Q2 2022 Twist Bioscience Corp Earnings Call
Ladies and gentlemen, thank you for standing by and worked with a twist twist Biosciences fiscal 2022 second quarter financial results 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 when you're depressed star one on your telephone if you require any further.
Assistance. Please press Star Zero I would now like to turn the call over to your host Angela bidding S. VP of corporate Affairs, and Chief E. S C officer.
Thank you operator, good afternoon, everyone I would like to thank all of you for joining us today for twist Biosciences Conference call to review, our fiscal 2022 second quarter financial results and business progress we issued our fifth.
Our results released this afternoon, which is available at our website at Www Dot twist Bioscience Dot com.
With me on today's call are Dr. Emily, let Bruce CEO and co founder of twist and Jim Thorburn CFO of twist Emily will begin with a review of our recent progress on twist businesses, Jim will report on our financial and operational performance Emily will come back to discuss our upcoming milestones and direction and we will then open the call for questions.
We would ask that you limit your questions to a maximum of two and then re queue as a courtesy to others on the call.
As a reminder, this call is being recorded the audio portion will be archived in the investors section of our website and will be available for two weeks during today's.
As presentation, we will make forward looking statements within the meanings of the U S Federal Securities laws.
Forward looking statements generally relate to future events or future financial or operating performance.
Our expectations and beliefs regarding these matters may not materialize and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
These risks include those set forth in the press release, we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.
The forward looking statements in this presentation are based on information available to us as of the date hereof and we cannot at this time predict the full extent of the ongoing impact of the COVID-19, pandemic and any resulting business or economic impact we disclaim any obligation to update any forward looking statements, except as required by law.
With that I'll now turn the call over to our Chief Executive Officer, and co founder Dr. Emily Law Proust.
Thank you Angela and good afternoon.
Hi, everyone.
The second quarter, we continued to sell the growing use of <unk>.
Delivering record revenue of $48 1 million and 50.
Pardon me.
Of note our Roes.
Total fiscal 2022 is equal to our revenue in all of fiscal 2020 and 90 points.
Illustrating our rapid growth and continued commitment to executing quarter over quarter.
We've increased our revenue and just no basically Michael simulation description and market uncertainty.
Prepays without lowest turnover rate even in the midst of the great resignation.
So this one today.
Police, who we'd be successful movie.
Moving forward, particularly the fall employee and unique culture, where we use a grid to make an impact each day and service and trust because the mill and each will go.
During the quarter, we added 12 balance sheet in the midst of a difficult market with rules stuck.
Also favorable we see robust opportunity and potential awry that can result from investing in vertical market segments.
We are getting resolved peacefully.
Responsible manner, we're working diligently to balance the drive to profitability, we seem to see upside from new product and new market, including the storage, we remain committed to achieving adjusted EBITDA breakeven for the core business.
$300 million.
With the core business being defined as seen by you and and yes.
When we reach that point, we expect to have options for the storage specific Kelly is concerned to mitigate Austin.
Windows 10 that posture in this market environment. It is critical both execute quarter over quarter to drive revenue growth and manage expenses to have a demonstrative of path to profitability.
We are doing both.
And we're finding that a very good position resonate in an environment, where the funding for more difficult since we had the high quality local leader.
So we use the second quarter 14, Baidu, we reported revenue of 18 point for me on the loss of these trunk older of $23 6 million barrel, indicating continued growth.
We achieved several milestones in their phone to increase celgene diversity, which will allow us to accommodate both the ongoing.
And as we bring up the factory of the future scheduled for the beginning of July with shipping from this facility starting in January 2023.
We announced a new four year supply agreements with ginkgo that includes a minimum of $58 million.
Just product constitutes over the lifetime of the contract.
Although the minimum commitment ginkgo has the capability to exit significantly more products to meet their needs moving forward.
This entire industry bowls, we continue to increase our revenue and expand both our customer base.
And market to them.
Therefore, we do not anticipate ginkgo revenue would become material to us.
Last week, we launched commercially our twist highest throughput and production of hydrogen park. This.
This is an exciting gene to anti body protection platform that enables customers to turn candidates DNA sequences into qualified antibodies for therapeutic discovery and screening applications and.
The products, we believe has tremendous potential with Citigroup just a minute.
