Q2 2022 Seer Inc Earnings Call
Ladies and gentlemen, thank you for standing by and worked with the <unk> second quarter 2022 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you need to press Star one one I would now like to turn the call over to your host Carrie Mendivil maybe.
Thank you.
Earlier today <unk> released financial results for the quarter ended June 32022.
If you've not received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investor at thier dot by them.
Joining me today from Thier is Amit Birk, Dodd, Chairman, Chief Executive Officer and founder.
David Horn, Chief Financial Officer.
Sudan, President will join for Q&A.
Before we begin I'd like to remind you that management will make statements. During this call that are 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 these risks and uncertainties appears in the section entitled forward looking statements in the press release.
Issue today.
For a more complete list and description. Please see the risk factors section of the company's quarterly report on Form 10-Q for the quarter ended June 32022, and in other filings with the Securities and Exchange Commission.
Except as required by law <unk> disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information and is only accurate as of the live broadcast August nine 2022 with that I'd like to turn the call over to Amit.
Thanks, Kerry and thanks, everyone for joining us this afternoon.
We continue to make strong progress across all areas of our business as we ramp our commercial footprint expand our installed base that <unk> got product suite and work closely with customers and key thought leaders.
As the body of data expense to show you the power of unbiased plasma proteomics at scale.
We're driving our research and development roadmap to further advance the capabilities of our technology.
We ended the second quarter with $3 $6 million in revenue and more than $456 million of cash on our balance sheet.
Continuing to drive momentum in our business, while remaining well positioned to execute on our multiyear strategic plan.
Now more than 18 months.
Since we started our phase commercialization and six months following broad commercial release, we're seeing accumulation of evidence that our technology addresses significant unmet needs.
Across a wide range of research applications. Our customers are seeing promising early results that they believe are unlocking biological insights never seen before we.
We expected that our customers work with spend discovery translational and clinical research applications.
And we are pleased to see an expanding number of customers undertaken projects in translational or clinical research relatively soon after acquiring the technology.
To date, the majority of samples run by our customers are in clinical research and involve clinically relevant biomarkers.
These projects span a wide range of complex diseases in studies across early cancer detection.
Our marker discovery.
<unk> and cell rejuvenation, and the impact of the environment and human health among other applications now.
With the larger context.
I would now like to share some updates on our execution against our five key objectives to drive growth in 2022 and beyond.
As a reminder, these objectives are first.
Supporting customers with an industry, leading experience, while helping them to systematically scale. The use of the <unk> product suite for projects of increasing size and scope.
Second.
Expanding our global customer network and installed base of instruments.
Third.
Continuing to build out our team commercial capabilities and geographic footprint.
Fourth.
Driving our product roadmap to enable more applications for our proprietary engineered nanoparticles and fifth.
Expanding our partnership efforts to make it even easier for our customers around the world and across markets to adopt our technology now to the updates.
Let's start with how our customers are using the Purdue graph and review some specific examples of the progress they're making.
In the first quarter of 2022, we saw 11 posters and presentations at scientific conferences.
Since then with the busy spring conference season, our customers as well as fewer scientists have presented 28 posters at additional industry events across the United States Europe and Asia.
These events spent the genomics and proteomics space and include a conferences such as ACR a GBT.
HG and SMS.
Importantly, about a third of these presentations were from our customers.
This is pretty remarkable when you consider that most of our customers have had the paragraph in their labs for a relatively short period of time.
For example at the <unk>.
<unk> Society of mass spectrometry or <unk> conference in early June there were multiple presentations and posters featuring the Purdue graft product suite, including several by our customers.
At a high level. The most common themes were first the.
The protium <unk> product suite is enabling an entirely new approach to interrogating the proteome added depth and scale not previously possible.
Second this capability is allowing researchers to see more of the proteome, especially low abundance proteins than.
And then they had previously been able to see across similar cohorts.
And third.
This is enabling researchers to access peptide and I mean, the asset level protein variant information.
