Q4 2021 Somalogic Inc Earnings Call
Good day, and thank you for standing by and welcome to the summer logic <unk> fourth quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one on your telephone.
Be advised that today's conference may be recorded if you require any further assistance. Please press star zero I would.
Now I'd like to turn the conference over to your Speaker today, Mr. Bush with Gilmartin Group. Please go ahead.
Thank you today's summer Arctic released financial results for the year ended December 31 2021.
A copy of the press release is available on the company's website.
Before we begin I'd like to remind you that management will make forward looking statements. During this call within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events.
Or performance are forward looking statements.
All forward looking statements, including without limitation those relating to our market opportunity gross margin in future financial performance protein content and database for our customer base diagnostic pipeline hiring expectation and growth in our organization are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results, Oregon materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
A list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our Form 10-K filed with the Securities and Exchange Commission today.
This conference call contains time sensitive information and is accurate only as of the live broadcast today March 29 2022.
<unk> disclaims any intention or obligation except as required by law.
<unk> or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
Yes.
And with that I will turn the call over to Mark Knight Chief Executive Officer.
Thank you Marissa and good afternoon, welcome to our 2021 earnings call summarizing an incredible fiscal year.
We are tremendously proud of our progress this last year and look forward with a great deal of excitement for the rest of 2022.
I'd like to start off by expressing my sincere gratitude for all who are contributing to our success here at some logic.
We're working everyday to relieve human suffering and prolonged meaningful life by harnessing and applying the power of the proteome.
And this unequivocally requires the efforts of many.
Some logic strong fourth quarter capped off a transformational 2021 for the company, which included among many other accomplishments, but successful public listing on NASDAQ.
Several new product launches and growth of our commercial team.
Our continued execution is reflected in our strong financial results generating revenue of $23 million for the first quarter and a record $81 6 million for the full year.
Assuming 46% year over year growth.
For those who are newer to Soma logic I'll start out with a summary of the importance of proteomics.
Followed by our business and key Differentiators.
Until now measuring in identifying a sufficient amount of the human proteome.
And leveraging that data to create useful clinical tools has been more challenging than the human genome.
The evolutionary path of genomics moving from measuring a few things to measuring many things and finally to the measurement and identification of all things and along the way harvesting. The information garnered from that ability to power applications with both financial and human value is now being repeated by proteomics.
However, the evolution of proteomics will result in an objectively more powerful and much larger number of applications and a total addressable market currently valued at up to $90 billion, which in time will be larger than genomics as well.
It is simply not debatable that some logic has traveled farther and faster down that evolutionary path than any other company with.
With a demonstrated and proven ability to measure more protein biomarkers of interest.
So identify vastly more genome proteome correlations and to create first in class high Plex protein pattern recognition diagnostic and prognostic tests.
Rather than just products, we offer a meaningfully differentiated platform <unk>.
Consisting of a foundational technology with the ability to measure and identify 7000 proteins.
A database containing almost one 5 million in human samples.
Our bioinformatics team and the bespoke tools they've created over the course of more than a decade.
Our flexible synthetic foundational technology can be used in a number of protein measurement.
Identification context.
As evidenced by our recent Ngls collaboration with Illumina.
In our reagents can be scaled and customize very quickly without the need to work and living systems.
We are heavily scientifically validated so.
So you stated by the facilitation of the publication of more than 400 maintenance groups.
Some of these collaborative landmark articles in human proteomics, rather than just method citations.
Knowledge, unlike raw data or information implies the ability to create applications and we have done so.
Our database currently gives us access to $1 5 billion individual human protein measurements with approximately $15 million clinical data points by the end of 2022, we expect to have 31st in class very impactful protein pattern recognition Soma signal diagnostic tests to move into clinical and commercial use.
<unk>.
We are also heavily market validated and trusted more than 400 customers had been on our platform and some such as Novartis have entered into long term agreements and we're adding more customers rapidly as we grow our field team and our commercial footprint.
In 2021, we achieved several milestones to augment our platform capabilities relationships and balance sheet.
In May we announced our proteomics for precision Medicine initiative.
We have since partnered with Emory healthcare Intermountain healthcare common Spirit Health University of Colorado Health University of Pittsburgh Medical Center, and University hospitals, Cleveland Medical Center.
It will take market update as well as our regulatory and payment strategy for our unique diagnostics pipeline.
In June we announced new disease specific and custom proteomics panel products, which demonstrate our continued dedication to cover the continuum of protein measurement identification needs of our customers and to facilitate their work on a single platform.
