Q1 2022 Singular Genomics Systems Inc Earnings Call
[music].
Good afternoon, gentlemen, ladies and gentlemen, and welcome to the singular genomics first quarter 2022 earnings conference call. At this time, all participants have been placed on a listen only mode and we will open the floor up for your questions and comments after the presentation. It is now.
My pleasure to turn the floor over to your host.
Philip Taylor, Sir the floor is yours.
Thank you operator, presenting today are singular genomics, founder and Chief Executive Officer, Bruce <unk> and head of finance genuine meter.
Earlier today singular genomics released financial results for the three months ended March 31 2022.
A copy of the press release is available on the company's website.
Before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today May 10, 2022, only and will include forward looking statements and opinion statements, including predictions estimates plans expectations and other information.
Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and our filings with the Securities and Exchange Commission.
Our SEC filings can be found on our website or on the SEC's website investors are cautioned not to place undue reliance on forward looking statements. We disclaim any obligation to update or revise these forward looking statements. Please note that this conference call will be available for audio replay on our website at singular genomics.
Dot com on the events page of the news and events section on our investors page with that I will turn the call over to CEO Bruce <unk>.
Hello, and thank you for joining singular genomics first quarter 2022 conference call.
My prepared remarks today will touch on a few key areas.
A brief reminder of our mission commercial progress and opportunities partnership activities and our newly published sequencing data and applications note and progress on our product roadmap.
Lastly, I'll provide a brief preview of what you can expect from singular at ADT.
Garrett singular genomics, our approach has always been to prioritize the needs of our customers into advanced sequencing to meet their needs. This philosophy remains at the forefront of how we think about our technology our products our business and how we pursue our mission to accelerate genomics for the advancement of science and medicine the <unk>.
Incredibly talented team of scientists engineers operators and commercial staff that singular are more focused than ever to execute on this mission as we are about to commence our first customer shipments later this quarter.
The <unk> is the most powerful fastest and most flexible desktop sequencer available today. It can produce more data output per hour than any other competitive system by a significant margin.
<unk> offers unmatched speed also leading peers by a significant margin.
Speed of our novel rapid SBS chemistry developed in house is a fundamental differentiator of our technology today, and our technology roadmap going forward. The <unk> flexibility is unmatched each of the four flow cells offers for individually addressable lanes no other offering comes close to providing.
This level of flexibility and modularity, which allows customers to scale up or down to optimize their sequencing run capacity they need in.
In addition to these fundamentally differentiated performance metrics. It is imperative to deliver gold standard accuracy and data quality now with seven external preproduction units placed in third party labs over the past year. The <unk> has consistently demonstrated industry gold standard accuracy levels of up to 99, 9% for Q30.
For 75% to 90% of base rates.
Core to our mission is to provide industry, leading performance at attractive pricing.
We provide direct cost savings across the pricing spectrum in terms of cost per gigabit cost per read or cost per experiment, depending on the setting and customer profile to sum it up compared to other competitive systems that <unk> can achieve a data output rates that is two to four times higher over two times faster run times unmet.
<unk> flow cell in 16 lane flexibility gold standard accuracy and highly competitive pricing.
For customers. This combination will enable new more desirable workflow patterns through daily runs flexible run sizes and simultaneous run type variation. It can also replace several alternative or redundant sequences and enable applications limited by pooling our bashing.
This is a value proposition, we are proud of and excited to bring to market.
Turning to our commercial progress we continue to build our sales funnel and have added to our system order book since the last earnings call held in March.
Shipments of the <unk> system, and <unk> flow cells remain on track for this quarter interested interactions prospective customers is accelerating our robust engagement with potential users across end markets reinforces the exciting opportunity in front of us.
We are actively scaling our commercial team, adding experienced sales reps and customer support personnel in key regions around the U S in anticipation of serving our customer in future installed base.
Offering a premium user experience the critical component to our growth strategy. We are continuing to push forward with our plans to scale the team through 2022.
We are also offering customers the ability to engage with our technology through our in house customer care lab. This offering to prospective new customers as a courtesy service to help validate customer applications on <unk> for the sample optimization and testing in advance of purchasing we intend to increase the capabilities of this lab and offering over time in la.