To facilitate our continued growth.
The future remains on track and we expect to begin shipping product from this site in Jennie O Swain 'twenty three we stand ready to meet the needs of Genco as well as many additional customers.
In parallel we are advancing al and benecke synthesis approach and one of twist early patent applications space published in April recall that we are developing a local college enzymatic process to synthesize DNA that we expect to use it for enterprise that the storage offering.
We expect to continue to use for somebody that chemistry is a primary method of synthesis for yet a near two and once we developed we will have we will add applications that are adding it on to enzymatic synthesis.
This could be a decentralized OEM option also recreational lending E N E R.
Although market, we're not serving today.
For NCS, we reported revenue of $23 1 million done open orders of $23 $6 million.
Last quarter, we talked about cheap with biopsy and minimal residual disease and during the quarter, we signed a partnership with situ I'd genomics to develop reference materials for we'll genome cancer detection for minimal residual disease.
While we're not able to announce every gives them as some dealers want to shed that's where part of the secret sauce. This is a great example of how we enable innovative workflows to ultimately benefit patients with cancer.
We continue to work with many liquid biopsy companies, who are developing new diagnostic tests for walk right Rancho Kansas as a whole the industry has been slower to ramp commercially the traction is building.
As Jean Michel we continue to extend our Nobel system as we serve in India with a top 10 accounts, resulting in about a third of our revenues for the quarter.
Our expanding customer base and decrease our reliance on any one customers, while positioning us to scale with the organizations as they commercialize and the scale the Hogan significantly.
Ultimately, none that build the application well focused on dominating the workflow between the sample and a sequencer.
This includes Liberty trip.
Instrument beat those.
So Bluetooth adapter Olson or reagents for yen and R&D tools.
We can just in lifestyles quickly with the off the shelf solution for a wide variety of applications and we are well positioned gift with a market share moving forward.
Moving to Biopharma.
We reported $6 $6 million in revenue and seven point and also a great quarter.
And those partnerships with many six in Korea.
In the second quarter, we added five new partnerships with big pharma with fleets of involvement in total.
We initiated 15, new programs with 47 IQ programs ongoing in the second quarter.
We completed 21 programs during the quarter for a total of 60 completed programs or tweets by phone.
<unk> hundred six total active and committed programs.
Two as milestones or royalties.
I'd like to note that similar with our new partner plus we do some books musician projects, which typically do not include milestones royalties. However, they are very good gateway projects that allow our bioscience seem to demonstrate safety and can lead to larger agreements.
So with Boston.
It varies.
As eight months projects underway, which as a reminder, our fee for service typically takes three to six months to complete.
Second quarter, two with Boston, Miami partnerships accounting for 56, New discovery projects and we continue to be impressed with it.
We added two new Beacon machines, Boston and as a reminder, the buses team is a power user of the beacon, which reduces the cycle time and increase the capacity, enabling significant revenue per machine.
Turning to data storage you will recall that in December we demonstrated DNA synthesis on our one micron pitch right.
Now we have a fully integrated.
We did it create control full at one micron pitch.
Next step is to debug the system to achieve since it is up to one gigabyte of data use cigarettes.
And we remain encouraged by the technical progress.
As DNA synthesis on this chip will translate into an areal density capability of 100 million articles per square centimeter.
Is the entity that is significantly.
If you can't be higher than any competitor.
We expect this June one functioning at Berkshire and scale to enable limited early access customer engagements and we look forward to share in.
The near future.
In parallel.
We continue to work on the design of our next chip using alpha which will enable it caused the inflection point that we believe will accelerate growth in early access market.
As we previously said, we expect our first offering to be a century ankur solution, where just the milk and thought that at four 100, Yoko Moe with migration maintenance on Etsy.
Most of the materials and increasingly condition can be realized we expect to introduce an accessible archive solution cognizant to answer that until environments.
With a technician will follow we are building the ecosystem and relationships that we believe will shift with well as we enter the market.
In February we will.
Became a super auto of the dish tool coalition coalition, a membership based organization, enabling its customers to deliver a resilient long term access to digital content and services.
And engaging with the digital position coalition provides access to a copy squeeze crashes that store and will help us navigate these important initial market.
In addition in April women's as well now voting modalities to originate working industry Association known as Neil.
