Q1 2022 Akoya Biosciences Inc Earnings Call
Thank you for standing by and welcome to the acquire Biosciences first quarter 2022 earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
I ask a question at that time. Please press Star then one on your Touchtone telephone.
As a reminder, today's call is being recorded.
All lines in the commentary.
<unk> Shah head of Investor Relations. Please go ahead Sir.
Thank you operator, and thank you to everyone who is joining us today on this call.
<unk> Shah head of Investor Relations at acquired Biosciences on the call today, we have Brian Mcelligott, Chief Executive Officer, and Joe Driscoll Chief Financial Officer.
Earlier today acquired released financial results for the first quarter ended March 31 2022.
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 statements. During this call that include forward looking statements with the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors for.
For the list and description of the risks and uncertainties associated with the acquired business. Please refer to the risk factors section of our Form 10-K filed with the Securities and Exchange Commission on March 15th 2022.
Average you to consider these factors and you should be aware that these statements should be considered estimates only and are not the guarantee of future performance.
This conference call contains time sensitive information and is accurate only as of the live broadcast today may five 2022.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise lastly, acquire will be participating in the upcoming bank of America, UBS and HC Wainwright investor conferences throughout May and we hope.
To see many of you in person, while we're on the road and with that I will turn the call over to Brian .
Thank you <unk> and good afternoon or evening to everyone and thank you for joining us today.
We had a very strong start to 2022 highlighted by the full commercial launch of our new fee in a cycle infusion system, the industry's fastest and most powerful spatial biology solution on the market.
The first quarter was another record revenue quarter of $16 9 million, representing 38% growth over the prior year.
During the quarter, we sold 51 instruments, consisting of 14 feet a cycle. There is 37 feet of Imagers.
When you combine the four pre release views of instruments shipped at the end of Q4.
As of March 31, we have sold 20 of the new fuse instruments, resulting in an installed base of 23 combined units of the fever side with fusion system and five standalone infusion installations.
We believe the strong initial adoption by new and existing customers with Korea further demonstrates the confidence in our platforms.
Our Q1 performance represents a signature quarter for Korea as it is a direct byproduct of the post IPO commitments and investments made to scale, our commercial organization and product development efforts.
<unk> fusion our expanded commercial team.
And strong execution were key drivers behind our solid performance.
We expect this team to continue through the remainder of the year as we launched new spatial biology solutions and gain additional momentum in the market.
Our sole focus is spatial biology catalyze the rapid growth of the industry over the past few years, the speed and robustness of our industry, leading optics and recycling technologies are enabling a whole slide single cell spatial phenotyping to become the go to method for tissue analysis.
Our platforms to meet the needs of discovery translational and clinical customers across research vertical such as immunology oncology neurobiology and more.
We have installed nearly 750 instruments globally, which have been referenced in over 530 high impact publications.
530 publications more than doubles the number of publications we had at this time last year.
The large install base is a confirmation of our success to date and are rapidly accelerating publications as a key lead indicator that this trend will continue.
And our continuing efforts to drive adoption of our spatial biology platforms, we embarked on a world tour starting in March of this year. Our team this holding seminars across 29 cities globally for hands on demonstrations of the <unk> refuses to discuss our customer spatial biology needs.
We have been pleased with the overwhelming positive feedback received on the tour.
This coupled to other high impact sales and marketing efforts has enabled us to build a robust and growing pipeline of opportunities to support our commercial objectives in 2022.
Our aim in the development of the phenotype of infusion was to improve customer workflow.
By providing the combination of speed plex and throughput.
The discovery and translational researchers desire.
Additionally, by delivering the platform as a modular system.
Our customers.
Hi, Plex discovery studies on the <unk> fusion and then use the fusion as a standalone system to perform high throughput validation studies.
We're essentially providing two workflow solutions in one platform, enabling both high plex and high throughput across whole tissue samples enables our customers to do spatial biology at a scale never before possible.