With customer feedback and demand.
I would now like to share more information on how we are qualifying the commercial opportunity in the field and describe how differentiated G. Four attributes allow us to segment major customer groups and key applications to best serve their unique needs.
As we think about our target customers three profile standout academic core labs clinical and research commercial labs and emerging growth labs.
I will go into detail on how the G four positions well within these three profiles.
Number one academic labs.
These labs are often serving multiple pies and run a wide range of applications with different requirements, including RNA seek single cell targeted panels exome and whole genomes. They often don't have a steady flow of experiments and our more highly price sensitive given grant funding constraints the flexibility of 123 or four.
Flow cells, each with individually addressable lanes, coupled with a 19 hour less run time is ideal for their needs for flow cell flexibility to scale up or down to accommodate changing volumes that allows them to optimize sequencing run based on the needs of their applications and experiments with significantly faster turnaround time alleviate the.
To wait and batch like sized samples are run.
And we can offer favorable pricing across all of you for consumable kits down to single digit dollars per gigabyte for many of these users.
Number two clinical and research commercial labs.
These labs consists of small and large commercial organization utilizing both clinical and research sequencing applications, such as targeted panels RNA seek exome and rapid whole genomes.
Applications in this setting are often in the form of validated lab developed tests or <unk> in our CLIA lab.
The <unk> fits well into these routine sequence the environments, where turnaround time has constrained the flexibility of the platform alleviates the need once again to wait in batch lifestyle samples or run the power in terms of gigabit throughput combined with attractive pricing provides a more scalable solution relative to other bench top offerings in this segment.
For a number of clinical and commercial labs. The G. Four serves as the first alternative option for those currently using high throughput sequences.
Number three emerging growth labs as we have noted on prior calls the amount of capital that has flowed into healthcare over the last two years is more than the previous 10 years combined a significant portion of that capital is making its way into new company creation and businesses that are built on Ngls. These companies are running both research and clinical LDC.
Based applications. They are looking for a sequencing provider that can scale up with their needs over time in a cost effective way they don't want to spend $1 million in the piece of capital equipment. The <unk> four can scale up with their sequencing needs over time, providing scalable throughput options comparable to instruments ranging from my seat through next year.
All the way up to <unk> SP or S. One.
Similarly, providing high throughput level volume and pricing on a bench top sequencer.
We realize there are considerations beyond the power speed and flexibility this factor into customers' purchasing decisions for some labs largely academic core lab cost are among the most important consideration given funding limitations, our pricing strategies provide attractive economics for all users across the pricing spectrum cost per gigabit.
Cost per lead and cost per experiment.
We believe it's important to look at pricing beyond simply cost per gigabit.
Oftentimes pricing comparisons are quoted solely in the context of the highest number of cycles on a 100% fully utilized both cell. This is often not what happens in customer labs full flow cell utilization is not always practical based on customers' sequencing and application needs required turnaround times in sample flow.
As a result customers end up paying more for their run Alternatively, the wait days, if not weeks to batch samples and run only after a flow cell is more fully utilized.
This is not practical for many customers the G four scales down cost efficiently due to the foreclosed on modularity.
This alleviates and efficiencies from both ends reducing the need to wait to pool samples and reducing the need for low cost low utilization because of this all customer types low mid and high volume users can realize cost savings with the G. Four through operational efficiencies.
Information, we believe the <unk> for the superior sequencing platform in terms of core kpis with favorable pricing and strong value propositions and some of the largest and fastest growing markets.
Now I'll turn to our recent highlights and partnership activities.
Integrating with customers existing workflows as a plug and play solution has been a priority.
<unk> already made significant progress with nine partners previously announced included some of the most widely used library prep providers, we continue to expand our partner network to work with innovative and collaborative companies to accelerate our mission.
As such we are excited to announce that we've entered into two new partnerships with library prep solution providers.
Okay.
Next I'll provide a few updates on our recently disclosed <unk> sequencing data and application note. If you recall from our last quarterly earnings call we highlighted a.