We also announced new customer collaboration agreements with companies such as Novo Nordisk.
In July we announced the relationship and deployment of our assay capabilities to Beth Israel Deaconess Medical Center, and our general program for Deployable Soma scan kits.
In August we announced the collaboration with twist Biosciences to probe our database and other proteomics data for new therapeutic antibody targets.
In September we successfully completed our business combination with C. M life Sciences, which provided substantial capital over $619 million in gross proceeds to our balance sheet in support of our ongoing growth objectives. As a result, we are uniquely well capitalized in our sector.
As evidenced for accelerating scientific interest in our platform through 2021, we powered the publication of a record number of manuscripts more than 100, and the biomedical literature from customers and collaborators around the world and in journals, such as science and nature spanning a broad gamut of areas of investigation.
From autism to all timers to Covid cardiovascular disease and cancer.
Our strong momentum has carried into 2022.
For example in the past several months, we have added several accomplished commercial technical and strategic leaders to our management team.
Including Stephen Mermelstein, as our senior Vice President of mergers and acquisitions a role. He previously held as adjuvant and Adam <unk> as our Chief business development and strategy officer. Following several important executive leadership roles at Thermo Fisher.
We've also brought onboard a new senior vice president of licensing and IP strategy kin cast Scone from Qualcomm, a new lead executive for manufacturing, Sean Walsh, who most recently held a similar position at IDT and a new Vice President and engineering lead executive Maarten Rutgers from asylum research at Oxford instruments.
We're also pleased to share that we recently added a senior vice president of Investor Relations and strategic finance.
Blazer, who joins us from Assembly Biosciences and brings over a decade of experience in IR and related functions.
Early in the new year, we announced the co exclusive partnership with Illumina, effectively combining genomics and proteomics technology to empower and enable the future of multi Omics research.
The partnership combines the power and scale of Aluminous global commercial infrastructure and installed base with our unique proteomics platform to develop co exclusive co branded next generation sequencing base deployed proteomics kit products.
And while this partnership accelerates our NGL space capabilities over time, we plan to deploy a variety of protein measurement solutions on several different platforms, including Ngls arrays and emerging chip based approaches to best meet the needs of our customers and collaborators, regardless their technology cost or throughput needs.
And preferences.
Our comprehensive combination of a powerful enabling technology flexible synthetic reagents and an ability to leverage podium excited to create powerful diagnostic applications offers us a substantial first mover advantage.
And a large number of near and longer term opportunities to leverage these advantages capabilities and proprietary tools to both diversify our sources of topline revenue into.
And to substantially expand our share of the rapidly growing proteomics field.
Notably the realization of these opportunities does not require us to spend significant capital over time on new development.
The assets needed already exists in a part of one uniform platform, we work with them every day.
One near term opportunity is the continued deployment of site of service array based Soma scan kits to complement our current service offering.
Our early access program for academic institutions and research partners was successfully initiated during 2021 and we are planning an open access launch later this year when would that will give our customers the option to either access a robust in house service business capabilities or run and benefit from the advantages of Soma scan in their own laboratories.
Yeah.
A second major opportunity comes from our clinical diagnostic development capabilities and the diagnostic assets, we have already created as a result.
As proteomics technology scales and adoption increases our capability to develop these high plex protein pattern recognition clinical applications will increasingly and rapidly differentiate our business.
We have over 20 validated Soma signal test currently available in as many as 10, new test scheduled to launch in 2022 as well as the capability and Tom to develop between 180 and 100 tests based on the current database.
Given the number of test products already developed and those in our pipeline, we intend to accelerate time to market for these some signal test products via licensing and business development and are now pursuing very active near term opportunities for both of these approaches.
Our existing and planned test product menu spans a variety of indications with initial tests addressing liberty disease heart disease and diabetes to name just a few.
Our unique reagents themselves also present, a considerable opportunity the creation of scientific and financial value. We are the inventors of <unk> technology and the world's most sophisticated developers of these tools.
<unk> can be used in many contexts, where antibodies are currently employed such as other proteomics platforms and a number of use cases and clinical and experimental pathology in all represent revenue generating opportunities.
We accreted thousands of these proprietary modified reagents and are currently creating more of them at a pace of approximately 500, new constructs to go onto the summit skin menu each and every quarter.
To facilitate the development of our near term test product opportunities, we have recently announced our engagement with the European prospective investigation for cancer and nutrition, where the epic biobank.
