well, we kind of get a sense of the magnitude in some of the newer customers you've announced here like adaptive and exactly putting the Q4 into production mode or is it really kind of R&D at this point.
Yes, I think Tycho, we probably won't provide specifics on backlog.
Until we've really gotten out in the market for a few quarters and feel like we can provide information that is credible and predictable.
Can count on.
In terms of the early adopters and the orders we've taken so far I mean, I think in general it's a crawl walk run.
Any type of.
Adoption for sequencing.
Had questions before about the barriers to adoption and we're.
Committed to partnering with these companies to make sure that they are not only seeing.
Good sequencing quality, but they are also seeing a path to value and cost savings.
I think in general what we can say as you would expect people with step wise or new technology into large clinical.
Sequencing operations I think it makes sense just in general that there is a stepwise approach there that being said, we think the profile of the <unk> for the.
The cost savings matched with the speed and flexibility really do provide a nice glide path to larger engagements.
And bigger relationships in terms of customer vendor down the road.
Okay, and then just last one before I hop off on PX are you able to give us any details on resolution throughput panel Brett.
Any metrics there you can talk about ahead of the launch.
Yes, I'll have turn that one over to Eli.
Yes, so I would say in terms of resolution it will be.
Ballpark.
It is our pathology when applied to tissue.
Micron resolution there.
I just wanted to.
A number of unique features about the system that is designed for both.
Single cell analysis, and also for tissue in one platform.
And within each of those category.
Able to read out.
Gene transcription of animals of RNA and then also.
Protein, either just RNA and proteins or the two combined and since we use a sequencing readout. We also have a unique capability to look at the specific sequence.
So for example, the variable region.
Antibody producing cells.
And then lastly is just the scale. So we use a 96 locally format.
And we can run up to about 100000.
<unk> per well.
Across 96 example.
<unk> I think.
Unprecedented today and the same thing can be done with tissue section in those wells.
So.
Some of the unique attributes of that platform.
Very helpful. Thank you.
Thank you and our next question comes from the line of Matt <unk> with Goldman Sachs. Your line is open. Please go ahead.
Hey, good afternoon, everybody. Thanks for taking my questions.
Maybe just a question on sort of customer type.
<unk> is pretty well diversified across a number of different customer types.
But as you've kind of gone through that process and gotten a lot of additional customer feedback is there any type of customer whether it's government CRO pharma diagnostics that you feel like some of the demand is gravitating towards or is it still pretty well spread across those different customer type groups and that we should expect a fairly diverse potential customer base going for.
Sure.
Yes, the daily.
Hit it we've got a very robust engagement across all the customer segments. So whether it's academic cord, whether its fundamental research clinical.
Biotech startups.
Very very excited about the breadth I think as drew outlined when you look at the attributes of cost speed accuracy workflow integration.
That versatility to G. Four really does gives us the opportunity to hit all of those customer segments and meet their needs specifically with the <unk> or the G. Four by four so it continues to be very broad and very diverse and we're excited about that.
Great. Thanks for that color, Dave and then daily maybe one for you just on the Opex.
Have you had to readjust to your budget at all for supply chain constraints inflation et cetera, or are you still relatively on track to what you've kind of had originally kind of budgeted it out.
And the original plan or subsequent plans.
Yes, Hi, Matt.
Yeah, absolutely I'd say, how to think about Opex, we are definitely in an investment phase.
We're expecting opex to increase here in 2022.
Specific to inflation.
Or any of the other factors that you've laid out I wouldn't say that it's anything material. That's caused us to reset I think in general we've seen some manageable headwinds like a lot of companies are seeing.
But the team is managing through that we've got a little bit of increase in labor expenses with the higher job market are more competitive job market.
But the team is managing through that.
If we think about kind of pace of expense into 2022.
We could see operating expenses will be about double 2021.
Just depending on how we can phase and the investment to support the growth.
But I would just say we've always been really capital efficient you can look at our history.
$450 million raised $110 million of sales spent to date, we're going to continue that philosophy.
And investments here over.
The course of the next couple of years.
Great and then maybe just last one just related to that just on the PX does that opex spend bacon some spend on PX and when we see that kind of increase this year is that sort of a little bit more of a 'twenty three type of spend plan.