To support this accelerated workflow the theater side of the fusion platform also has a proprietary file compression algorithm that can reduce file sizes from terabytes to gigabytes, making.
Making data analysis sharing storage a much simpler task.
At the AACE, our meeting in New Orleans last month, we were excited to share the full dataset of our high Plex antibody modules with over 100 Plex markers for deep special Phenotyping using the phenotype of fusion.
This expanded capability demonstrates the breath of unique cell interactions that we can capture giving researchers unprecedented insights into tumor immune biology.
Throughout 2020 to acquire we will continue to expand both our antibody content menu.
And multiplexing capability as we move to commercialize these higher plex modules.
Our commitment to increasing speed and throughput is ongoing and we plan to release workflow improvements that drive discovery throughput from 10 samples to 30 samples per week on the phenotype of the season.
The fusion Standalone for biomarker validation already enables throughput of over 100 samples per week.
Also previewed at ACR was our new Universal protein chemistry that will further accelerate biomarker discovery and validation.
This new assay combines the core components of our codecs assay with the high sensitivity of our Opal assay.
The combination into a single method will simplify our FILO imager workflow and bring more value to our customers simplifying panel design.
Automation and will drive higher platform utilization and reagent revenue.
The University of chemistry technology will allow us to own the biomarker journey from discovery to clinical research.
Io markers discovered on the Pheno cyclic fusion will be validated on the season.
And then we will advance to larger scale studies on the <unk> HD.
Commercial rollout of the Universal chemistry will commence at the end of this year.
<unk> also remains committed to providing a true multi ohmic platform.
We will be delivering a suite of whole slide spatial transcript <unk> solutions on the Athena cycle infusion.
Our first product launch for RNA analysis comes out of our partnership with biotech knee.
Which is designed to automate their R&D scope chemistry on our <unk> system.
We have you know RNA scope is the industry's most widely adopted solutions for special RNA with over 4500 publications and thousands of customers.
We expect to launch RNA scope on our platform later this year and anticipate it will be used primarily for targeted applications and validation studies and the lower Plex range.
Simultaneously for upstream and broad scale RNA discovery applications, we are working on our own proprietary space with transcript almost technologies, which will enable us to offer up to 1000 flex capability.
We expect to launch this proprietary spatial transcript filmic solution in 2023 and.
We will provide an update at the <unk> conference next month in Orlando.
And the late translational and clinical markets partnerships are central to our success alright.
Our advanced Biopharma solutions group or Avs out of Marlboro is fundamental to this effort. We continue to see rapid expansion of our pipeline of translational and clinical trial studies run through ABS and as with our total revenue instrument placements Q1 was a record quarter for our ABS business.
ABS is central to acquire is aimed to expand or extend our spatial platforms workflows and regions into higher value clinical applications supporting clinical trial enrollment and diagnostic assay development.
The CLIA certification of our ABS lab, our network of Kols partners and the robustness of the imager HD workflow are key drivers of our ongoing success in the translational and clinical research markets.
To guide us on our clinical journey, we recently announced the appointment.
Dr <unk> as Chief Medical Officer.
He brings over 20 years of leadership and pathology in IBD development critical knowledge that will help drive a clearer vision of advancing space Phenotyping and precision medicine in cancer care.
To summarize our first quarter update we are pleased with our strong financial and commercial performance.
We continue to expand our leadership position in the spatial biology market and remain focused on the following initiatives for the balance of the year.
First continued adoption of our newly launched fusion instruments stand alone or paired with Athena cycle.
Second drive further workflow and speed improvements on the Pheno cycle their fusion and launch additional protein panels.
RNA capabilities.
And our units and our new Universal chemistry, and third continue to partner with leading Biopharma and industry Kols to drive the adoption of our platform and translational and clinical research.
With that I will now turn the call over to Joe to discuss our financial results Joe.
Thanks, Brian and Hello, everyone.
Brian highlighted total revenue for the first quarter of 2022 was $16 9 million as compared to $12 2 million in the first quarter of 2021, representing 38% growth.