Cooperative project between Imperial College, London, The International Agency for research on cancer, and the World Health organization.
We will begin to analyze what will be a total of 210 million protein measurements from 30000 samples from this biobank the world's largest oncologic proteomics study to date and we'll both use us to develop a suite of planned cancer prediction Soma signal tests as well as share the data back with the consortia for its own scientific.
Use.
We will also be assaying, the biobank assessments from the multi ethnic study of atherosclerosis, where Mesa Ah.
Ah study sponsored by the National Heart lung and Blood Institute and the NIH.
The $105 million protein measurements, we create in this process from 15000 samples spanning 15 clinical years of clinical applications will represent the world's largest proteomics study of an ethnically diverse population.
To support our ongoing commercial growth, we were actively recruiting and hiring with great success. We began 2021 with 10 and ended the year with 39 sales field team members of 290% increase.
We also continued to grow our marketing team in support of our commercial expansion. We began 2021 with two marketing Timna team members into the ended the year was 17, 750% increase.
We've also added additional members of our commercial team and customer support and product management and intended in 2022 with a combined total commercial team of roughly a 125 employees.
As we align our commercial capabilities with the heft of our research and development assets.
Great people, who are motivated by purpose and want to work for great companies with an aspirational mission no matter what is going on in the world.
Our mission is to leverage the power of the protium to relieve human suffering and extend meaningful life and we are unequivocally <unk>.
During this with great people working towards these ends.
2021 was a transformational year for some logic.
We've only begun to fully realize the full commercial potential that comes with 20 years of tireless innovation.
And with the people and resources in place, we are incredibly and uniquely well positioned to continue to do so.
In that regard 2022 should be even more remarkable.
We will continue to grow our commercial team to support and facilitate the growth of our customer base as we continue to add new customers to our platform and deepen our relationships with existing customers and collaborators.
We will develop the capability to identify and measure 10000 human proteins up from the 7000, we currently measure.
We will pursue new partnerships in both life Sciences tools and diagnostics and the latter will include both licensing, but existing proprietary soma signal tests and agreements to develop new ones for other customers.
We will begin to collect evaluate and discuss early study results from our proteomics for precision Medicine initiative.
We will develop new impactful Soma signal tests in several disease areas, but with a focus on tests that can actually predict your biologic risk of developing cancer before you have it even before early detection technologies, such as cell free DNA can be effective.
Our cash position provides an opportunity to evaluate inorganic opportunities, which can add to augment or synergize with our current capabilities.
And we will continue to execute on our current revenue growth plan.
I'd like to now turn the call over to Sean to review, our current and recent financial performance and our 2022 outlook Shawn.
Thanks Roy.
We are immensely pleased to report a record revenue year in 2021 contributing to a 40% top line CAGR over the last three years.
As we have continued to execute on our growth plan through the continued expansion of our commercial team and continued reinforcement of the benefits and value of our platform.
We expect these investments to continue into 2022 and beyond supporting our commitment to ongoing success and strong growth ahead.
Starting with our financial results for the fourth quarter and full year <unk>.
Revenue for the three months ended December 31, 2021 was $23 million.
And 18, 5% decrease from $28 2 million in the same period of the prior year.
I would point out that the fourth quarter of 2020 benefited from two large one time events of approximately $9 million combined as well as slightly higher royalties associated with COVID-19 testing in 2020 relative to the fourth quarter of 2021.
Adjusting for these we saw approximately 30% year over year growth for the fourth quarter.
Revenue for the full year of 2021 was $81 6 million or 46% increase from $55 9 million in the prior year.
Revenue growth was driven by a significant expansion of our core sales organization, whose efforts led to substantial growth and broadening our customer base over the course of the year. We added 77, new customer accounts, representing over 200% increase in our number of new customers for the year.
With these additions we continued to significantly derisk, our business by diversifying our revenue base in 2022, we expect to continue expanding our customer base as we scale toward roughly 125 commercial personnel by the end of the year.
Gross margin for the fourth quarter of 2021 with $54 584, 5% compared to 63, 7% in the fourth quarter of the prior year.
Of note the corresponding prior year period benefited from a onetime revenue recognition of $4 million at 100% margin.
Gross margin for the full year 2021 was 59% compared to 59, 5% in the prior year.
I want to reiterate at the service business as a mid fifties percentage margin business give or take with mix with our total margin also affected by royalty revenues.