Cohort, where the <unk> demonstrated state of the art accuracy and whole human genome sequencing. We're pleased to expand the portfolio of available data and share some of the highlights for our most recently published application note to further demonstrate performance and versatility of the <unk> and one of the most wildly run applications RNA seek.
The study covered RNA samples on the <unk> four compared to aluminum and exit 2000 samples were individually loaded onto different flow cells on the <unk> to highlight the sequences reproducibility, both within the system and compared to the next week. The <unk> processes on a library is using to buy 100 based care sequencing each sample produced $25 million.
For RNA Zeke analysis for both the <unk> and the <unk> 2000.
The overall comparison with nearly identical across all secondary RNA seek analysis metrics substantially and that the <unk> meets customers' needs on quality and accuracy, coupled with the potential to produce results at a much faster rate given the shortest sequencing run times.
In addition to our progress on standard sequencing applications, we continue to make headway on our specialized applications kits HD seek for Vera variant detection and extended rate sequencing or Src.
We continue to advance our development of HTC and are now demonstrated greater than 250 accuracy impaired reached 150 basis formats with greater than $100 million reads per flow cell.
We recently published the technical paper on Src novel Library Prep method to enable longer molecule reconstructed from standard peered read 150 basis cycle data.
The study demonstrated now this technique can be used to reconstruct one to three kilobase long fragments from short read technology. We believe it has the potential to fill unmet needs in areas such as immunology for therapeutic antibody and T cell discovery protein engineering and vaccines for infectious disease.
We expect the XR seek method to aid in the characterization of complex DNA libraries with high accuracy and throughput ultimately expanding the utility of the G. Four.
Transitioning now to the PX system, we are assembling our first beta instruments. Now later this year, we are planning to open a technology access program or tap.
Early PFS collaborators the capital offer early customers and thought leaders the ability to collaborate with us to develop assays and application in advance of the commercial launch in late 2023.
Turning to <unk>, we are looking forward to meeting in person at the conference in June we anticipate having a <unk> system onsite for demos hosting kols discussions in networking events, showcasing new technical development and application nodes and providing additional data and highlights from our specialized application chips.
In addition at <unk>.
We are excited to provide a sneak preview of one of the disruptive innovation that our development team has been working on the Max re flow cell.
We believe the Max rate flow cell will redefine how customers think about cost and flexibility for short reach applications in the $30 to 100 base to arrange a configuration that is applicable to applications such as short recounting for an IPG proteomics and single cell RNA seek.
And one final note as highlighted last quarter, we launched our scientific Advisory Board. We recently issued a press release, noting a distinguished group of academic and industry experts on the David.
David Barker Laurence von David Ledbetter, Elaine Mardis, and Daniel Shoemaker, we are thrilled to work with this exceptional group of industry thought leaders, who advise on the companys product and service offering and R&D pipeline.
With that I will now turn the call over to Dylan to go over the details of our first quarter financial results and operational progress.
Thank you drew.
I'll start by covering the Q1 2022 financials and then provide brief remarks on our operational progress, including our infrastructure build out and manufacturing capacity planning to support future growth.
Operating expenses for the first quarter of 2022.
Total $22 million compared to $10 3 million for the first quarter of 2021.
These totals included noncash stock based compensation expense $3 6 million in Q1, 2022, and $1 1 million in Q1 2021.
The year over year increase in total operating expenses was driven primarily by our product pipeline and R&D roadmap scaling head count and infrastructure to support the <unk> launch and the costs associated with being a public company.
Net loss for the first quarter of 2022 was $22 million or <unk> 31 per share compared to $23 $9 million or $2 <unk> per share in the first quarter of 2021 the.
The year over year decrease in net loss and net loss per share was driven primarily by the change in fair value of convertible notes and warrants in Q1, 2021, which were converted to common stock with the IPO and no longer outstanding in Q1 2022.
This was partially offset by higher operating expenses as previously noted.
In addition, the year over year decrease in net loss per share was driven by the increase in weighted average share count used to calculate net loss per share because of the common stock issued in connection with the IPO.