Product revenue, which includes instruments reagents and software was $13 3 million compared to $10 million in the prior year period, representing 34% growth.
Within product revenue instrument revenue was $8 3 million compared to $6 7 million in the prior year period, representing growth of 24%.
We had another strong quarter with 51 total instruments sold of which 14 were <unk> 37 were from the imager portfolio.
The total installed base of instruments is now 748 as of March 31, 2022, which includes 196 <unk> and 552.
Imagers.
We are pleased to announce that as of March 31, 2008, <unk> instruments have already been shipped including four early access purchases shipped in Q4 of 2021.
And we now have a total installed base of.
<unk> 23 point that combined cycle or fusion system.
Old either directly as a combined system or upgraded from a previous standalone instruments.
Five additional effusion instruments were sold as Standalone units.
We are currently tracking a very impressive fusion to cycle or attach rate driven by the ongoing global launch efforts that Brian described.
However, our longer term estimates remain at 50%, 60% attachment rate.
Factoring in that many labs, who have purchased or will purchase the pheno cyclic.
Already have an existing microscope or may prefer another microscope based on their specific needs.
We will have more clarity over subsequent quarters on purchasing patterns of standalone versus combined units.
Sigler in the future.
In Houston.
Reagent revenue was $4 6 million for the quarter versus $2 5 million in the prior year period, representing growth of 82%.
Reagent revenue is a crucial part of our coils business model that has started to show tremendous strength since Q2 of 2021.
Recall that in Q2 of 2021, we saw a significant improvement in customer activity as Covid shutdowns started to pull back and we saw a corresponding increase in our reagent revenue to $4 3 million. Therefore.
Therefore reagent growth in Q2, 2022 is expected to be in the 10% to 20% range compared with the 82% growth we experienced in the first quarter.
Our annualized pull through exceeds $30000 per instrument for both the pheno cycle, there and the imager each T.
Mmm high volume clinical trials drug development, and a variety of I O applications.
We expect that the rollout of our higher <unk>, multi ohmic and Universal chemistry solutions throughout 2022 in 2023 will drive meaningful growth and pull through.
Services and other revenue totaled $3.6 million as compared to $2.2 million in the prior year period, representing 58 per cent growth.
We're very enthusiastic about the scaling of our services business, namely are advanced Biopharma solutions clear lab services and we believe this operation has a significant opportunity to contribute meaningfully to the top line.
Following the CLIA certification in November 2021, we are seeing a substantial increase in orders for our service lab and have hired aggressively to support this demand.
Gross profit was $10.1 million in the first quarter compared to $7.4 million in the prior year period. This.
This resulted in a gross profit margin of 60%.
For the first set of Pinot cycle or fusion orders, we did offer promotional pricing to drive early adoption of the platform.
A slight impact on Q1 gross margin.
Margin was also somewhat impacted by the investments we made in the service lab to support future growth.
Operating expenses for the quarter totaled $25.7 million as compared to $12.8 million in the prior year period <unk>.
Included in this number is 3.2 million of non-cash expenses, such as depreciation amortization and other non-cash items.
This is a reduction from the $27 million of total Opex, we incurred in Q4 2021.
Throughout 2022, we will continue to make targeted investments in the company with a near term focus on the commercial launch of the fino cycle of fusion and R&D efforts to further enhance our speed multi ohmic menu content and a b S service capabilities.
We ended the quarter with $94 million of cash.
The first quarter of each fiscal year typically is the highest cash used quarter of the year due to certain expenditures that only happened once a year such as bonus payments and other annual payments.
In addition, we are maintaining higher levels of inventory to cushion any impacts from global supply chain challenges.
This includes making certain prepayments two suppliers to secure a consistent supply of inventory.
We project that cash will be in the $70 million range as of the end of fiscal 2022, which provides ample runway to continue to invest in the business.
Common shares outstanding or $37.5 million as of March 31, and fully diluted shares, including the impact of outstanding options and warrants total is $39.4 million.