In the short term our continued customer diversification will provide modest ASP expansion, but the bulk of the future margin improvement will come with cost out and RSA and future product expansion such as additional tailwind from price elasticity of diagnostic testing and the development trajectory of using synthetic nucleic acid.
As our reagent.
Total operating expenses for the fourth quarter of 2021 were $51 4 million and 84% increase from $27 9 million in the fourth quarter of 2020.
Operating expenses for the full year, 2021, or $154 9 million or 72% increase from $90 2 million in the prior year.
R&D expenses for the fourth quarter of 2021 were $11 2 million compared.
Compared to $7 $6 million in the fourth quarter of 2020.
Full year 2021, R&D expenses were $43 5 million compared to $30 7 million in the prior year.
Sales general and administrative expenses for the fourth quarter of 2021 were $29 7 million compared to $10 1 million in the fourth quarter of 2020.
SG&A expenses for the full year 2021 were $78 million compared to $36 9 million in 2020.
The increase in our expenses is primarily associated with head count additions as we continue to invest in our technology platforms, the commercial team and related functional support as well as public company readiness.
Adjusted EBITDA for the fourth quarter of 2021 was a loss of $27 7 million compared to an adjusted EBITDA of $1 million in the fourth quarter of 2020.
Full year 2021, adjusted EBITDA was a loss of $64 3 million compared to an adjusted EBITDA loss of $31 5 million in 2020.
Please see our press release on file with the SEC as of this afternoon for a reconciliation between GAAP net loss and non-GAAP adjusted EBITDA.
We ended the year with $657 $7 million of cash cash equivalents and short term investments.
As Roy mentioned, our cash position provides substantial capacity and flexibility to execute our strategy.
Now turning to our 2022 outlook.
Based on ongoing strength in our business and the development of our sales pipeline, which is progressing as expected. We are reaffirming our formal 2022 guidance of $105 million to $110 million in revenues representing growth of 29% to 35% over the 2021 revenue of $81 6 million.
We are often asked about quarterly trends in our business. So I do think it's worth providing incremental color on our expectations on how 2022 could rollout.
As our historical results show, our first quarter tends to be seasonally lighter relative to the other quarters of the year as many of our customers finalize their internal annual budgets, just as our fourth quarter tends to benefit from customers' year end spending before the end of their budget here.
Consistent with these trends.
We generally expect to see an upward trend from Q1 to Q4 of 2022.
I would also like to provide some color on our operating expenses.
In 2022, we expect general and administrative and R&D spending to slightly outpace revenue growth.
Most of our expense growth will continue to be in sales and marketing, which as Roy mentioned is growing substantially.
Overall, you can expect our operating expenses to increase about 70% in 2022 over 2021 in line with our strategic investment in cash burn expectations.
In summary, we are keeping our foot on the pedal by accelerating our commercial team build out while continuing to invest in our technology platform as part of our plan to drive the business towards profitability.
Finally, I would like to review some more details of our co exclusive partnership with Illumina, which included an upfront frequent $30 million payment.
We expect to recognize upfront payment as revenue tied primarily to the provision of reagents.
I expect these amounts will be nominal in 2022, while the NDS products are being developed and the vast majority of the revenue recognition will ramp with commercialization of the NGL products.
As Roy highlighted we are thrilled about this partnership and see this as a meaningful opportunity to expand our impact and growth prospects over time.
At this point I would like to turn the call back to Roy for closing comments.
Thanks, Sean before we close and go to Q&A I'd like to highlight a story that clearly drives home.
The power proteomics.
The story of Dr. David Fagan bomb.
So after taking Bob took part in our recent analyst and Investor event on February 4th where he recounted the very personal experience with our technology.
With this life literally on the line from a severe form of castle ones disease.
Cancer like condition that affects the body's lymph nodes, David brought new meaning to personalized medicine.
As you work against time to understand and attempt to treat as one element.
When that was considered untreatable at that time.
Using some scan David was able to identify an M. Tor inhibitor therapeutic that would prove lifesaving for him and put his disease into remission.
Doug you're saying C'mon emphasize it when faced with this point point, yet an urgent challenge at high Plex, proteomics, and especially summer skin offered him. The most specific actionable insights into the pathogenesis of the disease, which had previously been completely mysterious.
Our ardent hope and substantial belief was that proteomics will soon become as impactful to millions of others as it was to David.
Actually this eventuality is inevitable.
It's beginning to happen right now.
Melody Harris, our President and Steve Williams, our Chief Medical Officer will be joining Sean and IRA for the Q&A session I want to thank all of you for joining us today and I'll turn it now back over to the operator.