Yeah, He's a minute of member companies spanning the storage market and these globally recognized as the trusted authority for storage leadership turn downs.
Got it.
We are already engaged with them active my Bill organization and believe our involvement will be critical to our ecosystem activities and will help inform our product roadmap.
Finally, the DNA that the storage storage alliance is gaining momentum as evidenced by the 15 member organizations at this time.
Yeah cause system is building nicely.
Come a long way from the full funding companies in just 18 months.
I'd like to point out that in every aspect of hospitals to the storage. We have built a novel technologies and expanded our engineering Substations, we have implemented our team with express from the tax shield.
Committed to industry, introducing our initial solution at the right time.
That is always at the very likely lost market pulse rate. These spending from individuals and small businesses to enterprise and ultimately hydroski casinos, all seeking to address their speed archive storage needs. We believe the early exit market for energy storage, including media and entertainment and digital.
The Division has what has been signed and we are building those relationships today.
On the ESG front S&P Global recently issued a report and twist.
Which we encourage you to review it evaluates twist nut certainly from a single point in time that takes into consideration our ongoing activities.
As a reminder, we released our inaugural ESG report.
January and I encourage you to review it to glean, a better understanding of our culture and systems.
Which are so important to the work we do.
And now I'd like to turn it over to Jim to review our financials.
Alright. Thank you Emily we had another good quarter at twist revenue was $48 1 million sequential growth of 15% and year over year growth of 54% orders were 55 million, a sequential increase of 11% and 32% year over year and our gross margin for the second quarter was $38.
3%.
We shipped approximately 2000 customers for the quarter growing from approximately 1800 in the first quarter of fiscal 'twenty two.
And we ended the quarter with cash and investments of approximately $604 million.
Now I'll provide more color on orders and G. S orders for the second quarter were $23 6 million, which is an increase of 27% year over year and up sequentially from $21.8 million and during the quarter. We received orders from approximately 750, ngf's customers and the top 10 accounts place our dose of our cross.
$8 million.
Confirming that we're seeing continued diversification of our customer footprint.
Our pipeline for larger opportunities continues to scale or now tracking 231 accounts up from 225 noted in our last earnings call at 104 have adopted twist and increase from 96 last quarter.
Turning to send vital we saw robust growth in our send by orders, which includes genes DNA, perhaps I G. G libraries, and oligo pools, which rose to $23 6 million in the second quarter that is sequential growth of approximately 6%.
Year over year growth of 16%.
The major contributor to growth this quarter include health care and industrial chemicals.
Now to Biopharma with contained to scale, our biopharma business as orders rose to $7 8 million for the second quarter and that includes twist, Boston and up from $5 6 million in quarter, one and $2 6 million in the second quarter of last year.
As Emily mentioned for our twist Biopharma antibody platform. We are fortunate to seven partners reported seven active programs and a 52 milestone and royalty programs.
Before moving to revenue. Please note auditors may not translate into revenue.
The trend line for each product group.
And yes product revenue was $23 1 million in the second quarter, there are 6% growth year over year and sequential growth of 20%. This brings our first half fiscal.
Fiscal 'twenty two revenue to $42 3 million from Ngls with the continued growth in our pipeline and bookings. We believe we're well positioned to achieve our N. G. S revenue guidance of $94 million to 96 million for fiscal 'twenty two.
Two of the top 10 accounts accounted for approximately.
Actually 3% of our revenue.
Our syn <unk> product revenue for the quarter was approximately $18 for a 3% sequential increase in reported 2% increase year over year. Some of the highlights include shipping to approximately 14, hundreds and biotech customers and that's up from 13 30 in the last quarter genes revenue was $14 2 million up from $15.5 million.
Quarter, and 9 million in the second quarter fiscal 'twenty one.
We shipped we shipped approximately 124000 genes in the quarter.
Oh to Biopharma, our revenues for quarter was approximately $6 6 million as compared to $1 3 million in the second quarter fiscal 'twenty, one and will serve 79 customers, including 55 through twist Boston.
In terms of revenue breakdown by industry health care in quadrature was $24 1 million up from $16 6 million in the second quarter fiscal 'twenty one industrial.
Industrial chemical revenue was $14 1 million versus $8 7 million in the second quarter of fiscal 'twenty one.