Our weighted average share count for the quarter used to calculate net loss per share was approximately $71 million.
Ending cash cash equivalents and short term investments, excluding restricted cash totaled $316 million.
Looking ahead through 2022, we continue to expect investment across the business to increase as we scale up manufacturing at head count in sales customer service and support and marketing and progressed, the product roadmap and future innovations and R&D.
We expect our Q2 weighted average share count used to calculate net loss per share to be approximately $70 million.
Turning to commercial we are encouraged by the progress our sales team is making in developing the sales funnel. We're still early in our launch and we will plan to share more information. After we have begun to ship products and have more visibility into how the sales funnel is transitioning to orders.
We are scaling our manufacturing head count across both instruments and consumables in line with anticipated production volumes.
We believe that our dedicated manufacturing site in San Diego is sufficient to meet our capacity needs for the near and medium term.
We expect our longer term manufacturing and lab space needs will be accommodated with our new 78000 square foot headquarters facility.
And finally, we are pleased with our history of execution and progress to date.
We've always been capital efficient than.
Since inception, we have raised approximately $450 million and have spent less than $140 million.
We remain well capitalized to support the <unk> launch activities with $316 million of cash and investments on hand, our existing resources, our forecasted is sufficient to support our activities over the next three years.
With initial orders in we're ramping up our commercial organization and will continue to make the necessary investments to support our commercial goals and scale the business.
Thank you and back to Julia for closing remarks.
Thank you Dylan.
We continue to advance the technical capabilities of the <unk> four with expanded library provided integration improved accuracy and advanced specialized applications to further differentiate it as the most versatile and powerful desktop sequencer in the market.
Our actions with current and potential customers across end user profile indicate the G. Four provides compelling value beyond the alternatives. We are excited to leverage the customer care lab to advance our increasing funnel opportunities and continue to grow the order book.
Fourth positioned favorably in this large and growing market.
Singular genomics is in a great position, we are well situated with two differentiated technology platforms, well funded with $360 million of cash and investments providing roughly three years of runway for us to scale, our operations and products execute our exciting technology roadmap and generate valuable customer relationships in.
In the near term, we are laser focused on getting <unk> for manufacturing scale and identify market segments and customers, where the <unk> offers a differentiated value proposition.
Our exceptional team continues to execute across the organization. We are on track to commence our first customer shipments later this quarter and we're confident that those early customers will get real value for their investment and we'll have an exceptional customer experience as they put our platforms to work.
Joining me for Q&A, we have Eli Glazer, founder and CSO and Dale and meet our head of finance now, let's open it up for questions operator.
Thank you ladies and gentlemen, the floor is open for questions. If you have any questions or comments. Please press star one on your Touchtone phone pressing star two will remove you from the queue should your question to be answered and lastly, while posing your question. Please pick up your handset if listening on speaker phone to provide optimal sound quality. Please hold.
While we pull for questions. Once again Thats star one if you have a question or comment on the first question is coming from Mac Sykes with Goldman Sachs. Your line is live.
Hey, good afternoon, thanks for taking my questions.
Sure maybe I'll start with where you just finished on the customer service parts just given the critical nature of service and supporting the early portion of your launch could you maybe talk a little about the infrastructure that you've put in place from a service and support standpoint, meaning to properly balance in terms of the head count and resources you put towards it but knowing.
The service and support element is so important to the beginning part just talk about kind of the investments you've made in the plan that you have for that.
Yes, absolutely happy to.
So early on with an initial launch it really is bringing multiple parts of the organization together. So we've tried to get ahead of it.
By hiring and building out a dedicated <unk> team, but largely it's a collaborative effort with R&D to really bear hug the customers the early ones and another component of that is.
Sample testing and what you heard on the calls we're setting up a customer care lab, where we can scale that so for your first handful of customers you really want to make sure you understand their assays you understand how they're going to use the sequencer you do Apple testing in house first and you work with them to make sure that once you dropped the box in they're going to get the <unk>.
Expected type of data quality and results that they're expecting.