Thank him as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Our first question comes from Dan Dan Arias with Stifel. Your line is open.
Afternoon, guys. Thanks for the questions ROI on.
The new customers taken on in 'twenty, one it sounds like those played a pretty important role in performance for the year I'm just curious how much of the business development that you're doing at this point is influenced by.
The change in data sharing and the requirement there you're still communicating that message that some folks were at this point is there sort of an understanding as a policy for civil logic is not what it was and then if I could ask a follow up you know if you remove those accounts does it feel like assay utilization amongst the existing customer group is going up.
So in regard to the change in our our policy around data sharing.
And data contracting I do believe that the majority of the market understands that this has taken place.
Sometimes it takes a little longer for everyone to catch on but I would say that the vast majority of our customers do understand that.
And can you repeat the second part of your question. Please Dan.
Yes, I was just curious whether if you'd take out I think it was almost apologize for the background noise here was almost 80, new customers. If you remove those new guys.
Picture, whether it feels like your existing customer base is just doing more work with soma logic than they had prior.
I'll make a brief comment about that and then I'll, let multi harris, our president expand but.
So in general the progression that we see.
Is that most of our customers come onto the platform with relatively small pilot studies to start and then.
With a very high percentage of success, we convert those to larger studies and then obviously over time, we hope to convert a number of those the larger enterprise.
Relationships.
Certainly you know a lot of the new customer start with smaller studies.
And then and then move up to chain Nobody would you would you care to elaborate on that sure. Thanks Alright.
Absolutely with 77 of those customers.
And we know roughly what that initial byte is looking like from those customers revenues from those new customers on the platform accounting for less than 25% of our annual revenues. This year. So the growth that you're seeing is certainly coming from existing customers on the platform that we're seeing in recurring revenue. So we're happy with the growth both.
On diversifying our customer base, but we're also happy with the growth that we're seeing from recurring customers and I would add that again because of this.
High success rate of moving people into larger studies over time based on there.
How they how they view the data product that they get widows early studies that that 25%.
Contribution to this year's revenue bodes well for the future.
Yes.
Yeah, Okay. Thank you.
Helpful and then ROI on the product development side any change to the update.
For the plan for the 10000, Mark or assay launch is at the end of 'twenty two are looking any more or less likely than early 'twenty three and then on the kitted assays should we still expect that by year end. Thanks.
Yeah. The current plan is for us to have the reagents in hand by the end of the.
For fiscal year, 2022, and to create that 10000 plex product and as we have mentioned previously and for that product to be launched sometime in the first half of 2023.
As far as our kids.
Again a successful.
Early access program.
With academic and basic researchers and we plan to be by the end of the year in full full access as well.
Thank you and our next question comes from Brandon Couillard with Jefferies. Your line is open.
Hey, Thanks, good afternoon.
Maybe just on the epic study, how long will it take to run those 30000 samples do you expect to complete that all of this year with some spillover into 23 I'm curious if pricing is similar to the core business and then bigger picture just in case.
How many more studies like this do you think are out there with a similarly large sample size opportunities.
Sure I'll make a couple of comments and I'll ask Steve Williams are.
Chief Medical Officer, who are who proctors studies like this to comment.
Now the first question is that epic actually is an investment for us in this in the context of this this <unk>.
Set of samples in other words, we're running these samples.
On our own investment to create new clinical product and as we've mentioned before we believe that there'll be substantial benefit from this in regards to creating a number of new.
Cancer prognostic tests that should have significant <unk>.
Market interest.
And I'll answer the third question and I'll, let Steve talk about the timing of running these samples.
Over the over the next year. The third question is there are a lot of these opportunities out in the market currently both opportunities for us to make investments and Biobanks part of the reason we know we were to sit in a raising large amount of capital on our public transition was to have the.
<unk> to do projects like epic, where we can make investments in those Biobanks Inc.
And create clinical products, which obviously would have downstream revenue for us.
There are also a number of these that represent revenue generating top line revenue generating opportunities around the world and we are actively engaged.
And pursuing many of those over the next couple of years, Steve can you expand on that and maybe comment on the timing of running those ethics samples.
He had the rate limiting step is not soma scan assay capacity, because we could run 30000 samples in less than two months the rate limiting step for epic is the samples themselves are stored and straws in liquid nitrogen in Lille in France, and it's a slow and difficult job to extract them install them.
So that's what will take and we anticipate that they will be run during 2022.
But that's the rate limiting step north out of capacity.