To summarize we had another record breaking quarter was $16.9 million in revenue at 38% increase over Q1 2021, we sold 51 instruments in Q1 across the product portfolio and the initial sales of the fusion instrument have exceeded our expectations.
We remain very confident in our ability to deliver strong growth. This year barring extensive lockdowns in China, which may impact our distribution capability in Asia Pacific if they remain in effect longer longer than expected.
At this time, we are increasing our full year 2022 preliminary revenue guidance range 270, 273 million as we continue to see tailwinds for our business and the spatial biology market.
Now I'll turn it back over to Brian for closing remarks.
Thank you Joe summary, we are very pleased to report a strong quarter and announce exciting developments as we track the launch of the feet of secular fusion expand our menu offerings.
And build on our first mover advantage in the clinic, we are thankful for the hard work of our fellow dedicated or clans as well as for the support of our customers and shareholders.
Oh quit remains very well positioned for growth and we are excited about the opportunities that lie ahead.
As we deliver news station solutions from the discovery to the clinical markets.
At this point, we're all open up the call for questions operator.
Thank you again, ladies and stomach like to ask a question. Please press by then whine when you touch tone telephone.
Again to ask a question can crestar than one.
One moment please.
We have a question David Westenburg Piper family of line is open.
Hi, guys. Thank you for taking the question and congrats on the good quarter here.
I'm Gonna go ahead and break [laughter] I Hope you don't mind me to go ahead and did you commented that you you know you don't really know the the the behaviors of it. It's so early in the fusion lines, but I do think it's so important to the story. So I I'm Gonna try to press my luck, a little bit and you know if you guys say no.
Perfectly fine with me.
Starting with.
<unk>.
Placements are really good can you just kind of mainly remind us about the seasonality the business I typically think of a of a business like yours is having.
With funding cycles in Q3 with with like NIH budget, and then you know of course that the budget Flushing in commercial with with Q4, but you had a nice beat in this quarter. So.
Can you. Please make me walk us through that seasonality and and how you were able to get a look quite a good instrument. This quarter sure. Yeah. So thanks, David we really appreciate your time I'll I'll, let Joe Hill that question.
Yes, so that seasonality and our business has been consistent for the past few years. So Q1 is typically the lowest quarter of the year Q2 is generally a little bit better Q3 is a little bit better than Q2, and then Q4 is generally a step up of several million dollars from from Q3. So that's.
We expect we expect that trajectory. This year. So from the 16.9, we did in Q1, you should expect you to to be somewhat higher than that in Q3 to be a little bit higher than Q2 and then.
Q for kind of budget flushes you as you noted.
Okay, well I mean, it just makes the the the the placements pretty.
Exciting.
So can you.
I know you you talked about not really wanting a you know talking about how early it is but you have mentioned that with with the confusion you do expect.
The the phenotype alert consumables to to you know increase.
At least in that early trends I mean are you seeing an immediate bump and I get you know you you.
You said that you don't know yet, but I do want to press my luck, a little bit with that.
And then look it's a fair question and I think the.
Reality is David with most of the shipments frankly of all the shipments save the four happening throughout the quarter and generally installations and trainings happening or a month or two following that <unk>.
That's why we're sort of saying it's too early because they are literally just getting installed then but again just to reiterate what what we talked about on the prior comments on the call.
With that increase speed relatives as being a cycle, there's an expectation that the average flexing will go from call. It a 25 would be the median up to closer to 50, and then and then the samples per unit of time.
It's also gonna increase so you have Ah Ah Ah Ah Ah Ah revenue per sample bumper and you have a sample putting in the time bump and that's why in the comments were talking about two to three fold X expected pull through increase over the Phoenix cycle there alone.
Got it okay.
Got it and that that's really helpful. Can we talk about a little bit about on the on the competitive landscape I mean, I think some of your competitors had a little bit more challenges than you seem to have I definitely don't I'm not definitely on asking you to throw them under the bus, but I I do want to maybe get on what.
It might be different about your macro or.
Your target customer that made your placement or would you like you, having maybe better expect being expectations relative to some of the others in the space.