<unk> done yourself in your own lab and within that whole process. You are building out the customer sales and support infrastructure, which is that's a yes, a technician to really shadow closely. The first few units to make sure that we can absorb all the learnings we need to kind of learn and iterate forward, so taking a step back.
This is something that has been on the forefront of our mind for quite some time doing the last Europe EAP sites and placing these units gave us a number of really good learning experiences and we're taking those learnings forward to build out a dedicated personnel to kind of handle and scale of that but it's very much something that.
You have to take head on and it's going to be more work for the first few up to dozens of systems.
As we start to learn kind of what it all looks like what customer service looks like understanding the nature of the early technology in third party hands. So we feel like we're very prepared but its definitely a focus area for us.
Got it thanks very helpful. And then just two quick follow ups I'll ask them upfront step back in the queue, but it sounds like we'll get more color later, but just anything you can give us on order backlog and sort of the early stages.
This quarter would be really helpful or at least maybe some feedback that you've gotten from customers and then secondly, you talked about the emerging growth labs.
Totally appreciate the level of funding that we've seen over the past couple of years, but looking forward. It seems like a different environment and maybe cost consciousness might be a little bit more on the minds of these types of customers. How does the cost element and value proposition of <unk> resonate with these customers that have that has that come up in conversations with those customers. Thanks very.
Much.
Yes.
Good questions I guess I'll take the first one which is which is kind of the short answer is we we added to the order book.
We're not providing guidance yet, but at the time, when we're able to with confidence provide more color around things like order book and installs. We absolutely will it is still early for us in terms of the emerging growth segment specifically.
We directly havent heard or seen too many people that at this point or.
Rethinking purchasing decisions are rethinking.
Their investment into their own businesses to advance their science and I think that it's going to take some time.
Let's step back to the figure that we quoted on the earnings call.
Just a few moments ago, the number or the amount of capital that's flowing into the space over the last two years.
Lot of that still need to be put to work and people are going to need to spend that capital to advance.
Our efforts internally.
That being said I think we're going to have to be adaptable.
To how customers want to step into a new technology spend money and that might be different solutions that might be.
Reagent rental it might be a capital lease.
It might be just having to walk people through and show them, how this real cost savings holistically.
With one of our sequencer and their specific use case over the alternative but the need still there and these companies are well capitalized they're going to have to invest in it and a lot of that investment is going to need to be in sequencing to advance their own efforts.
Great. Thank you.
Okay. The next question is coming from Michael <unk> with Bank of America. Your line is live.
Great.
Thanks Luke.
Thanks for taking my question guys.
Following up on the previous question I want to start with.
Evaluation process for some of these customers that theres been some preliminary data published you've got your own data sets out there comparing the G. Four with some comparator systems, if I want to go through the process that you or your customers and your potential customers are going through.
When they are when they're making that purchasing decisions can you just walk us through the process.
Data points are they looking at sort of how long does that validation process.
And so it was just if you could give us some case studies of that thanks.
Yes, so it really does vary by customer type.
You're talking about kind of academic labs.
It's going to be a longer sales cycle and in general, there's probably going to be more back and forth over a longer period of time to really make sure that you have buying.
Academic course, typically have a budgeting cycles and you really want to start conversations early and get ahead and know who had budget for a new system and really have a more tailored approach to engaging and bringing them forward.
And for the academic course cost is really a big part of it. So you have to understand the nuances of their applications you have to walk them through how they would use the applications on your system youre going to have to provide data, whether it's publicly available or other data.
It's all publicly available yet that we would engage with the customer and really get them confident that the system can perform and once theyre confident the system perform they are going to have to see a cost savings.
<unk> to alternatives typically now theres, some academic cores that have specific value propositions, where the speed of the flexibility specifically makes it very different dynamic for them to purchase and again those are where we want to for a large part focus our efforts places where our competitive advantage.
Really highlights the need to adapt our system versus others.
As we're thinking about other customers, whether they are emerging growth customers are or commercial labs, typically with the private entity. Its a quicker buying decision, but there's still that hurdle, where you need to get them comfortable to sequencer is going to meet their needs. So we offered and we will continue to offer sample testing as needed and thats something that again.
