Q1 2022 Quantum-Si Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the quantum ASI first quarter 2018 earnings call. At this time, all participants are in listen mode.
The speaker's presentation, there will be a question and answer session to ask a question you will need to press star one on your telephone if you require any further assistance. Please press star zero.
Please be advised today's conference is being recorded I would now like to turn the conference over to Juan Avendano head of Investor Relations with wants MSI. One. Please go ahead.
Good evening, everyone. Thank you for joining us today after market close quarter with high released financial results for the first quarter ended March 31, 2020 through a copy of the press release is available on the company's website. Joining me today are Dr. Jonathan Rosberg interim Chief Executive Officer.
Got it Greg Schneider, our newly appointed President and Chief operating Officer, and Cloudy upgrade then chief Financial Officer.
Before we begin I'd like to remind you that management will be making certain forward looking statements within the meaning of federal securities laws.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding disgrace and uncertainties appears in the section entitled forward looking statements of our press release.
For a more complete list and description of risk factors. Please see the company's filings made with the Securities and Exchange Commission.
This conference call contains time sensitive information that is accurate only as of the live broadcast today may nine 2022.
Except as required by law the company disclaims any intention or obligation to update or revise any forward looking statements.
During this call we will also be referring to certain financial measures that are not.
Third in accordance with U S generally accepted accounting principles or GAAP, including adjusted EBITDA, a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release with that I will turn the call over to Dr. Jonathan Rosenberg.
Thank you Juan <unk>.
Good afternoon, everyone. Thank you for joining us in today's call, we will provide a business update and present, our first quarter financial performance and outlook for 2022.
We will then open the lines for questions.
Quantum edge <unk> mission is to transform life science research in proteomics.
Becoming the first company.
To launch next generation protein sequencing.
We believe that digital massively parallel.
Single molecule protein sequencing will revolutionize life Science research and health care.
In a similar manner to how <unk>.
Next generation DNA sequencing transform industries when my team first of all it's a market over a decade ago.
Our search for a full time CEO with ongoing.
We have met with several high caliber candidates.
Found its process to be valuable in focusing our criteria for this critical hire.
As our search continues we are looking for an individual who has a deep understanding of technology.
Proven track record launching complex life science tools and.
Allophony, tenacity and charisma to make quantum edge side of commercial and financial success.
As interim CEO I have been motivated by quality met five teams commitment to our mission.
And now even more confident that we have the right people technical.
Capabilities and resources to not only pioneer but also on the fork in history, we create with next generation protein sequencing.
While I have loved leading the day to day operations of quantum edge side and have been able to truly appreciate and help advance our technology I'm very excited to announce I have a new partner to raise the probability of our success.
I would now like to introduce Patrick Snyder, our new President and Chief operating Officer.
He brings two decades of life science senior leadership experience to quantify.
And we are excited to have Patrick on board to enhance our leadership team and allow me to identify strategic opportunities.
And evangelize next generation protein sequencing technologies.
Demonstrating the potential and high profile projects.
Thank you Jonathan I am honored to help lead this impressive company into the future of next generation protein sequencing. During my past appointments I led the acquisition product position and market introduction of many new technologies from bench top flow Cytometer, So ultra sensitive single molecule.
The accounting proteomics instruments and kits.
All of these have had a common thread instruments with reagents and software working in concert to deliver in a unique way solutions to some of the most challenging problems in research and drug development.
I emphasize product Ization, because a big challenge for any technology company is to transition their technology into a product introduced it to the market and drive adoption.
That's exactly what I have done throughout my career.
And now I joined the talented team that has deep experience developing nextgen DNA sequencing instruments and are applying their knowledge and skills to protein sequencing.
They've done it before and are doing it again.
Deeply impressed with the level of talent here.
Quantum ESI digital Protium. This platform is powered by Nextgen protein sequences and single molecule analysis. It has the potential to unlock a deeper understanding of the proteome, which is the collection of proteins.
And there are variations that are associated with health and disease.
<unk> Nextgen DNA sequencing fuels, new understandings in genomics and gave scientists insights into what might happen to an individual during their lifetime.
Thomas of Nextgen protein sequencing is to tell scientists and ultimately clinicians what is happening now.
Proteins, turning on or off increasing or decreasing in their levels of expression and importantly, being modified in ways that drive all of life processes from conception to death and have a profound impact on health.
That's why over 90% of today's pharmaceuticals target proteins.
I've dedicated my career to the pursuit of solving the most difficult challenges in drug development.
The current processes are too slow and too expensive.
On average it takes 10 to 12 years and an estimated $1 $3 billion spent per drug developed.
And about half of the approved drugs in the last several years are not first in class, which means no new or unique mechanisms of action.
In order to develop better drugs faster, we need to find new mechanisms of action, we need to find new proteins to target.