Even though we're operating in a pandemic for many academic labs were impacted globally. Our academic revenue was $9 5 million versus $5 6 million in the second quarter of fiscal 'twenty, one, reflecting our continued focus on growing our long tail of the market.
I will now briefly cover our regional progress for fiscal 'twenty two.
<unk> and building out our global commercial organization is reflected in strong international growth.
Second quarter revenue was $15 2 million versus $10 million in the second quarter of fiscal 'twenty one.
APAC continues to deliver strong growth with revenue increasing to $4 5 million up from 2.7 million second quarter fiscal 'twenty one.
In the U S, including Americas revenue was $28 5 million second quarter versus $18 6 million for the same period in fiscal 'twenty one.
Now moving down the P&L, our gross margin for the quarter was approximately $18 5 million or 38, 3% of revenues compared to 35, 5% in quarter, one fiscal 'twenty two.
Now to operating expense, our Q2 operating expense, which includes R&D SG&A and change in fair value and Mark to market adjustments of acquisitions was approximately $79 2 million as compared to $70 9 million in the first fiscal quarter of 'twenty two.
To break it down further.
R&D for the quarter was $31 2 million, an increase from $22 6 million in quarter, one primarily due to increased spend associated with biopharma, including embarrassing rebel out agg and data storage SG&A in the second quarter was $54 million as compared to 51 million in the first quarter and the increase.
This is due to approximately 3 million of stock based comp stat.
Startup costs for the factory of the future and G&A were two point were $2 million, including facility lease expense of approximately $1 1 million.
Change in fair value of contingent considerations and attempts to hold backs for the quarter resulted in a gain of $6 million versus a gain of $2 8 million in quarter one.
Stock based compensation for the quarter was $22 2 million.
Depreciation was $2 5 million the second quarter.
Amortization was one 5 million primarily associated with acquisition amortization of intangibles.
Our net loss before tax was approximately $60 8 million as compared to 56 million for quarter, one primarily due to increased investments in R&D and higher stock based compensation offset by higher gross margin.
Capex for the quarters 22 million, mostly associated with our factory of the future investment.
Given the global supply chain challenges, we have strategically increased our inventory to $4 million to $5 million compared to 14 million at the end of quarter one.
I'll now provide updated financial guidance for fiscal 'twenty to 'twenty two.
We enjoyed strong bookings of course to our costs.
Customer base continues to expand and our twist Boston team that joined us through the acquisition of embarrassed is doing very well.
We negotiated a four year contract with Genco and we're optimistic about opportunities in the same time more Sars Covid two variants continue into March.
For the year, we're increasing our revenue guidance, which is now expected to be in the range of 191 to 119 9 billion up from the previous guidance range of 118 nine to $1 98.
So in bio revenue is estimated to be approximately 70 173.
Three and that's up from previous guidance of $70 million to $72 million.
And yes revenue is estimated to be in the range of $94 million to $96 million consistent with our previous guidance.
Biopharma revenue, including twist, Boston is estimated to be in the range of approximately 26 million to $30 million.
Our gross margin for the year is projected to be approximately 37%, which reflects costs associated with our Portland ramp up for our factory of the future.
Operating expenses.
Which includes R&D SG&A and Mark to market adjustments are expected to be approximately 335 million for the year, including $130 million in R&D expenses as we previously guided including approximately 14 million DNA data storage spend.
Mark to market adjustments of the year is projected to be 9 million favorable.
Our net loss guidance before taxes for the year will be approximately $260 million to 265 million, which includes stock based compensation of approximately two 5 million.
And this is an increase from our last projections $74 million depreciation is projected to be $13 million amortization of intangibles project 5 million, reflecting the cost of amortizing our barisan tangibles.
Projected capex for fiscal 'twenty, two is expected to be in the range of $90 million to $100 million associated with increased investment in our Biopharma business.
We ended the quarter with approximately 604 million in cash and investments and the balance sheet.
I would like to thank all our investors for recent support.
We believe fiscal year 'twenty two is the high watermark for cash usage and as we continue to execute we believe we have the cash runway to achieve adjusted EBITDA breakeven for the core business at $300 million revenue per year.
And with that I'll turn the call back to Emily.
Thank you Jim.