Was not a surprise or a reaction where kind of building in that infrastructure to have capacity to test samples at high volumes for our highest number of customers now of course, we hope that you qualify on your customers and understanding who the.
High potential buyer, if you do spend the time and work to validate those samples versus somebody who just wants to see free data, but thats part of the engagement process that we're trying to make sure we improve that so long story short it really varies some customers are very quick there is a new technology. That's in the technical paper I know the team I want to be.
Bye.
And then those people all over the spectrum from that very quick decision that doesn't meet us all the way to the customer that needs. Many many months of education of interaction of testing samples to the point when they get to a buying decision.
Okay, Alright thats helpful.
A follow up on that if I may.
And the last couple of months, obviously, there's been a lot of noise by some existing competitors buy some new competitors with product.
Entry into the market I'm, just wondering on some of the products that are already on the market and some of those products. For example, what chemistry X that's projected to be a future launch at some point right and you have your own <unk> flow cell at launch and then there's the F. Three.
So I want to ask about future innovation.
How much does that come into conversations when you're when you're discussing.
But.
The G four with customers.
As a selling point on the <unk> or is <unk> something that has to come into play is the timing on that.
Still unchanged by end of year, and again sort of as you're going through the comparisons are you comparing with existing staff with future staff just sort of.
Level set where the discussions are from a chemistry and from a consumables perspective. Thanks.
Yes.
Sure.
Good topic, there was a lot of.
Some questions in there I would say again it varies based on customers some people.
Look at the <unk> and the <unk> right now and Theyre comparator is a key one of our <unk> and if youre looking at in <unk> versus <unk>. It's a very simple buying decision, it's going to be much cheaper on a cost per year cost per gigabit, that's going to be faster and more flexible and it's scaled down there are other users that are using <unk> and they are really at the high volume.
You said <unk> of the next week or users or potential customers that are using the low end of the <unk> for those customers. They really do want to wait and understand.
<unk> going to be on time, that's really how I want to use the sequencer and then within that subset of customers some are willing to.
Get in line early and know that the roadmap is going to be there and others.
Candidly Sam you want to wait till you Havent have three and then we're a customer.
I think the roadmap is actually very important.
There is going to be continued competition in this space in terms of your question on chemistry, we still don't really know enough to kind of handicap, where or what that means, especially for our segment, which is really bench top kind of mid to low end or the high throughput I think the rumors that we've heard and again there are simply rumors as the Chemistry Act.
Likely makes its first appearance at the very high end, which again is not our target market, but back to the question on roadmap absolutely.
Ability to continually push our cycle times faster on our run times faster and to push the density or the throughput of our system.
Higher are top of mind, and we certainly intend to continue continue to improve on those metrics over time and then the last part is we still are on track for an F. Three launch in Q4. This year. So everything is on track in terms of the product roadmap for the near term.
Great. Thanks, so much I appreciate all the details there.
Okay next we have John <unk> with UBS Your line is lifetime.
Good evening and I appreciate the update on the sales funnel. The company had previously highlighted that revenues are recognized so after <unk> completed the installation and validation, yes, it sounds like youre going to be shipping units in the second quarter should we expect revenues from <unk>.
Or is this more of a second half.
Okay.
Yeah.
Yeah, Hey, John this is doing.
Yes, like you highlighted your primary focus right now is shipping placing systems.
In customer labs, getting them up and running.
Just really trying to get as many units out into the field and start driving that consumable pull through.
Like you highlighted on the last call.
Yes. The revenue recognition is going to follow the specific terms and conditions for for each of the orders.
Those initial shipments theres going to be a customary acceptance or validation process that.
We're going to engage with the customer on to complete and thats going to be a gating item for revenue recognition.
It's not uncommon for a new product launch rate longer term, we're going to structure, the Ts and CS to allow for revenue recognition.
Upon shipment, but assuming we're shipping here.
In June that acceptance process, we're targeting to take about 30 days or so it can take a little bit longer and revenue recognition will follow that so that could.