Okay. That's helpful.
And then maybe just.
Good question for Pete just curious three.
<unk> customers, sometimes disclose in the Qs.
Curious what that percentage was.
'twenty, one for the fourth quarter, and we expect that to be.
Exiting the year.
Yes.
You talked you asked a question on the customer concentration.
Yes, just kind of how you see the evolution of kind of the diversification of the customer base or revenue base evolving next year.
Yeah.
Yeah, we definitely have seen a significant decrease in customer concentration, especially compared to three years ago MLD would you care to comment on the percentage difference.
Over the last several years I think three years ago, our largest customer represented in the neighborhood of a 20% of total revenues and now that's down below 16, 15% is that correct. That's right that's right.
The nice thing about bringing on as many new customers as we have is that the loss of any one single customer is not tied at all to some of the logic at this point and so being able to bring down that largest customer as far as their impact on our overall revenue it put us in a more comfortable position as far as managing.
Our own teacher.
And I would add that.
Another another benefit of adding all these new customers is that.
For preexisting.
Very large customers some of those have obviously first favored nation pricing considerations in and so now our Asps go up basically every time, we add a new customer to the platform. So less concentrated in our higher asp's, both as we as we grow the business.
And then just one clarification for you Shaun.
Thank you Ted.
70% growth.
For the year was that for sales and marketing or Opex, yes.
That's total total operating expense I'd pointed out that our R&D and G&A will slightly outpace revenue growth and then the you get to the 70% the rest of it is the commercial investment.
Okay got it alright, thank you.
Yep.
Thank you. Our next question comes from Dan Brennan with Cowen Your line is open.
Great. Thank you for taking the questions maybe on the first one I really just on the diagnostic strategy, obviously, a lot of excitement there and a lot of investment going into that just can you give us a sense or an update on how we think about the revenue contribution from diagnostics, whether in 'twenty, two or 'twenty, three and 'twenty four kind of what are the key milestones to see.
SaaS strategy begin to contribute.
Well, we're certainly hoping to see some revenue this coming year from.
Our diagnostic strategy.
Primarily from partnership deals where we either.
Enter into a licensing agreement with a customer for an existing asset that we've already created.
Or enter into development agreements with customers.
That have access to the clinical material.
Or have an idea that that dovetails with the material. That's in our database such that we can develop new tests for them and of course those agreements will will include some upfront payments as those are realized.
Certainly for larger.
Areas on the on the bar graph revenue over the next few years.
We're really talking to.
'twenty 'twenty three 'twenty 'twenty four 'twenty 'twenty five timeframe before I believe.
We really begin to see the.
The the potential.
Topline revenue generated from our diagnostics, but we do think it's important this year too.
Give the market a reason to believe and.
And we also believe that this strategy of.
It's unusual for a company to start out with the diagnostics platform with 30 assets, it's usually one.
But we have by the end of 2022 we'll have around 30, and so we feel like we can begin to monetize in this year and these licensing and development relationships and we are just beginning to do business development for those.
And already have you know.
Small pipelines developed for both of those approaches primarily just from those.
Potential partners and customers.
Reaching out to us.
Prospectively. So we are quite excited and confident about the ability to do that over the next year or two.
Great. Thanks for that and then I guess I just had a quick follow up the epic presumably Mesa.
Similar where you guys arent collecting revenues on that but I would just like to confirm that.
That's correct, Steve would you like to talk a little bit about the Mesa study and the benefits of that for us.
Special about it as Lloyd pointed out earlier is the multi ethnic than we like.
Excuse me, we like to be able to show that our tests are generalizable across ethnicity, and the models that we develop the potamic models.
Don't have race in women they tend they tend to be race blind, but we need to be able to demonstrate that but the other special feature of Mesa is its longer choosing when that has sequential samples from the same individuals' overtime.
And so you can see as diseases and diagnoses develop or get more severe and you can see the co gen make changes within individuals and so that's what particularly good about Mesa.
And we've talked in the past about.
Actually back before we made our public transition when we were talking about potential uses of capital we talked about making these investments and the bio banks to grow.
Both our database and our clinical product.
Our components and so we're just making good on those promises.
Great no thanks for that.
It kind of kit launch this year is there any way to help think about what the impact from that.
And obviously it sounds like it will pick up traction more in 'twenty three.
Whats kind of the opportunity there in terms of.
Growing your customers and to our pull through on kits versus the centralized service just any color on that would be helpful.
Sure Melody would you care to comment on that sure.