As we move through the second half of our fiscal year, we intend to continue to focus on execution and revenue generation with good opportunities to disrupt markets. We will also focus on controlling expenses and driving towards profitability for that business.
In July we expect to begin our production qualification in the factory of the future.
Citing an important step to semi custom as well into the <unk> market and we remain focused on reducing overall turnaround time disappear.
Forging while exploring new product offerings.
Yes, we expect a strong second half driven by continued customer growth and commercial execution.
We expect to add more tools that enable our customers to perform groundbreaking research, while we leverage our sales team to expand our market share and own the market between the central and the sequence here, particularly in the area of liquid biopsy MLD.
Randy.
And by Pharma, we will continue to have partnerships and programs and move up the value chain, both for service offering and fall internally generated antibodies. In addition, we're pending an integrated portfolio of antibody discovery and optimization offerings as we integrate the twin Boston team.
<unk> with our Biopharma group.
Combined solution truly differentiate suites for the rest of the pack and we look forward to cross selling as well as broadening our reach as soon as the earn out is achieved.
It doesn't storage with a run up to reach terabyte scale.
We have a full screen integrated Cmos chip with controlling and all activities, making the system to achieve synthesis up to one gigabyte data in a.
Single run well.
We believe we'd be able to generate initial revenue from these chip once fully optimized through central archive solution.
Parallel we're working on the alpha cheaper and increasing the density per square centimeter to drive down cost significantly with it.
Two of them extra secret archive solution.
Is that discipline the call for questions.
No.
Ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone.
Question has been answered or you wish to have yourself on mute. Please press the pound key our first question comes from Matt Flex with Goldman Sachs.
Hi, good afternoon, Emily and Jim Thanks for taking my questions, maybe the first one just on <unk>.
And a bit longer term, but how should we think about the fact, the future coming online.
On line next year in terms of accelerating that syn <unk> growth are there certain capacity constraints that you are dealing with right now that can be alleviated or the speed of the turnaround time.
One of those factors could help accelerate that <unk> growth as we look into 'twenty three.
Thank you very much met that.
Great question, and so we do not have today.
The capacity issues.
We have extended a little bit of capacity until closer window Soc demand, we're able to catch it.
And we the fact that the future will have even more capacity.
As we have successfully and grabbing market share.
We continue to whenever the other out there be able to catch them and produce them.
In addition to that like you suggest in your question.
The fact that we have.
We will have a faster turnaround time will give us an opportunity to really extend to new market, where we don't really serve today in the market that is a very time sensitive.
And sufficient in the in the <unk> market.
We believe that the.
Significant portion of that makeup market that these stem cells.
That we'd be able to come to them.
So again 222 objectives for the future.
Bio one is ASLAN most successful take more market share continuing to make sure we have the capacity to.
Excellent into into the into the the rapid.
Jim market.
I will add in addition to that the we have a robust roadmap of <unk>.
Products, we want to launch.
Around.
Hum.
Thin ihram RNA, they all come from making DNA and could be as effective or would it still be.
A great foundation for us to expand into those additional market.
Great. Thanks for that and then just second question on Biopharma.
Assuming you know.
You're generating a gross margin on the upfront fees and the fee for service. Therefore should we really look at in terms of initial success of this program, adding it just more and more programs, obviously, the larger economic or comes with the commercial success of a drug in the royalties, but how should we think about sort of your building of the initial programs and the potential revenue grow.
Right.
Of those programs as they add.
Yeah. So so.
We're very much focused on the on the <unk>.
Trunk.
So as you mentioned is good margin there and that's enabled us to pay the beautiful weather.
Nuts, subsidizing anybody else's drug discovery.
So if we just get upfront payment, it's great and and.
No.
We've guided.
He contributed growth this year just on the upfront, but in addition to that.
Indeed, well, we are accumulating thinking up a bunch of muscles of royalties, which should provide some since you can't it couldn't meet with them in the future.
However, because of the those up you should go to two two.
In terms of exact timing and amount.
At this point, we're not guiding on those.
So amy or any milestones.
We would get above and beyond upfront payments would be would be upside.
Got it thanks, Tim I appreciate it.
Thank you.
Our next question comes from Lucas forgot with Barclays.
Hey, guys. Thanks for the question here.
Can you just update us on what your cash burn was on organic basis ex the rays I'm, just trying to get a sense there.