And that triggering revenue recognition on Q2 shipments in Q3.
Yes, I appreciate that and I guess just on the continued build out on the commercial organization any update on the search for.
Head of Chief sales officer head of the commercial organization and continue to build out on that team.
Yeah.
No specific update in that position, we did initiate a search quite some time ago.
And we're in the process right now.
Hoping to have more information on that soon but very encouraged by the existing team.
We previously noted we do have a very strong.
Sales leaders across the country at this point in the <unk>.
Team continues to grow.
In terms of a leader, we're very happy with the quality of potential candidates out there and expect to be moving forward with the CTO position fairly fairly shortly.
And then lastly.
Strong cash on hand, and company has been very prudent on the cash burn.
Any changes just from the update that was provided last quarter and on the burn for this year and outlook. Thanks.
Okay I'll, let Pierre.
Yes, I'll, let <unk> comment on any changes for this year, but I guess I will just add one thing and we were very fortunate to access the market and put a very strong cash position on our balance sheet.
And while we absolutely want to.
Not ignore that the macro situation and make sure that we have as much flexibility as possible to extend runway very much. The next 12 to 18 to 24 months are an opportunity for us to invest that cash into R&D into product into commercial and to really grow our business and further advance our technology. So.
There is a lot of thought that's going into this and we're trying to be very.
Dynamic and really maximize flexibility in terms of the rest of this year I'll, let Dale and talk about kind of how we're thinking about cash.
Hey, John Yes on the last call, we talked about 2022 operating expenses could potentially be about double 2021.
Probably tracking a little bit below that but.
Nothing materially different from our comments there I would just say.
We've always been really capital efficient like we said in the <unk>.
Prepared remarks, we're going to continue to be very disciplined in terms of how we invest our capital we feel really good about our position.
And our forecasts are basically using our existing resources.
Through the next three years, so we feel really good about the position we're in.
Thanks for taking the questions.
Okay next we have Tom Stephens with Cowen Your line is live.
Okay.
Tom's line.
Connected is there any further questions. Please indicate so now by pressing star one on your Touchtone phone.
Once again Thats Star one if you have a question or comment.
Okay.
Okay up next we have Tom Stephens with Cowen Your line is live.
Hi is the landmark now.
You are coming through.
Yes, just to just follow up on John's question. So I believe you said you exited.
Last year was about four T cell to go install whats the target head count this year and then maybe you could maybe give some color on target head count for your kind of services. The team given your kind of ramping through this year.
Yes, sure so I'm not sure I'll have to pass over to Dale on on what we've said for total head count I know, we have said we plan to grow the operations team.
About 100 by the end of this year and we plan to grow the commercial team in that.
Sales support and marketing to about 40% by the end of this year outside of that I don't know if we've guided further on head count the LNG no no that's it.
Tom we ended the quarter at total head count of about 240.
Got it.
That's useful and then just to kind of follow up on your kind of high accuracy coming towards them. So.
Actually the <unk> without that you've also kind of thrown off of this route.
How does that youre kind of Q, <unk> compared to kind of coming competitors and the high accuracy arena.
And why is your kind of key differentiator.
Yes.
It wasn't with us in <unk>.
Answer that.
Yes, Tom the key differentiator there is that we sequence both strands of a double stranded DNA molecule.
And that allows us to achieve not only the inherent high accuracy of sequencing, but also get around other air mode that can be introduced.
By DNA damage by preliminary Smith copying and so on and so it really provides a unique advantage for applications, where you wanted to detect rare variance and really get a true variants that are genomic in nature as opposed to just resulting from library prep steps or just general DNA damage.
Got it.
Thanks for that and then just the last one so given you kind of wrap up your access program. I was wondering if you can kind of give an overall kind of spread of the metrics you saw.
I'll be the seven in total we have about five of them. If you gave any metrics overall, so I think maybe the range of accuracy across the IX as partners and kind of the key learnings from the final to be really helpful.
Yes, so maybe ill provide kind of a few overall metrics and then I'll, let <unk> talk about any additional learnings. It was a very broad set of applications. So I would say if you think about kind of the core performance metrics of sequencing you start with accuracy.