Digital proteomics with Nextgen protein sequencing and our associated single molecule technologies have the potential to find novel protein targets and helps develop new drugs.
Unmet medical needs.
I am excited about the quantum of <unk> technology to bring the power and scalability of a semiconductor chip technology to this field.
La and help answer questions in proteomics that had been too difficult or expensive to answer using past approaches.
Vision in the next coming years climate size next generation protein sequencing technology, finding its way to the center of the digital proteomics ecosystem with a wide range of applications in upstream protein sample prep approaches.
And downstream analytics as part of that ecosystem.
Im eager to start building this ecosystem with our first launch this year.
Again, I'm honored to be named President and CEO of quantum ESI I'll work closely with Dr. Jonathan Rockford and the rest of the team as we build a dynamic transformative company.
Back to you gentlemen.
Thank you Patrick.
We're off to a strong start.
In 2020 to Pat.
Patrick the team and I are focused on launching in the second half of this year.
I continue to think systems go for launch.
On the operations front, we are executing well on our supply chain readiness commercial build units from our contract manufacturer.
With regards.
So semiconductor chips, we successfully completed the tech transfer to a garden as a reminder, this is louis.
Chip Assembly and packaging.
The facility that we brought in house through the acquisition.
Q4 of last year.
We are scaling up our chip production capacity.
Future years.
Yes.
In addition, we are preparing to launch our library prep and protein sequencing consumables by working closely with multiple.
Well reagent vendors and placing advanced orders for key components.
These consumables are some of the most complex the industry has produced.
And I am heartened to have both a great internal team as well as a group of vendors we are confident.
During Q1, our head count increased by 22 to 175 employees.
Thanks to our ability to attract and retain best in class talent as well as significant investment in R&D.
Accelerated our application and instrument development activities.
What we are doing that unique what we are doing is game changing what we are doing will affect all aspects of life Science research and human health care.
On the commercialization front.
We are establishing a sales funnel for more than 500 advanced leads and growing.
Our marketing team has a robust business development plan, which will include attending several industry conferences in the second half of the year.
Among other strategic initiatives.
We will announce specific events in the coming months.
One of our goals over the next several months is to continue to release White papers and application notes, describing the technology and demonstrating our single molecule protein sequence in the context of the most common workflows our customers use.
Every day.
To be successful, we understand we must fit into how people work today.
To this end, we recently released an application note demonstrating the use of quantum edge size platinum sequencer to interrogate variance and beta amyloid.
Approaching the key pathological and clinical significance and the progression of Alzheimer's disease.
Information on our products technology and applications can be found in the newly created resources page on the quantum MSI website.
In addition to these initiatives we continue to support our early access partners as they validate system performance and prepare to initiate your own research projects.
I will now turn the call over to Claudio to review our financial results.
Thank you Jonathan Hello, everyone.
Discuss the details of our Q1 2022 financial performance.
Research and development expenses in the first quarter of 2022 were $18 8 million compared to $8 million in the first quarter of 2021.
The increase in R&D expenses was primarily driven by the increased number of employees.
Stock based compensation expense and product development activities.
Selling general and administrative expenses in the first quarter of 2020 to $8 4 million compared to $3 8 million in the first quarter of 2021.
Costs related to being a public company.
In aggregate total operating expenses in the first quarter of 2022 or 20.
$27 1 million compared to $11 8 million in the first quarter of 2021.
Net loss for the quarter was $35 2 million compared to $11 8 million in the third quarter of 2021.
Adjusted EBITDA was a loss of $27 4 million compared to a loss of $11 1 million in the first quarter of 2021.
A reconciliation table of adjusted EBITDA to GAAP net loss is provided in our press release filed earlier today.
As of March 31, 2022, we had $434 8 million in cash cash equivalents in marketable securities.
The balance reflects $11 $5 million in unrealized losses, and marketable securities we recorded during the quarter.
We believe that this cash position can support our operation through the year 2024.
Finally, we expect GAAP operating expenses to grow up within the range of 70% to 80% in 2022.
I would now like to turn the call back over to Kevin for closing remarks.
Thank you Claudia.
In summary, I am excited to pass the day to day operational leadership of the gifted operations commercial research techs.
Technology and software teams to Patrick our new President.
And CLO.
I'm focused on driving the company's strategy and identifying exciting projects to advance july's and bring to the world of technology that will transform life Science research and ultimately help save the life of someone you love.
We have made substantial progress towards launching the world's first massively parallel next generation protein sequencing system.
<unk> please open for questions.
Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason like Jeremy that question. Please press star followed by two again to ask.
Good question Press Star, one and as a reminder, if using a speakerphone. Please pick up your handset before asking your question.
Pause here briefly ask questions are registered.
Yes.
Our first question comes from Kyle Nicholson with Canaccord. Please proceed.
Hey, guys. Thanks for the questions.