And specifically the challenges are you referring to our Covid type challenges that the ones that are a commentary challenges is that got me in a lot of them, calling out cobaltite challenges getting into labs salesforce.
Yeah that that kind of thing.
So I think one one way to think about the specific COVID-19 challenges for example, as you look at China or another.
Geography's we're still.
60, 70 per cent instrument revenue driven and.
So a lot of our revenue was driven on the instrumentation site. If we were heavily.
<unk> 80, 70 per cent consumables, it might be a different story, but I, but I think because we're so heavily instrument dominated.
And we were able to get those instruments placed in those geographies.
That might be one reason why.
There was perhaps a less of an impact.
Got it okay.
That's helpful. And then there's a lot of attention and facial biology at H B T. I mean, you look at the goal the goal the silver the sponsors all the way down the line I mean, I mean, I think like two thirds of the top tier.
Sponsors it'd be TR spatial biology company.
Any thoughts to what might come out of there any thoughts to maybe maybe some freeze in in acquiring your product due to the fact that.
There's some some interesting stuff coming out of <unk>.
Well, so maybe it take those in reverse order I don't anticipate any any freezing of our purchases I think as we look at the robustness of our pipeline its breadth and depth and the eagerness for for people to have a solution that works today that Scott.
<unk> believes that we already talked about we don't anticipate a freeze but the.
The first part of your question what to expect that Hebt.
I think I I don't know, what they're going to come across with but I think our main point is I think as you as you noted in your note we have largely been focused on protein and now the reason why we're spending so much energy at a Z B T is with the capabilities now that fusion and they expanded RNA team, we now have the energy capabilities and technology.
Used to go mobile.
I think that's the trend that you're going to start to see is more multi olmec, but again speed is becoming a standard a mantra in the market as a requirement and I think that's an area, where we still have a lot of headwinds.
Got it okay and actually.
Great. That's a great segue into my internment to my next one here and that is why do why do you think it's and this is my last question. What why do you think it's gonna be a protein provider, adding transcript homemaker or RNA versus the other way around I mean, what kind of advantages do you think you have going after it from from your angle.
And also I think that's why I really actually it thank.
Thank you David I really liked that question.
What first comes to mind when you when you ask that question is is.
His image acquisition in image processing.
And we've got decades of experience in that so the underlying microscopy technology. The image analysis methodologies and the ability to do that at both high throughput and high Plex.
That is a capability that is.
Profound challenge to be great at.
I think.
That's an area, where I think starting with protein provides us as you layer into multi element provides us a great technology foundation to build upon.
Okay perfect. Thank you very much congrats guys.
All right. Thanks.
Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press Star then one when you touch tone telephone.
Our next question comes centre half of that Ah Morgan Stanley Atlanta, Okay.
Hey, guys. This is Edmund amputations, thanks for taking the questions.
I've been harping on call K hopping around call Tonight. So apologies if I missed this but I'm just wondering what is the expected pulte revenue of a combined.
He was a unit after a year after installation and I would just pull through different pulse.
Bolton revenue definitely between a Dino cycling and if you know image H T.
Yeah. So so today, just put that Pinot sigler paired with a third party microscope. It's.
Doing about $32000 per instrument on average of pull through so with the with the piano cycle are paired with the fusion.
We expect two to three times that pull through.
Just based on the you know the.
Higher speed the higher flexing. So that's that's really the the theory right now.
And so that's.
We haven't really seen it in action yet.
The instruments are just getting installed as we speak so.
But that's that's kind of our outlook and then in terms of of an H T pull through so today on average it's a little over $30000.
You know, we think that number is gonna grow I mean, there's no question about it there's a lot of things, we've got going on Universal chemistry things like that.
And so we want to get that that number up to 50 or 60000 over the next several years. So that's kind of how we're looking at reagent pull through.
Got it thank you for that color and I know, it's still early days, but based on your conversations.
Are you seeing any specific customer types that seemed to be gravitating more towards the Pinot cycling the future.