So our strategy with respect to this is to have gea towards the back half of this year and.
We are targeting what we would anticipate to be larger labs with larger pull through as those first customers that come on in the <unk> you won't see a material impact from revenues from that this year given that we won't get that launch Intel.
The second half of the year, but we do anticipate those revenues to ramp in 2023.
Thank you and we have a question from Kyle <unk> with Canaccord Genuity. Your line is open.
Great Hey, guys. Thanks for the questions Congrats on the on the year.
About a year ago today.
<unk> merger announcement was announced and that pad.
Titan you had this 22 revenue projection that was about $89 million and so your current guidance stays roughly 20% above that original ashwin. So could you talk about like how you're thinking or your guidance philosophy has changed in these last 12 months or year or so.
A result in that upside of almost $20 million and I'm just kind of wondering like was that primarily driven by the.
<unk> increased our sales team the buzz around some melodic given market.
Marketing may be funded by the stock merger or just the.
<unk> core execution.
We'd like to think it's all three of those.
But.
And in fact.
I believe it is.
No.
We have been an incredibly serious research and development enterprise for more than 20 years.
And we have the technology to prove that.
We've been a really serious commercial business for <unk>.
Around three years and so.
Certainly.
A couple of years ago, a little more difficult to project, what the future might hold.
We've been pleasantly surprised.
I think that changing the business model.
A year ago was important.
In regards to pent up demand in the market for customers that wanted to come onto the platform, but perhaps in the past had decided not to.
Because of all business models, and then of course growing the commercial team.
It's hard to have a.
A customer conversation when you've got no one on your end to have it in.
We certainly you know.
Believe that this incredible growth and in our commercial.
Actual team and our hiring success I didn't mention this in unbelief shonda it either but we've actually doubled the size of the company in general over the last year, we saw.
Celebrated our 400 employee.
Just a few weeks ago at some logic and of course, we started fiscal year last year with about 183, so having.
Having feet on the street is really important.
The reception for what we do has been stronger than than we had predicted and.
And of course, that's all good news.
Okay. Thanks, Alright sounds good.
Just kind of a trailing off from the diagnostics commentary that was touched on before.
You, obviously have a very large number of tests that had been validated or like in development or in the pipeline I guess, but out of those like what's the killer App of the Soma second all tasks.
I understand protein pattern recognition.
I would say very attractive opportunity, but like what gets you most excited and what could be like the biggest maybe financial contributor over time.
Well I'll make a couple of comments and then Steve Williams Who's the father of Soma signal tests.
Or if not default or at least the uncle.
I'll ask him to comment.
It's a question we get asked fairly frequently about what's the killer App and I think.
The killer App for proteomics diagnostics is not a single test. It's the breadth of things you can measure and identify and predict with proteomics.
Genomics has been incredibly impactful.
It's not arguable.
But genomics is largely limited to dominant mutation diseases and oncology because you know the tumor cells escape the germline impair.
Imperative in and have a lot of differences that can be identified and capitalized on clinically.
But we're talking hundreds of potential tests.
For genomics we're.
In proteomics and using protein pattern recognition, we believe it's thousands.
Maybe even over time more than that.
And so in my in my mind.
The killer App is the breadth of capabilities that proteomics diagnostics will bring to the market into more importantly, clinicians and patients that need them.
Overtime, Steve and his group focused initially on I think very wisely.
Common diseases, where interventions can have an impact so they focused initially on cardiac and metabolic diseases, followed up by cancer, but it's really the breadth of things that clinical proteomics can do that I believe is a clinical lab I know that you'd like to hear that this one is going to be the one that you know that it is the.
Leading tip of the spear, but this is a lot of spheres once Steve would you care to add to that.
And I like what you said Roy of course.
The what I think that the killer App is this intersection between our two businesses.
Net.
Within the life Sciences business.
What really just talked about.
Is is how much do you know about the participants in your clinical trials, how fitter. They secretly smoking are they drinking too much.
Are they pre diabetic have they kind of have a heart attack stroke during our study.
And of course, those things are all important in preventative health as well and so when we look at the business opportunities. We think we've got this near term business opportunity in life Sciences, and knowing your cost systems in clinical trials, but that rolls into preventative health and if I had to single out one test it would be the composite prediction.
Of heart attack stroke.
And death.
And heart failure that this test that we've now validated in over 40000 people.
Confined roughly 20% of the population who are going to have an event in the median time to event is about 18 months in the Communist type of event is that that's pretty catastrophic in the life science business and validating that as a surrogate endpoint has huge upside opportunities.