Which is necessary to perform high resolution <unk> genomics and only possible to large scale deep and unbiased proteomics.
To illustrate this I'd like to share some specific highlights.
From customers posters.
Starting with prognostic they found novel biological signatures for pancreatic cancer with multiple statistically significant differences in protein abundance, among 92 cancer and 104 healthy subjects.
In the case control multi omics study.
This result was very exciting because despite the moderate size of the sample cohort.
We achieved a high predictive power driven by their biomarker signatures compared to other pancreatic cancer studies published to date.
<unk> observed.
The strong detection of changes in biological signals and the breadth of the signals greatly enable identification of novel biological markers and clinical studies of practical side.
This is in part due to the low technical noise relative to biological signal that the protium <unk> enables across thousands of proteins in the proteome.
Can hear more from <unk> in this study also at the upcoming AACE, our pancreatic cancer conference in mid September .
Moving to Evo Tech.
See our center of excellence and what are the global leaders in providing drug discovery solutions.
Stand alone basis or through holistic fully integrated drug discovery solutions.
They presented a poster revealing that on average more than 5000 proteins were detected using a single shot data independent acquisition or DAA analysis.
Across 105 patient samples.
With more than 3000 proteins in individual samples.
The poster also highlighted an unprecedented depth of detection for.
For low abundance proteins such as cytokines.
Loss of protein known to be increasingly important in development of certain therapeutics that were previously not accessible in the unbiased workflows at scale.
And finally in the collaboration between sphere wildcard Enel and Spacex the perennial graph was used for deep protium interrogation of the four civilian astronauts.
From the inspiration for crew looking.
Looking at time points before and after space flight.
The poster showed 50 differentially abundant protein, primarily indicative of oxidative stress and metabolic pathways.
They are excited by these findings, which address the open ended question of what happens to human physiology at the molecular level as a consequence of space travel.
Importantly, the project graph provides information as to what protein variance may be affected by how much and how this correlates with other or make changes of interest.
These posters highlight the unique value proposition at a particular product suite to enable access to the vast depth proteome, which was previously very limited.
In a paper published in 2017, titled Revisiting Biomarker discovery by plasma proteomics by Professor Matthias Mann, one of the leaders in proteomics evidence was presented that the majority of the 117 FDA approved protein Biomarkers that were known at the time of their public.
Patients were biased towards the most abundant 300 plasma proteins.
This is because historically these where the proteins that could be readily interrogated at scale using shallow proteomics workflows without the complex immuno depletion and fractionation protocols.
The authors proposed that if the protium could be interrogated to an arbitrary depth of 500 proteins efficiently and at scale and additional 280 protein biomarkers could be discovered and validated here.
Curious why sphere is uniquely position to enable this.
The protium graph enables efficient and rapid access to the plasma proteome with peptide and amino acid level resolution at depth and scale never before possible.
And the Proteus graph provides a high level of reproducibility innate.
Enabling discovery power from tractable cohort sizes, making it possible to identify even small changes or more complex biomarker signature comprising groups of protein variance across populations.
The combination of this depth and scale impedance matches, what has been made possible in genomics to allow adds scale functional <unk> of genomic variance and the discovery of novel protein content.
Customer data and the plasma proteomics and the putative biomarkers are seen appears to support professor men's hypothesis.
Larger cohorts are likely to reveal even more novel Biomarkers, finding statistically significant differences in proteins and protein variance.
We're in the very early days of this expansion and novel content discovery.
And I expect to see a massive deepening of our understanding of the proteome and thus biology in the years ahead.
As more third party data enters the public domain over the coming months and years.
We expect it will have a network effect in accelerating adoption.
We also expect adoption will accelerate across multiple markets in parallel.
We see growing interest in the project graph across a broad range of applications, including biomarker discovery.
Target identification and drug development and early disease detection.
This interest spans a broad range of disease families, including Neurodegenerative diseases oncology cardiovascular disease, and other complex diseases reproductive health aging and veterinary medicine.