You know the day the fee and the fact that fusion customer base looks.
Largely similar to the <unk> the original fee in a cyclic customer base.
I think the one potential exception is it does have.
It is more attractive to core labs and service labs that are making money on a per sample basis for.
For for obvious reasons with higher throughput and higher flexing.
You can do more samples per unit time, and you can charge more per sample. So it is more attractive to the service groups, but again in terms of <unk> broad strokes directionally the customer base is largely overlapping with what we see with the current <unk> standalone install base.
Got it and for my last question I was wondering if you guys can talk about the customer excitement about in the new Universal chemistry antibody that's watching at the end of this year and what.
What type of projects do you envision being early adopters.
That's a good that's a good question so the the customer base and the excitement around Universal chemistry, It's really those groups that are currently using for example, the the current Opal chemistry on the <unk> system to design panels and the early excitement around the underlying technology of the Universal chemistry does it does the excitements for two <unk>.
Number one it leverages or antibody base for codex.
So having an inventory of antibodies that had been tested but.
Equally important the excitement is around the simplification of the automation in the work flow to get panels up and running.
So that the excitement there was around their ability to build panels faster and to have a larger library of panels and I think that the the earlier custody early customer basis, I think like you're being a psych refused a question are likely to be as I was saying those same customers that are running.
Large studies large number of panels and developing new panels. So I think a lot of it is going to be frankly around new panel development because of the benefits of provides.
Great. Thank you.
Thank you. Our next question Catholic Chylomicron of Canaccord Genuity. Your line is open.
Thank you so the status of the case alone for calling Redfin I just Wanna apologize in advance so I'll have your job cause a little bit so if you've already touched upon this ah apologies, but even though it's only been.
On the market for a few months what are you going from customers that gives you confidence that he feels like the fusion is differential.
And what attributes contribute to that differentiation.
And my second question would be can you switch to proprietary nature of acquaintances intellectual property.
Moreover are you confident that the company is trying to litigation, although I could challenges next time why not.
So let me let me take those in reversed order everything that were selling on the market is covered by issued intellectual property. So we have a really strong patent portfolio.
The second part the first part of your question I I was a little bit choppy. So let me answer hopefully I hit your question.
So the the differentiation.
The fear secular fusion versus other products on the market.
Really really comes down to two things number one.
Is the speed of that work flow.
The ability to do large number of Sam samples per unit time, and an understanding that we have got a foundation to continue to build on that speed to have a platform that's future proof.
The second thing that is differentiating about it is that.
It is true all slide multi helmick, that's why we that's why we're talking about the forthcoming.
RNA Chemistries at <unk>.
A huge benefit that our customers see is the ability to have this do a work flow.
Classically in the life Sciences markets instruments are are are rolled out and they're sort of monolithic standalone instruments to do a single thing.
What we have with the fee and a secular effusion as I noted in my earlier comments is the ability for this system.
[noise] due to workflows and that's very unique it could do high plaque smoking on the discovery and when you identify something that you didn't want to validate.
You can use the fusion as a stand alone for more focused panels at much higher throughput.
So you can swing your workflow between doing 100 blacks.
100, Plex protein study for example, and then you can run 100 samples and a validated manner on the abuse of stand alone.
So those are really the three things I think the speed the multi <unk> all of this being whole slide single cell and thirdly.
The two of workflow given how quickly our pipeline has expanded.
Since the announcement of the of the Pina cycle diffusion a special day in December 17th.
Confident in the ability of this drawing pipeline to meet our expectations for the year.
Got it thank you very much.
Thank you, Sir I'm, showing I'm showing no further questions at this time I'd like to turn the call back over to Brian Mcelligott, when your closing remarks.
Alright, well thank you Valerie.
Thank you everyone you for your time, we really do appreciate it and and we look forward to catching up with with each of you soon in the coming weeks and months have a great rest of the day and rest of the week.
Thank you.
To the gentleman that does conclude today's conflict. Thank you all for participating you may now disconnect have a great day.
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