How you guys are thinking about that through the rest of the year.
Yesterday.
For the total year, you just step back and look at the the loss were projecting a loss of about $2 16.
That doesn't include approximately 84 million for stock based comp.
It does include about 13 million for depreciation and then.
Our amortizations by $5 million for amortization.
In terms of capex or projecting.
Accordingly, 90 to 100 million for Capex.
That should help you frame.
The cash burn so you just step back and look at that as a process being run by $260 million for the year.
Obviously.
Good chunk of that is being invested in ramping up R&D for Biopharma reinvesting core business, we're investing about $40 million into storage.
And obviously for for overall Capex, the bulk of the Capex investment.
Approximately $75 million of the 100 million in the Sierras for factory of the future.
Alright, that's great. That's helpful on the factory of the future Youre talking about.
The breakeven for your base business at $300 million can you give us the assumptions by segment from a revenue and margin perspective.
Yeah, I mean overall, we're forecasting.
Approximately 50, 50 split between unjust and bio and we're targeting a gross margin of about 50% to 52%.
Okay.
Alright, and then last one for me on.
The twist high throughput antibody production, where the swap program, how how integrated is that with the Tao.
And on the new customers into that program, how many are new to twist customers versus just coming from the Tau program.
Yeah. Thanks for the question so.
It's two different products, then so what you're describing one is tower where.
Someone comes to us where they have a an antibody and of.
Using Tau, we will design more sequences make more sequence in a make those volumes in house screened them in house and then give them in and then so for a bit on the belief of whichever.
We're going to want to be to maintain expression on implementing binding whatever and so that is basically a savvy.
Oh, the new products that we've launched which is an antibody synthesis.
Offering customers go onto the website they choose we try them they want.
And then the upload those volumes, we just synthesize them and then the customer will do all the work of screening out for.
The function they won't so in.
Basically it so they tell me the answer of course is the complementary but in one case without with those older with at least.
Kate.
Visits from the website and the custom of the older work. So Indiana all the same customers that we're reaching out but we're trying to fill them.
Growth in menu is placebo.
She wants to do the work you have been.
So on the website.
If you don't have enough capacity, we think we have an advantage of being first though let us to dial in and we'll do the work for you.
Okay. Thanks.
Our next question comes from rich over the dog with J P. Morgan.
Yes.
Hi, guys.
Casey on for Rachel first one how should we model the cadence of gross margin. Following the opening of the factory of the future understanding that theres going to be some underutilized capacity at the open how long will it take to ramp to those gross margins that you just called out at 52% and then again when do you think you can get to 60% gross margin for the total company.
Yeah. So in terms of modeling at gross margins for this year and gross margin guidance.
That's 7%.
We will give updated guidance for next year as we continued to ramp faster in future.
I mean overall, we're targeting.
For factory of the future 300 million revenue.
50% to 62% gross margin and adjusted EBITDA breakeven and then left with a core business that's for Ngls and bio.
As we continue to scale towards $500 million.
We are projecting gross margins in the range of 65% to 60% and that's based on a 50 50 split in terms of revenue between and by oil and Ngls.
Okay.
And then you've previously mentioned for enzymatic that theory, there will be equal or lower to that.
Standard chemical approach. So I'm just wondering what are the technical milestones that you'll need to hit.
To achieve that and then what is ultimately, giving you confidence that you can meet or beat those very rich. Thank.
Thank you.
Well. Thank you for the Great question and there's a few things that we're trying to optimize or a rate differential.
Definitely one of them and linked to our rate is the length of DNA.
And those are.
Apartment until that we'll want to remind us when is.
The speed of the different reaction steps.
And then last but not the some probably ill probably most important is the overall cost.
Hum on the reactions to synthesize and nobody goes so it's a it's a multiple viable.
Hum.
Optimization.
In terms of the milestones we have to optimize the the enzyme swept to my.
The link is.
And the Buffalo.
The chemistry and the deep looking today, there's a there's a lot of lots of cycle and to really help us in.
Hum.
So optimizing all of the cycles.
We developed a N G is electrical and put that into the platform. It is accelerating the speed at which we.
We can try all of those different condition, so instead of Av.
This thing one one condition and when we turn to the same time wherever there's thousands or hundreds of thousands of different meet them.