It is clear there is a strong need for deep unbiased proteomics and it's exciting to see the emergence of our customer data and the traction we are progressively gaming.
Now turning to our growing installed base.
We continue to see strong interest across geographies with our pipeline of qualified leads roughly equal between academic and commercial customers.
As we have previously stated the sales cycle for our commercial prospect is shorter relative to academic prospects driven by how each segment received fundings for their projects.
Overtime, we do expect that the percentage of academic customers in our installed base to.
To increase as more and more grants are submitted and approved for projects leveraging the prototype product suite.
Despite.
The ongoing risk of Covid and the uncertainty around supply chain.
We were able to increase our installed base across North America, Europe , and Asia in the second quarter.
Expanding global access to the Protium <unk> product suite.
As an example, burtis and innovative South Korean Proteomic based precision Medicine company, which recently established U S. Presence has added the <unk> product suite to complement and accelerate the discovery and translation of mass spec based clinical test development capabilities.
Scaling the scope and increasing the resolution of future studies.
We are proud of the growing body of customer data and expect to see a number of them submit manuscripts before the year end.
Customer driven proof points are essential in developing the market for any first of its kind product.
We believe that as more third party data enters the public domain over the coming months and years, the differentiated value proposition of the Purdue graft product suite to provide novel insights into the proteome and to enable the next generation of multi Omics studies will become more established.
Okay.
And finally, we made important progress with our partnership name.
Namely the Protium genomic consortium.
Which as a reminder is a first of its kind partnership that we established with discovery life Sciences and <unk>.
This is a multiyear collaboration with three phases for expansion, where discovery will set up expand and offer deep unbiased proteomics capabilities to.
To their existing and new genomic services customers with a plan to ramp up to an annual capacity of over 100000 samples.
Discovery recently received the <unk> and <unk>.
<unk> units off 7600 instruments at their facility in the Boston area as in the process of installation and validation.
Using 500 internal samples for Proteus genomic study.
We expect that they will begin running initial customer projects.
Early as the fourth quarter of this year.
We believe the Portio genomic consortium will accelerate <unk> genomics projects.
At the protein variant level with the type of scale streamline expert operations to match nearly any customer's needs.
As we expand our footprint globally with what is already a disruptive product. We're also pushing on the next set of innovations to further extend the capabilities of the Purdue graph product suite.
These innovations spanned a broad range of capabilities, including workflows assays, and importantly software and informatics.
With our recent release of the next version of the Portio graph analysis suite path to know, we're enabling the first of its kind prettier genomic workflow.
That maps proteomic peptide level data to genomic data to identify sample specific variant peptides not captured in canonical reference databases.
Customers can move easily.
Genomic endpoints and accept meaningful data to enable peptide level disease Association further functionalizing understanding of genetic variation and moving closer to phenotype.
Past two point no empowers high resolution Proteus genomics.
Something that is uniquely enabled by our technology and it is not possible with targeted methods.
We're continuing to expand our software feature streamline data management across our workflows and leverage the power of our proprietary engineered nanoparticles to lay a roadmap into the future.
We're also expanding what can be done with the Purdue graph with exemplification of proprietary engineered nanoparticle based approach across sample types and model organism.
<unk> cell culture, and cell lifesize mounts, and pik as well as standardizing workflows across mass spec platform.
This flexibility and extensibility will enable the proteus graph to elucidate novel insight for biomarker discovery and protium genomics at scale across more customer groups.
As we work to expand this flexibility we expect to see an acceleration of the work of the scientific community to unlock immense biological insight.
As we work closely with our customers focus on our goals and drive execution against them. We are committed to providing a continuous stream of product enhancement and improvement to customers that will expand access to novel biological content and set a pace for innovation in proteomics with that.
I will now turn the call over to David.
