Q3 2022 Akoya Biosciences Inc Earnings Call

November 7, 2022

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Good day, and thank you for standing by and welcome to the call.

Sciences third quarter 2022 earnings conference call.

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Now like to hand, the conference over to your Speaker today <unk> Shah.

Mr Relations.

Thank you operator, and thank you to everyone who is joining us today on this call.

I'm <unk> Shah head of Investor Relations at acquired Biosciences on.

On the call today, we have Brian Mcelligott, Chief Executive Officer, and Joe Driscoll Chief Financial Officer.

Earlier today acquired released financial results for the third quarter ended September 32022.

A copy of the press release is available on the company's web site.

Before we begin I would like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 995.

Any statements contained in this call that relate to expectations or predictions of future events.

Our forward looking statements actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.

For a list and description of the risks and uncertainties associated with the quest business. Please refer to the risk factors section of our Form 10-K filed with the Securities and Exchange Commission on March 15 2022.

George you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

This conference call contains time sensitive information and is accurate only as of the live broadcast today November seven 2022.

<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

We'd like to inform listeners that acquire will be participating in the upcoming Stephens Nash 2022 investment conference in Nashville.

<unk>, we will be participating in the Canaccord med Tech and the Piper Sandler healthcare conferences in New York This month.

Please see our Investor relations page for pertinent data and webcast information.

Lastly, we will be hosting our second annual spatial day virtual event on December 15th registration information can be found in our press release today and we hope to see many of you attended and with that I will now turn it over to Brian .

Thank you Brandon and good and good afternoon, everyone and thank you for joining us today.

<unk> had a very strong third quarter of 2022.

It continues to demonstrate success in revenue total.

Total instruments placed and publications spanning the discovery translational and clinical segments of the spatial biology market.

We reported record revenue of $18 9 million in the third quarter, representing a 40% growth compared with the third quarter of 2021.

<unk> robust growth quarter after quarter.

As a byproduct of three key drivers.

Strategic product development commercial.

Execution and.

Our balanced portfolio of revenues by product category by market segment and geography.

We sold a total of 55 instruments in the third quarter, consisting of 17, <unk> and 38, imagers, representing a 67% growth in placements from the prior year period.

And we ended the quarter with an installed base of 863 instruments on track to reach 1000 in the next few quarters.

The rapidly accelerating publication volume featuring <unk> platform now over 690 to date and a near doubling from a year ago.

Is a key leading indicator that the adoption of our platforms will continue.

<unk> product portfolio is setting the industry standard for spatial biology, and delivering meaningful value to our customers.

Imaging based approaches now dominate and spatial biology.

Which gives affirmation to acquire foundational cycling an imaging based in situ technology on which the company was founded.

We have built on the success now delivering second generation solutions that provide single cell phenotyping to industry, leading optics and the fastest workflow available.

Our platforms are each purpose built for the discovery translational and clinical market segments, delivering meaningful discoveries and immunology oncology neurobiology infectious disease transplant medicine and more.

At the upcoming society of immunotherapy of cancer conference for <unk>.

Taking place this week in Boston and also announced today, we will be unveiling our new coach signature panels previously referred to as our universal protein chemistry.

The commercial launch will take place by year end and at <unk>, We will outline these new validated antibody panels for use on the imaging platforms.

The penal code signature panels were created for the rapidly advancing immuno oncology therapy landscape that includes nearly 6000 ongoing clinical trials.

With tissue based Biomarkers central to these trials.

Need for a robust rapid whole slide multiplex tissue imaging and analysis solution to identify prognostic and predictive biomarkers has never been more important.

The final signature panels are designed to run on our imager platforms.

These pre designed panels focused on distinct areas of tumor biology, and response to therapy. They are of greatest interest to translational and clinical researchers.

Extensively tested by <unk>.

And available and modules with the flexibility to customize.

The field signature panels will rapidly accelerate biomarker assay development and validation for our image of customers, particularly in the fields cancer and immunotherapy.