Welcome to Patrick good to have you onboard.
We are nearing the launch here it could be here that the second half target remains in place I'm just kind of wondering if it's safe to assume that your sales funnel continues to expand throughout the first quarter I heard the commentary, but I just wanted to know if it's continuing to.
To this day I guess.
Way to frame that might be talking about like how many of the I guess 500 breast leads that you want to basically convert in the first maybe year or so post launch.
And I think like Big then there would be any kind of modifications or optimizations that needs to be done to the platform before the full launch later this year.
Thanks.
Great Great question as you know we've gone through this before.
And we watched.
College, you drive DNA sequencing, which makes sense because cancer is a disease of your genome and we're now seeing with long COVID-19.
And immunology and immuno oncology.
And intense desire to understand what's going on in the proteome and that makes sense, because the majority of complex diseases or diseases of the proteome.
As mentioned the majority of drugs target the proteome.
At this point, we don't have quantitative measures to.
To give you in terms of the interest.
But as a general rule, we're seeing the tens of thousands of labs.
<unk> next generation sequencing.
We are now ready to answer questions at the protein level here.
Historically, they have to do this through a surrogate sequencing RNA.
Now there is a moment, where they want to access proteins, but it's slow and cumbersome with mass spec, which either needs.
Core facility or intensive experiments.
And have a $1 billion plus of capital. So interest continues to be driven because we are behind.
<unk> wave of organizations moving from DNA analysis, and now seeing that the next step and all of their projects, whether it's drug development or biomarkers.
Our focus on understanding the protein problems that DNA work has elucidated. So thats 500 strong funnel is growing and it's growing because the world is shifting.
And all of those positive demographics.
Are driving us.
The other competing technologies or analog and people are realizing it's not about whether youre approach unit, there, which you can do by MLS technologies, but its how that protein is being modified.
Of those 25000 proteins can be modified and over a million different ways. So right now it's really about.
The world shifting from studying genes from using RNA as a surrogate for protein and having an urgent need, especially with COVID-19 and immuno biology understand proteins.
Okay that was great. Thanks, a lot Jonathan also answer.
So I actually I noticed that youre going to be watching now it's confirmed with the <unk> chip with 2 million wells.
Now you, obviously down by <unk>, but just what application projects or are you confident that this.
And chip will allow users to conduct during these early stages of commercialization and I know this is Doug and I touched on before but again now that you've confirmed the the density of the chip we can kind of like now drill down on these applications that youre looking at.
Thanks.
I love the questions and again I'm, drawing on analogies with next generation sequencing and right now at launch.
<unk>.
The ideal match for us as people, who are focused on five to 50 proteins.
Over three to four orders of magnitude in terms of concentration range.
These can be questions.
From blood.
Cerebral spinal fluid.
Coming off your chromatography columns, but in most cases there are panels of proteins. For example, if youre interested in cancer drug development work on the <unk> pathway, you want to hold down those 50 proteins and see if there are new proteins or modifications of the proteins. So very targeted.
I looked at the company as to Venn diagrams are two circles are a venn diagram coming together, what the world wants to do in proteomics and what we want to do all commerce any problem throw it on the chip and get an answer and what we can do now.
Small problem, 5% to 50, but I can tell you in the same way that when we worked on next generation sequencing, but people who framed the correct questions got great Grant.
Amos discovered new biology like small RNA.
And the same thing is going to happen now because we can see single molecule modifications that no one else can see.
There are fragments of proteins that fly the wrong direction or mass spec, so people, who ask focused problem.
Whether they're an aging.
<unk>, our COVID-19 will be able to get answers that will transform their work in terms of biomarkers are drug mechanism of action, but it is targeted again general protein sequencing.
Got you what focused problems.
Five to 50 proteins and this translates into the us.
Are those 2 million wells in the same way next generation sequencing at first with <unk>.
Driven by price at distribution. So we will be happy when you get 200000 to 600000 reads give you great statistics on 55 to 50 or 100 proteins over that three to four magnitude of concentration difference, but we recognize that people will break plays on Jos.
Like they did with DNA and the 2 million chip is only the start so focused problems and I promise you investigators working with US will get famous will get grants will get drugs and biomarkers that absolutely will save the life of some of your block.
Okay perfect.
Sticking with kind of applications capability is actually I'm, just thinking about like post translational modifications.
I know that you have a lot of confidence that the climate <unk> platform is scalable with respect the pts relative to maybe some of the other next gen potency with the accompanying at that.
Generally leverage of four <unk>.
Invitation.
I just wanted to ask you what drives that.
Confidence level of yours, Jonathan and maybe is that due to the kinetics or something else given.
The underlying technology platform.
I Love the question. So when you do DNA sequence you have to have a.
Platform that can distinguish for thing ADC GT.
We have a platform.
That can distinguish.
<unk> plus things.