Thanks, Amit total revenue for the second quarter of 2022 was $3 6 million, representing an increase of 171% compared to $1 3 million of revenue in the second quarter of 2021. The increase in second quarter revenue was primarily due to increased sales of the <unk> product suite and its related products.
<unk> related revenue for the second quarter of 2022 was $3 5 million includes.
Including related party revenue of $1 1 million and consisted of sales of SB 100 instruments consumable kits and platform evaluations related party revenue of $1 $1 million represents product sales to <unk>.
Total gross profit inclusive of grant and other revenue was $1 6 million for the second quarter of 2022, representing a gross margin of 44% as we have discussed we expect gross margins to improve over time with increasing product volumes and continued cost reduction initiatives.
We continue to target long term gross margins between 70 and 75%.
Total operating expenses for the second quarter of 2022 were $25 million.
Including $8 4 million of stock based compensation compared to $17 4 million, including $6 4 million of stock based compensation in the second quarter of 2021.
Research and development expenses for the second quarter of 2022 were $10 9 million, an increase of 57% compared to $6 9 million in the second quarter of 2021. The increase in R&D expenses was primarily due to an increase in product development efforts related to the <unk> product suite, including $2 6 million in employee compensation.
Cost and other related expenses, including stock based compensation due to growth in research and development personnel and an increase in expenses related to the build out of our facilities to support our R&D efforts.
Selling general and administrative expenses for the second quarter of 2022 were $14 2 million, an increase of 35% compared to $10 $5 million in the second quarter of 2021. The increase in SG&A expenses was primarily driven by a $1 $4 million increase in employee compensation and other related expenses and a $700000.
The increase in stock based compensation other.
Other increases are attributable to an increase in professional services and consulting fees and our facility expansion.
Net loss for the second quarter was $22 8 million compared.
Compared to $16 6 million in the second quarter of 2021, we.
We ended the quarter with approximately $456 1 million in cash cash equivalents and investments and continue to be disciplined about our level of spend and the rate of return that we will earn on our deployed capital with our extremely strong balance sheet. We believe we are well capitalized to execute on our strategic plan for many years to come.
Turning to our outlook for the year, we remain focused on building our business over the long term and achieving our strategic objectives. Each year. We encouraged by the feedback we have received from our customers as well as the breadth and quality of our pipeline. While we have managed to navigate the complexities of COVID-19, especially in China and uncertain macroeconomic conditions globally, we remain cautious and visualization.
As we aim to successfully navigate the coming months with that said, we continue to expect revenue to be in the range of $14 million to $16 million in 2022.
We realize the opportunity in front of US is significant and we remain focused on thoughtfully deploying capital to develop the market for a first of its kind technology that is opening new avenues of investigation into biology across a range of applications.
At this point I would like to turn the call back to Amit for closing comments.
Thanks, David what are the pivotal time in proteomics. It is inspiring to support our customers as they generate data that is redefining what is possible in deep proteomics, enabling first of their kind studies and opening up a new gateway to the proteome I have never been more excited about the opportunity.
These that lie ahead of us with that we will now open it up to questions.
Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your Touchtone telephone, we will pause for a moment, while we compile our Q&A roster.
Okay.
Our first question comes from Derik de Bruin with Bank of America. Your line is open.
Hey, good afternoon. Thank you for taking my call.
So a couple of questions.
Just wondering.
From your customers that.
<unk> been doing experiments, what sort of like the reorder time, meaning when they do an experiment and then they.
Come back to do next iteration of it I'm just curious what's the time lag how quicker theater is how quickly the iterations and experiment.
Going on is there a lag as people are doing.
More data analysis is taking more data analysis, just just give me a sense on what the what the turnaround time is between experiment.
First for me in here.
So I think that depends on the customer type.
<unk>.
The number or the number of customers are relatively small so the point I'm going to make.
It may change over time.
So typically a customer gets the proteome.
Ron.
Relatively small study.
<unk> be in the tens of samples.
I understand the platform the way it operates.
That data set.
<unk> to get the resources.