No we're actively working on that here in in development, we're bringing up data units.
Right now we will be moving into kind of the technology access program phase here last part of this year. So that opex spend includes PX as well great.
Great. Thank you very much guys.
Thank you and our next question comes from the line of John Sorry, Brian with UBS. Your line is open. Please go ahead.
Thanks.
And all of the color you provided there maybe just on the early access customers any additional feedback our impressions you could provide maybe the customers that haven't yet converted to orders has there been any feedback there on various maybe for focus or improvements.
Yes, I would say holistically. The EAP has been really helpful. In a number of ways. Both from a learning about the system perspective, but also learning about customers.
And one part of that is understanding kind of the buying cycle is much different if you're looking at.
Private company versus.
Core lab or in academic or some type of a public institution.
So theres definitely differences in buying cycles and budgeting in the way that happens and were learning through that.
No additional color at this point in terms of.
Customer vendor relationships I think we're hopeful that we can convert most of these if not all of these EAP to customers at some point in time.
Got it thanks for the color and the company has announced several partnerships since the beginning of year a few more this week.
Any additional details there are areas that you think of focus maybe for Paul.
Phil.
I don't think there is more color on.
The name is involved I think maybe the.
The higher takeaway is that we are very focused on making sure that the.
The practical.
Adoption of the sequencing is as seamless as possible. So the team that's running through these partnerships whether they're on the backend of data informatics of the front in the library prep is understanding that there are hurdles to get new adopters and there are nuances and differences with the different sequencing platform and the partnerships holistically are kind of.
We're very focused intended set.
Set of activities that we plan to.
We spend time on this quarter to make sure that when we're shipping systems in their repeat customer labs and they are using <unk>.
Third Party library prep solutions that they've used before that the compatibility of the protocols at all of that has already been essentially figured out for them that we don't have any aha moments or any confusion when assistant drops and so I would say these are really all in kind of the same direction of how do we make sure adoption is seamless.
And that users have positive experiences with the sequencer and existing kit that they already cut them to use it.
Thanks for taking my questions ill jump back in the queue.
Thank you and our next question comes from the line of Michael Raskin with Bank of America. Your line is open. Please go ahead.
Yeah.
Good afternoon. This is Peter on for Mike. So on the PX definitely I. Appreciate it's still early days here I believe you had previously commented that we could expect the launch in the second half of 'twenty three.
I guess a is that timeline is still intact and then.
B is there any more detail you can give on the EAP plan I think you had touched on it differing from the G. Four I'm just wondering if there's anything new there you can share.
Yes, absolutely.
So I guess I'll cover the first part of the PFS and then I'll, let <unk> talk a little bit more about the tap program.
We do still have it on schedule for the second half of next year.
We are again launching our first product and that is not a trivial pursuit so to speak.
<unk>.
So we are very aware that the success of the <unk> four in this organization needs to be focused on making sure. Our first platform is successful.
A mistake on that well.
We're trying to make sure that we have.
Our group continuing to push the PX forward and assuming we're successful with the G. Four things go. According to plan is as they are right now we should be able to continue that investment today on that timeline, but we will be very transparent on the timeline of the second system and it largely has to do with the success. The first system, which is which is our priority in terms of the technology access program I will turn it over.
Eli to talk a little bit more about what he has in mind there.
Yes. Thanks for the question it is going to be a little bit different than our early access program for <unk> four.
And that program, we're really just trying to reality.
Operation of the sequences in customers hands in the applications.
Clear that were targeting.
For the PX.
Our broad range of possibilities as I mentioned, a little bit earlier single cell analysis tissue reading out R&D panels proteins direct sequencing.
Then when we hope to do through the technology access program is work with thought leaders and potentially large customers in this area to help guide us in the most.
Most promising directions, there and so thats part of the technology access program, where we work with people closely on those applications may be developed custom panels specific to those needs and then that will guide our further development as we headed towards commercialization.
Great. Thanks, and then is there anything you can speak to how discussions with potential customers have evolved specifically within the past couple of months here.
Given the announcement by our major competitor in January and then there's another pending platform are expected to rollout.
How are you kind of thinking about this impacting your launch thank you.
Yeah, Hey, Peter this is David.