We were consistently at our target.
<unk> of above 75%.
Q34, all of the different applications in fact for a number of them we were quite a bit above Q30.
And I think you have to remember that Q3 is a prospective estimate what really matters is retrospective accuracy and if you look at the accuracy metrics, we had for each of those sites and I believe there is a table on the slide our website, we were consistently above $99 7 million, even at 99, eight which is which is higher than Q30.
For all of the EAP sites in terms of cycle time, there is actually a nice progression, we improved our cycle times throughout the year last year. So, whereas we started with our first few sites. We were closer to four minutes, we were able to get the cycle times down to our target specs, which was under three minutes and that's also.
On that table so.
Accuracy and cycle time or run time consistently within our building spec.
And then the last one would probably be the throughput or the number of reason actually don't have this in front of me I'm talking from memory, but I believe that we also demonstrated pretty consistent improvements actually getting above our spec on the up too. So the F. Two we set our specs rather conservative we had $150 million each per flow cell so across portfolio.
So that $600 million reads and what we're showing on the EAP is is that we were actually able to achieve that.
Not only above $150 million reads, but on some of the piece, we were getting over 200 million reads.
On the up to flow cells.
And I think that that really.
Probably conclude the core kpis are other minor things like in certain lanes and GC bias.
And other things like that that we worked on with the individual partners and I think the.
The fact that we were able to advance several of those to purchasing decisions speaks to the quality of the data and the experience and the confidence they have that it meets their need.
In terms of learnings.
There are a ton of learnings and one of the initial questions on the support component of it was a big one what is it going to take to make sure that the customer experience for our initial users is really gold standard and it is understanding the way the sequence is going to behave it's understanding what onboarding is going to look like in all of those things we've now.
Experience with over the last year, there were definitely some learnings on the actual user experience there were some learnings on the.
The robust reliability.
Of the machines.
One is across the board I don't know if you guys do you have anything specific that you would want to say it is a key learning that we're bringing forward on the machines.
Yes, I would say, we had kind of a general progression and development as we were going through the two beta sites. First then the five early access sites. So we started off with.
Relatively easy applications like RNA seek and then progressed to full a paradigm of 150 reads, but.
Index reads. Additionally, so kind of working through that and putting us in a position where we're comfortable about hitting our commercial specs like drew mentioned that $150 million.
Per flow cell in the half to close out the three fulfill will have double that $300 million.
And then overall run time.
Accuracy.
And some of the secondary metrics that drew mentioned in terms of <unk> coverage.
And certainly that we can handle and the sequencing so yes.
Yes.
Good progression and confidence building throughout that early access period.
Alright, Thank you and just one more if I could tie up so given the recent kind of IP battle between alumina and can be Joe I, just want to make sure you guys use forecast kind of a strange not to color.
And then on that kind of might seek product you have being announced <unk> guidance for the <unk> for the coming PX.
Yes.
First question, Yes, we are a four color novel chemistry that was developed from the ground up internally. So very different composition of matter is different preliminary so is there anything else out there and we actually call. It rapid SBS chemistry, given the fact that we're able to push the cycles. So fast and we actually have a roadmap to go even faster.
And then on the.
Second question.
<unk> is something that really again was born out of.
Deep understanding of how a lot of customers are using sequences and one of the pain points and one of the pain points is essentially that the.
The cost per read doesn't get that much cheaper for short reads versus long reads.
And we saw that as an opportunity if you can deliver lower cost or a higher number of short read at a lower cost you're really offering something differentiated the pinpoint if someone's doing a 50 or 70 basis Reed.
300 base read Theyre, not getting a third of the price for that Reed, it's not even close so how do you allow people to see real cost savings for short reads.
And it's a technology, we're working on and there is actually a configuration that were looking to share technical papers, where we can produce up to about 1 billion reads on a single flow cell for short rates and that.
Dramatically, we will increase the number of short reads that you can do on a <unk> four which we think will be a big differentiator for a lot of the short read applications.
Okay. Thanks, Paul.
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