More enriching and monitor clinical trials and monitoring drug safety and monitoring drug efficacy and whereas in the medical realm and it also has immediate application in allocating medical resources and expensive new drugs. So I'm really picking on the intersection between the two businesses is the sweet spot for the near to medium term.
Yeah.
Okay that was great. Thanks, thanks for that guys.
And then just talk on that comment.
Kind of a pipeline updates on other was the timeline towards that 10000 Bucks per discussed but in terms of something also you discussed previously.
Offering multiple <unk> for protein is that going to be development work this year for that type of.
Functionality or when does that really start those efforts really start to kind of ramp up.
Those efforts have already started we've actually been working on that for several months already and.
And of course, the good news is that we're not starting from scratch.
The interesting things about.
This ability to create these construct using synthetic biology is that we can do it very rapidly first of all the example, I like to give us at the beginning of the pandemic. We obtained some purified protein from the spike protein of Sars Cov, two the alpha variant.
Within three months of receiving that protein, we generated 200, app tumors that bound all over that spike protein to various epitopes. So.
So we've already started that project.
We also have a substantial percentage of of App tumors, where we've got.
Alternative construct already stored away in the freezer.
That's the comment about not starting from scratch. So we.
We haven't announced a launch of that product or what that product will look like exactly but we look forward to talking about that more during the course of the year, but the R&D efforts are well underway and of course. This isn't speculative. It's something every time, we make an aftermath, we make hundreds and so the technical risk for this is it.
Low and of course the benefits for this over time.
The ability to bind to multiple epitopes on each protein and the ability to do that very rapidly when youre not having to stand in front of a bioreactor or a goat to do that are or are significant.
Okay, Great and then just last question for me could you walk through the steps toward more international fashion in the near to medium term and I know that you guys are casually in places like Europe over the past year.
I guess will the growth of the kind of international commercial force decelerate.
In the near term like I said or.
And will that will that increase or meaningfully and are there any kind of capex implications given that expansion internationally.
We've had a I'll make a couple of comments then ask melody to to expand we.
We've had significant success early success in recruiting in both EMEA and APAC and.
And hopefully that's going to bear fruit relatively soon not hopefully it will bear fruit relatively soon so melody can you talk a little bit more specifically about our recruitment efforts in those areas and expansion.
In this first quarter of the year, we've already hired our regional leads for both EMEA and APAC. We've also added <unk>.
Double digit sales folks outside of the U S and we anticipate that growth will continue throughout 2022, So we're looking for.
A reasonably impactful contribution from international revenues during the course of 2022.
It takes us about 46 months for a sales person to become fully productive.
As they learn our technology and learn how to make those value propositions to customers and given that we've been hiring so rapidly in the last two quarters, we anticipate to see an enormous amount of that ramp in the back half of the year. It's all of those bodies start to become.
Highly productive in the back half of the year for us.
And to think about it.
The potential for this.
We gave at the beginning of 2021 we had 10.
Our commercial field team salespeople, we ended the year with 40 at the beginning of 2021, we had one person in EMEA and no one in APAC. So.
The upside potential.
For this we believe is as significant eight of the top 50 actually but 12 of the top 50 <unk>.
Pharma companies in the world by total revenue or in APAC for example, so.
So the upside for this is substantial we believe over time.
I would intersect that with our kids strategy that.
I had mentioned earlier that we're looking at these large volume sites that can process samples for others and we are certainly targeting locations for that in EMEA and APAC. So that we can drive more volume into those core lab kits sites.
Starting in the back half of the year with fewer issues of data or sample movement across international borders, which.
Which which this will ameliorate to some degree.
Thank you and that concludes the Q&A portion of today's call I would like to turn the call back to Roy for any closing comments.
Thank you very much.
And thank all of you for joining us today.
I'd like to.
Again, thank all the participants in the call on our side Sean Steve.
Steve or Marty I'd like to thank Richard from Gill Martin in our operated as well we're looking forward to seeing some of you both virtually and hopefully even in person. This next year at upcoming conferences, including Jefferies.
In June .
As a closing comment.
Like too.
Ask that all of you who have the ability that you work to facilitate piece in Ukraine.
We are intending to make a corporate donation to refugee relief in this region.
In the coming days.
And as Martin Luther King one said.
Armed truce in unconditional love, we'll have the final word in reality have a good week and thanks again.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yes.
[music].
Yes.
Yes.
Yes.