As I mentioned previously.
In customer engagement has been very robust and in fact, it's accelerating the number of engagement.
Funnel itself across all of the various segments continues to be very very strong and again I think as we're demonstrating the value proposition of the <unk>.
<unk> four is real I think one thing that we haven't mentioned that I think has helped that as the early access program actually shipping systems to these third parties and having them be run in their laboratories has given us a lot of insight that you don't get when you just send samples into.
Their laboratory.
Providers laboratory for processing. So we can talk specifically to these target customers about how the G. Four can actually plug and play and.
And then secondly, as you indicated with the Upfronts Library partnership with the backend analytics partnerships. We can likewise talk about real world utilization of the G. Four at these various customer prospect locations. So we're not talking conceptual we're really.
Talking about actual capabilities of the system.
And the ability to do that has again accelerated those customer engagements.
Feeling really good about not only the number but the acceleration of the number in the fall.
Yes, I'll just add on the competition.
There's going to be competition in this space I think what we're focused on is what's within our control.
Largely that has to do with making sure that we meet or exceed the specs that are very aggressive.
And making sure that we're engaging in listening to customers I think one thing that's worth mentioning the profile of the <unk> four by four is really unique in that it kind of spans both the mid throughput and the high throughput and what I mean by that is if you look at.
Essentially.
On a simple way how pricing works.
On a per gigabit basis, right now the mid throughput market.
Is kind of in the high teens to maybe $40 or so and that the higher throughput market.
Kind of four to $5 mid single digit up to about 20, what we're really talking about here is a system, where the power and the speed and the output and now with pricing kind of ranging from high single digit up to 40, where kenneth spanning the gap between those two systems. So it's really a unique offering and when we say no trade.
Awesome.
We really mean it the speed of the system the flexibility of the system. The fact that we'll be offering that spans. This gap. We think provides a very unique value proposition and a very unique system that will be differentiated for quite some time.
Very good thank you guys.
Thank you and our next question comes from the line of Dan Brennan with Cowen. Your line is open. Please go ahead.
Thanks, guys for taking the questions maybe the first one would be in terms of the flexibility of the team for the ability to run <unk> sells all the way up and get that same pricing per gig.
Amongst the early beta users and the customers. So far how often are they wanting to run one full sell it to Samsung.
That's a pretty big differentiator in terms of your viewpoint on the funnel is that going to be like a big driver for customers.
Yes, I think it's going to be a very big driver and I think it really just depends on the profile of the customer.
Certain profile of the customers that if they are running fleets of next week's those are customers that are thinking about this system is something that bridge. This them in terms of throughput and lowers their cost.
Those are the types of customers that are probably going to be using foreclosed flow cells in parallel doing multiple runs per week.
There is another subset of customers.
There are really for example in academic core lab, where they're serving all different types of sequencing and for those the flexibility is really something that allows them to cater to their pies or operate their lab in a more efficient faster turnaround type fashion, where a sample type or set of samples can come in you have minimal Bachelor requirements, you can load up a single flow.
Sell run the systems ready to go to the next day, you don't have to wait all week to batch to run 300 gig flow cell. So the question I think.
Really it can be best answered it depends on the customer.
And if it's both both of those needs very well.
Great. Thanks drew in terms of learnings that you've had so far have there been I assume theres been a bunch of like smaller things that we won't see it sounds like things are going well, but have there been any kind of key learnings as <unk> gone through this beta where you've been able to tweak things fixed certain things.
That.
The G. Four were kind of out of the box if you will right now.
There's been a ton of learnings I guess on the commercial side, Dave and I were just talking about there's definitely been a lot of learnings in terms of the way people think about their own validation.
And there are also learnings.
Again, what are the purchase look like and it's very different for a small private company versus large private company versus a <unk>.
Government entity.
In terms of the actual technical learning they will probably turn that one over to Eli I don't know how much detail you want to go into here, but feel free to.
I would say, it's been valuable for us to work with real customers real samples we owned library.
Preparation method, so maybe it would be one example in one case.
Their libraries are particularly small in sir.
So we wound up adjusting some things in the way we process the data to make it suitable to that so things of that sort.
Things are deeply fundamental but important to be able to be prepared to meet all of those various types of applications as we rollout the commercial systems.