And so right now well Clinton declining.
Yes cranking.
Through all those.
Ooh Ooh Ooh.
Experiment to optimize the equation.
Absolutely you are correct that the.
The error rate and length is important but so too.
The speed of the reaction as well.
Although all of them.
We're quite encouraged with our progress Cooper.
Of note.
A few weeks ago.
The published.
Hum.
The potential one avenue that we.
Following two two to get there.
And linked to that provides the color.
It's a very low cost.
Yeah.
Thank you.
Our next question comes from Puneet <unk> with SBB Securities.
Hi, you have Michael on factory neat congrats on the quarter I just wanted to ask one.
One quick question regarding pricing. So obviously, it's an important lever for Chris.
But with the inflationary environment. We were wondering if you could get your thoughts on.
How youre thinking about potential price list.
And on the debt.
So that's a great great question.
Is it simply a therapy that we spend a lot of time.
On.
We at least.
E story, Kelly, we have been the high quality price leader.
And that does that.
He is really win in in.
Making sure that we are growing faster than the market.
And so wherever you can get all the opportunity to differentiate also.
One is the price.
Can you just repeat that we have.
If you.
When you use the extent that we can.
Alright.
At the same time.
We all are.
Seem quite increases all wrong.
Fortunately.
Vanya burden.
Labor costs.
But it's quite small as you know that's one of the different things that we have.
When our suppliers.
Thanks.
Uh huh.
The effect is mitigated but.
We also understand that the that a great way to boost revenue and boost margin needs to raise prices. So we are well positioned.
Studying the market looking at at.
What we can do and and.
Definitely to deliver.
Deliver.
Continued revenue growth margin growth.
Market share growth and pricing.
Pricing is a key element of that so I can assure you that as with many lots of time on it.
Got it thanks, and then when it comes to liquid biopsy I was wondering if you could provide any updates on the number of customers you're serving.
How much you're seeing in liquid biopsy.
Contributing to the overall ingest guide thank you.
Yeah, So overall as a highlight to the pipeline of our overall larger.
And Jeff's customers continues to scale number of adopters increase terms of liquid biopsy.
Right.
Tracking about 20.
Key liquid biopsy customers.
I mean, we've.
Obviously been adopted in a number of their tests so.
As our test volume increases our volume increase.
Yeah. The Carter was interesting that started off actually from an auditing point of view.
January was very it was it was low or as as we we saw the quarter proceed we activity picked up in February and we had a really strong strong March overall from an academic point of view, we continue to add a number of customers that were all for the business.
It is but also academic this is held up extremely well and in terms of I'd look as we expand our portfolio and as we as we continued to to explain.
Expand the customer base, we believe that we're well positioned to continue growing aggressively in this space, particularly in the fight with the featured comes on we'll be able to offer much faster turnaround time and that that really addresses the long too over the market the 1.4 billion opportunity and we're gonna start.
Seeing revenue and frankly, the future in January next year.
Okay, Great. That's helpful. And then switching over to Biopharma or are you still expecting Reblock is submit 90, Prince COVID-19 at the body in the first half of this counter ear.
Yeah. Thank you for for for the question mm mm.
<unk> <unk> <unk>.
<unk> is an independent company, who who would be we we let them make their <unk>, but the the objective of of.
<unk> the <unk> the the objective.
Okay, great. Thank you.
Our next question comes from out of the room with William Blair.
Hey, good afternoon, just <unk>.
From the time that the fact that few chore sort of opens in July 20 start shipping in January of 23, So what are the key.
Step the hurdles that you needed to clear from the validation quality control standpoint.
Well. Thank you great question. So we're offering the the the classic in this industrial step sofa I Q Q PQ. So I choose inflation qualification. So you can think of would be the instrument plugged Oh.
<unk> great vacation. So that is you know if the robot moving do what you expect you to to move and then P choose but for me if the opponents clarification.
Do you do you get <unk> out of.
Mm mm. So that's <unk>. That's we we we photo it's a lot more complicated because it's a system and so the monthly bill uhm piece of equipment with with very sophisticated software.
To track, we'll deal with those and direct the flu.
<unk> instrument, but physically that that's a framework.
What are they expensive doing it we have moved the fab within the Bay area Uhm multiple times. So that's something that we've done most of the time <unk> additional complication of one <unk>.