Running a larger sample it may be in the tune of.
Many tens of samples or one hundreds of samples.
And then those samples get wrong and then the data analysis is part of it that follows before they kind of build on.
I would say a case at hand would be if you look at the way, Oregon Health for example played out.
They were the first customer to receive the instrument.
They ran a relatively small.
In the tens of sample size study.
Then presented at a conference.
That form the basis for them to secure the resources, which by the way is not just funding has also access to samples because.
The sites are there.
I don't necessarily have the number of samples as you can imagine and ready to go so to secure the funding and the sample to then run about 1000 samples studied.
That study took a pause.
Similarly, just a little bit north of a quarter to complete another in the data analysis part of it so I would say that's probably.
A representative of a robust customer if you can think about it now there are customers that are even more.
More aggressive than that if you were a customer microeconomic obviously.
Nickel as well.
They hit the ground running with large number of samples and those study sizes up only grow and my expectation is we'll continue to grow the.
The other point I would make there related to is it's also a function of.
<unk>.
External data being presented I think thats been a facilitated for these customers.
To be able to access resources and also the samples to run progressively worsening customers present data, but if you look at the most recent <unk> conference.
17 posters presented.
10 of them were from.
We're from Sears forefront <unk> two from <unk>, one from Cornell of that $17 four talks.
Twofold product gnomic, one year worth of AMETEK, we're increasingly seeing customer presentations and customer data that pellet then paved the road for larger and larger studies to get done at a sharper slow.
Got it so just a couple ones here.
So is that $1 1 million run rate in <unk> is that a good sort of right number to use going forward for next couple of quarters or are you expecting to see them scale higher.
Hi, Derek its David.
<unk> if you look over time, what that related party revenue is and you're right that is all product gnomic.
Then fairly consistent we.
We do think it is certainly our anticipation.
It will continue but again really depends on prognostic and at some point.
Sure.
<unk> decided to pause and do another.
Set up for another study or what so but we do have some visibility that it will continue at least in the short term.
And.
And again, it's something where we hope over time.
That will continue to trend down a little bit just as an overall percentage of revenue as our non <unk> customer base grows.
So thats.
It's been a it's been a strong.
Pull through from from Park Gnomic certainly.
Hey, David I would also caution you Derrick they're not like a typical customer if you will.
Yes.
Understood understood. So why have you what were the number of units sold in the quarter.
We're not going to give the quarterly units Derek as you know.
We will give you the kind of.
Where we sit.
At the end of the year as we gave you the end of last year, but again, we feel good with where we are.
Two.
To being on pace.
Matt.
Got it thank you.
One moment for our next question.
Okay.
Sure.
Okay.
Our next question comes from <unk> with Morgan Stanley . Your line is open.
Hi, This is Neil on for David.
And the loss of your party genomics workflow any color you can provide us would be.
Early customer feedback and how you may anticipate this release to influence purchasing decisions or possibly pull forward some decision, making on the academic side getting more longer sale cycles.
I'm sorry can you if you don't mind just repeat your question one more time for me.
Sure just wanted to know about any early feedback on as you point out and how you anticipate it influencing sales cycles are potentially pulling forward purchasing decisions.
Sure Let me maybe answer the first half of it which is.
What the positives and the feedback that we're getting.
And then its implication maybe on the commercial I might ask for me to answer.
Provided input on that.
So first of all the pass program has really enabled for the user to access project genomic content. So it gives them some workflows that are less than peptide level.
Information and match it against genomic data to identify sample specific variant of peptide that's obviously.
And mechanism to identify various of protein.
And then these variance would not be present.
Economical reference databases. So these are really new content that we that.
The deposits enables the customer to get in.
And it's very easy to use so this August presented in an interactive table plot.
Utilization is very easy.
It gives.
Information in terms of where the past guidance in relation to this gene structure. The peptide domain. The functional regions are so really kind of makes it very easy for the customer to be able to connect genomic information and functionalizing. It at the protein variant level information a peptide.