We're watching the kinetics of our binding events.
And so why don't I have confidence as we can see a single out a single oxygen change on MSI amigo.
Amino acid when it's next to one of our recognizes now what that means is when we first start we will have trained the system to recognize the most common and most important post translational modifications which are.
Correlations of tyrosine or CRE on three and eight.
And potentially come in quite constellation. However, when you look at post translational modifications you realize that there may be as many as 50 types of modifications.
And so what we'll be able to tell people with confidence as often we will see those modifications, but until we have a proof or a truth set you may follow up with Matt stack will be able to tell you by the way you of an important modification in this sample versus that sample, but we won't be able to do.
Identified all of those without training so I have confidence, we'll see the modifications and confidence together over the next few months, we will start training the systems to understand more again 25000 genes code for protein.
But probably over a $1 million proteome forms will be able to see those protein forms while analog technologies cannot because you kept half a million different reagents.
And over time artificial intelligence, one only see them, but we'll identify them like we're able to do for common phosphorylated. Your common modifications. So this is a learning platform.
A powerful platform and not only single molecule, but literally examples of single Adam modifications.
It's really an exciting time and I know crazy things like understanding the protein degradation or the protein modifications and aging will be uncovered by this platform again can't answer all problems day, one just like you couldnt with DNA sequencing.
But we have Moore's law.
Investigators that focus on key differences.
In samples and have enrich those samples for tens to hundreds of protein are going to make biomarkers and drug discovery that will be profound and unacceptable.
Dark matter by other technologies.
Okay that was great and then maybe a question for Patrick on the Hill.
What kind of commercial strategy.
I mean, this is sort of touched on a little bit in the prepared remarks on what type of like initial projects or sales team training that has to happen before launch.
In order for you guys to hit the ground running.
Yes.
Thank you for the question, it's a great question.
For us to hit the ground running.
We need to obviously understand.
It really place the technology with the key applications in that Ben diagram that Jonathan was talking about.
And so in doing so.
Certainly training training the sales team.
Around those those technology application areas, but also working closely with the customers as well.
We're driving adoption of the technology.
And so that's that's really key as we go as we as we go through this process one of the things that we also need to do is target.
For example, academic researchers as well as pharma and biotech and they'll have different needs for example.
In academic research.
Youll be able to develop more closely with the researcher particular application and application areas. One of the things that we're doing from a commercial market development perspective.
Perspective, as we will be announcing soon that will attend.
Trade shows in the last half of the year generating more and more interest and and of course more and more leads.
So a lot a lot of activity will be happening.
We're out throughout the year in terms of getting us ready for commercial launch getting our sales organization.
Ready and also working closely with customers.
Got it okay. That's awesome. Thanks, a lot for that maybe just a final question on supply chain, obviously super topical right now and the commentary earlier was it was pretty positive in my opinion.
I just wanted to ask Jonathan.
You have enough inventory currently or are you still kind of building that I wasn't quite clear on like from the remarks, I just want to understand little bit better.
Great question and Mike Mccann, There has really been key on that Mike has worked with me for a number of decades.
Issue so on the supply chain.
I hate to say it but we're all like the people, who hoarded toilet paper and the beginning of the pandemic, we literally have gone through 500 item.
Part Smith.
Our platinum platform and stockpiled.
For this year and next year to meet any.
Demand, we're doing the same with key reagents.
Worse.
Creating and stockpiling.
<unk> so on the supply chain. We're ahead of the game we have been ahead of the game.
Second part of the equation is the assembly.
We are seeing in the entire world is seeing both the supply chain issue as well as the labor issue.
So we're working closely with our suppliers to make sure. We don't just have the parts, but we're actually having them deliver now fully assembled units. So we're ready to meet that demand and in some cases and you've seen this with US we are verticalizing. So there wasn't enough capacity.
So for example to dice wafers.
And Mount them into chips. So we bought our supplier and have transferred our technologies. There some of that virtualization may happen in other of our sub assemblies, where we have to take over the good news is Patrick has done this before Mike Mccann has done this before I've done this before.
So we're getting ahead and I'm quite confident we have both the parts and the ability to put things together and shipped them, but it has been a huge labor and it's been going.
For the last 15 months.
So great question, we're ahead of it.
Is a different type of activity than we've ever had to do before because now you have to stockpile. There is no such thing as just in time inventory anymore.
Great. Okay, Yeah, that's fair encouraging them to say the least Tom So I'll leave it there. Thanks. Thanks again guys I appreciate it.
Okay.
There are no further questions waiting at this time, so I'll pass the conference over to the management team for any closing remarks.
Thank you all for your participation today, we look forward to updating you on our progress in the next quarterly earnings call have a good evening.
That concludes.
<unk> the quantum inside Q1 2022 earnings call. Thank you for your participation you may now disconnect your lines.