Also over layered on that has just been.
Internal progression.
The output and sequencing quality and all that and Thats just sort of happened in parallel during this year as we've done the EAP program.
Great Thanks for that.
In terms of like the funnel, obviously, you're not giving any backlog numbers now but.
Obviously, you talked about the funnel really feel good about it I mean, we have I think we're around with the street as we have like 30 placement to see Youre, obviously, not going to comment directly but if you look at what youre seeing in the funnel qualitatively. If you look at where the street is can you comment at all on the final expected conversion just any any thoughts on how we might translate that funnel.
Kind of as we look ahead for the full year.
Hey, Dan. This is this is Dave I'll take that and anybody else can chime in here, but yes.
Yes, just as a reminder, that we haven't provided any formal guidance on units or revenue as a public company, but yes, we're absolutely aware of the consensus model that's out there and it's about 40 units backend loaded.
In Q3 and Q4.
There is no change to our perspective on the commercial opportunity at all right.
Manufacturing ops perspective, we're building units two to achieve this I would say that the 40 units isn't a lay up.
By any means we're bringing in new technology, and new product to market for the first time.
But it is definitely an achievable challenge right, where we're out there learning everyday filling the sales funnel customer conversations are going well.
So I'd say that's it.
A little bit of an overview and I don't know David if you have anything else that I think I think you also have to take into account and you touched on this a little bit when you look at the funnel is.
There are a variety of sales cycle and academic core lab has a six to nine month cycle clinical lab is a two to three months or more cycle.
Biotech startup can move.
We're quickly so.
While you've got a full funnel and theres a lot of robustness and you now have to bake in the various sales cycles to get to the numbers that dealer network.
Got it great and then maybe final one just on the four by four who is the target customer there is it just interested to kind.
Who are you going to be marketing that product too.
Yes, I think the four by four was something that we have been consistently talking about it since we filed our S. One. So this has always been something that as we were talking with customers.
We found.
<unk> continue to feel that there is a strong opportunity.
Allowing people and alternative and scaling into a super high throughput sequencer. If you think about why people scale. It usually comes down to they have a lot of volume and they are seeking lower cost, but there's a big step into a high throughput system. It's usually a $1 billion price tag, which is a lot of cap cap.
And that's.
That's a big deal so the thought process with the four by four is trying to provide an alternative and.
A more attractive cost and value proposition to those customers.
Essentially when we talked with them and we say, it's a mid throughput instrument at a certain price point in a certain capacity. They said, that's great, but I'm just going to need more and a lot of those customers would be customers running large central labs.
There could be research labs, but a lot of times, it's going to be a <unk>.
CLIA environment, a clinical lab.
Running <unk>.
And we just want to make sure that we're able to capture that market again, if you think about our grid and on that grid.
You have high throughput system, you have an Sps wanted us to and Thats for flow cell.
The people running the <unk> the <unk> those are large.
Percentage of the total customers are stepping into that system and first a lot of those customers, having something that's faster more flexible at a similar cost point or a better cost point is it really attractive value proposition. So it's really very simple if we look at the grid you have your low throughput and your mid throughput by doing the four by four it allows us to <unk>.
<unk> directly into that higher throughput grid, and really provide an attractive alternative from a cost and throughput standpoint for those customers and Dan one other additional point I think to complement what you just articulated is or you are looking at higher volumes and higher throughput keep in mind that the four by four is taking.
Four independent G four and harmonizing them. So now not only do you have the ability to run greater volumes, but now you have the opportunity to run simultaneously more types of experiments at the same time or.
<unk> got something a large experiments running and you happen to get something that needs to be processed relatively quickly you have access to your system.
So I think that really provides.
Different workflow scenario and a higher volume setting than youre getting some with something that's a bit more stat you load. It you got to wait for it to finish before you can then reloaded. The four by four it gives you a lot of workflow flexibility that you don't get in.
In most high throughput systems today.
Great. Thanks, Dave Thanks, guys.
Thank you and this does conclude today's question and answer session, Ladies and gentlemen. This also does conclude today's conference call. Thank you for participating and you may now disconnect everyone have a great day.
Yeah.
Yes.
Yes.
Okay.
Uh huh.
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