Asset level resolution.
John that was previously not possible and the customers find it really compelling.
I mean, if you want to maybe comment on implications on the commercial side from a customer perspective sure.
We don't really see Pos so point directly impacting our revenue for the balance of this year.
It was already.
Current included as a part of an overall part of our product suite offering. So for this year, we don't expect it to have any material impact suffice. It to say has more lease up analysis tools come out it makes the overall workflow simpler more intuitive and over the course of time, we would expect that it's going to have a positive impact in both adoption and the rate at which customers can not only execute experiments.
But extract useful information out.
Okay.
Thank you one moment for our next question.
Okay.
Our next question comes from Dan Brennan with Cowen Your line is open.
Hi, Good afternoon. This is Kyle on for Dan Thanks for taking my questions.
I'm, just trying to jump into the sales funnel here.
And slowing economy.
Do you notice any delays or push outs or any customer purchases to date, maybe after this can you give us a sense for your confidence about getting to around 35 block box placements. This year. Thank you.
So let me start on the first part of it I mean in terms of.
Push factor delays on the parts of the customers I think overall I would say.
<unk> seen our numbers for the first two quarters at a year.
We've managed to execute I would say really well now that is that is in the face of just some real factors out there in terms of Covid, particularly in terms of the lockdown and the impact that has had in China as well as macroeconomic issues.
<unk> have played a role yes, certainly I would say ex U S more but I think increasingly inside the U S. I wouldn't say, we've seen any material pushback in terms of purchasing decisions.
But suffice it to say the sales cycles are taking a lot of required focus on our part to make sure we execute on taxes. So far we manufactured the execute to those headwinds.
I would say quite well.
And in terms of the boxes I'll turn it over to David.
So he reiterated I think we've talked to you and what you would think that we're going to we're going to provide a number our number is retrospectively at the end of the year.
But we feel good about the overall plan that we laid out at the beginning of the year. David do you want to comment on listening no I think thats right. Kyle again, I think we are.
We feel good about where we are but again, we're not going to provide any any detail.
Until until probably the.
Well it will be the year end call in February so stay tuned.
Great. Thank you and then just one more on sort of the publication side can you remind us what the big key publications, we should be looking out for in any sort of incremental validation of the platform or could it be meaningful drivers to adoption.
Got it.
<unk> here.
Look we're seeing.
Both an acceleration in the pace of presentations and publications both in.
In terms of breadth of topics and also the number of presenting customers right. So if you look at it.
And that for example, the number of posters talks being presented by a number of different customers quite different than a quarter ago or two quarters ago.
I actually thing.
That slope will continue to increase.
As we head into the second half of 2022, we have another robust conference season.
<unk> presentation upward coming at the American Society of Biochemistry and molecular biology.
At the International Society of mass spec.
G at the ICU Po.
And Youll see talks presentation.
Both seer as your customers now similarly.
Obligations are going to continue to increase as well so.
I've mentioned before that there should be a publication coming.
<unk>.
In 2022, so I expect that to be out.
In the second half of the year. Similarly, we're now seeing.
At least a handful of customers with.
Manuscripts that are now in preparation that are going to be submitted and I expect.
A number of those manuscripts will be submitted in the second half of the year.
So.
Well I consider.
What's happening today in terms of both the pace and the quality to already be quite high.
And the insight that gaming is quite robust I think thats logo, just going to continue to be sharp in the upward direction and I don't expect any slowing of that.
Great. Thank you.
And im not showing any further questions.
Ill turn the call back over to our host for any remarks.
Thanks, everyone. I appreciate you taking the time today, and we look forward to being in touch.
Ladies and gentlemen, this does conclude today's price.
Okay.
Okay.
Yes.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Yes.
Yes.
Yes.
[music].
Okay.
Okay.
[music].
Okay.
Yes.
Yes.
[music].
Yes.
[music].
Yes.
[music].