<unk> state please send me.
The cheaper way for me to kneel, and then to <unk>, a number of new employees.
We have that we have to train and to help them that's going to the we've had a number of twisted the imposed on us included that <unk>.
<unk> and and the initial nucleus of of <unk> <unk> <unk>.
So those are the <unk> <unk> and then and then hiring of people and and then once we've done that the next step is is is is renting.
Ah <unk> wrapping them Austin or on time, the the number of practice runs increase.
And then.
At some point will it could be ready and which cheapest switch on all of the software that will do load balancing between the different <unk>. So someone will bills would come in and some of those <unk>, we'd be treated info someone physically with someone would be treated the important and and then we'd be off too.
<unk>.
Okay. That's great then uhm biopharma.
You know you've talked about sort of conversation with customers, becoming easier I started building a brand.
Pass you should a reference being the drug discovery of last resort I'm. Just curious if you don't get in funding dynamics market dynamics, if that quote unquote last resort might be happening a little earlier in the process and given the focus on on cash for some small by a text.
You know how open are you to discussions around the balance between the.
The fee for service rate and and the downstream economics.
Oh, that's a great question.
Oh, so the drink is squared off last resort is still a great <unk> so <unk>.
Oh, leveraging that <unk> as much as we can and then as you know as we've discussed in the past once people tried tweaks Wednesday has experience with the <unk> of the <unk> that they get the <unk>. The next projects, we get an easy stuff and people are waiting to to pay a bill.
In terms of <unk> willingness.
To be fixable on on economic <unk>, we have a <unk>, but no. There's definitly a red line with any deal has to pay for forecast my total so the bare minimum.
Oh I'm not gonna do it did that that's not a gross margin positive.
In.
In the business of subsidizing I'll I'll system knows research, however, yep paying out <unk> <unk>. If we if there isn't a boat you need to do to be flexible and and maybe get more of the the <unk>.
<unk> economy.
Instead of of all upfront I think <unk> be flexible and open to negotiation.
Okay. Thanks <unk>.
Our next question comes from Vijay Kumar with Evercore I sorry.
Hi, This is alexandra on for the day. Thanks for choosing a question I just wanted to start on R&D extend you guys broke out that $49 and three G. N. A data storage and I was wondering if we could expect to see revenue contribution here.
[noise] for <unk> for D N a data storage no.
And we're still in development of DNA. These stories Emily highlights.
So this year next year as his development, we are seeing a lot of interest in the product. The Lions contains 222 scale technology developments going well the more research we're doing the market, particularly archival with NASA the hundred year.
Archival product solution.
So we feel good about flew out from dwell on point of view and over the next few years. Our next next year will be able to give you updates in terms of Hollywood progressing, but our our goal is to monetize the storage.
Quickly as we can.
Okay, and if I could just follow up on the offer check could you get some color around that and the cost metric on it as well as what we can expect further generations yet.
[noise] and a food that's a great question, So where you were singled between the design of the the <unk> the the <unk> the design.
Production and then <unk> cycle.
<unk> of of Coast I think I think you you refill too <unk> data the the <unk> the the <unk> would be to being a terabyte scale.
So we'd be able to sell terabytes of storage to to <unk>.
And well we're in the process of of doing.
<unk> in terms of of of the the price if we'd be able to to to achieve so I I don't want to seem a little too soon what what would the price would be either which we can say that will definitely be competitive when did you know the total cost of ownership.
<unk> technology that the other than debatable today, so today, where where it won't be thankful for again.
Tape Hot drive in and slash memory and.
When you still have that at 400 <unk> increases substantially over time.
Because that it needs to be migrate to feed and.
Maintain them and it is what needs to be spent that's 100 year period.
So in a way of putting it needed to be to be very competitive against that the total cost of ownership.
So.
Uhm that that is that is that is the.
ZIP code in which we we'd be for for the depressive storage terabytes of data.
And I'm not showing any further questions at this time I'd like to turn the call back to Emily for any closing remarks.
Thank you for it though.
<unk> joining us today, we look forward to seeing you Oh actually seeing some of you <unk> you'd be confronted New York and the William Blair confronts in Chicago, and the Goldman Sachs confront in Southern California.
<unk>. Thank you so much flattening today.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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