With the launch of these panels.

<unk> now provides a complete end to end solution.

For our translational and clinical customers now, including the full suite of necessary antibody and reagents.

To summarize acquires new coach signature panels were one provide readymade and customizable panels for our pheno image of customers.

The panels address distinct areas of tumor biology, and response to therapy that are of greatest interest to translation of clinical researchers in cancer immunotherapy.

And to <unk>.

Will simplify and accelerate biomarker assay development and validation.

By delivering a full end to end space will phenotyping workflow.

And three.

They will drive higher system utilization.

And an increase in revenue per sample.

<unk> and expanded pull through on our FEMA imaging platforms.

We are progressing several additional initiatives in the downstream translational and clinical markets and our advanced Viropharma solutions CLIA lab out of Marlboro has become a valued resource for our biopharmaceutical partners, resulting in a material expansion of our pipeline and programs with leading.

Larger companies.

As discussed last quarter our.

Our agreement with <unk> therapeutics to develop and commercialize a first of its kind spatial signature companion diagnostic for <unk> targeted oncology agent.

Is an important milestone and developing an expanded clinical menu offering and indicates a clear path.

Towards addressing the large spatial biology clinical Tam.

Turning now to the upstream discovery market, we have several product.

<unk> underway, including adding new applications.

Further platform advancements to drive additional speed and productivity and enabling expanded software solutions.

First we will be completing the automation of biotech these RNA scope on the Athena cycle infusion by year end.

RNA scope is the industry's leading space whole transcriptome its technology with a focus on targeted applications with nearly 6000 publications to date and a massive customer base.

By automating RNA scope on the <unk> infusion and.

Co marketing the shared offering with biotech me.

<unk> technique and accelerate the adoption of both platforms to drive incremental growth.

In parallel we are on track to complete our upgrades to the <unk> refused by year end.

We will begin implementing this upgrade into production builds for new instruments by year end and initiating field upgrades in early 2023 existing customers.

This upgrade further increases the platform's speed and capacity and includes improvements to the hardware fluidics and software.

For example, we will be delivering a multi slide carrier for parallel processing of tissue samples.

The result will be a near doubling of sample throughput.

This upgrade is also required to support the RNA scope integration. So the launch of both the synchronized.

These peanuts after infusion speed and capacity increases.

And the addition of the RNA scope spatial transcript omics applications.

Our part of <unk> ongoing efforts to simplify and accelerate our workflow.

While simultaneously expanding available applications.

It is the combination of the two more speed and more applications.

That are central to driving increased utilization and system.

Simultaneously, we continue to further develop our proprietary RNA technology, which we demonstrated at the <unk> conference in June .

We highlighted a proof of concept for a 100 plex on the phenotype of infusion.

At the conference. We also showcased the industry's first proof of concept of 100, Plex RNA and protein on the same tissue section.

And then following Hebt emerging market survey suggests an overwhelming demand for multi omics analysis on the same tissue sample.

We will be providing more details on our RNA portfolio and the timing for early access and commercial launch our special day in December .

We do anticipate initiating early access by year end.

To summarize our third quarter, we are very pleased with our strong financial and commercial performance year to date.

As we continue to expand our leadership position in the spatial biology market.

As we have outlined we are focused on the following targeted initiatives for the balance of the year.

First drive the continued adoption and improvements of the phenotype confusion as the best in class in situ imaging platform.

Second.

Continued to deliver new applications and drive further workflow and speed improvements across the instrument portfolio to drive expanded pull through.

Third expand and advance our partnerships with leading biopharmaceutical companies and medical centers to drive the adoption of the piano imager Ht and translational research and clinical diagnostics.

As premium noted acquire will be hosting our second annual spatial day on December 15th.

It will include a review of our new product introductions and presentations from top researchers and the discovery translational and clinical markets all of whom have found tremendous value in our core <unk> product offerings.

With that I will turn the call over to Joe to discuss our financial results Joe.

Thanks, Brian and Hello, everyone.

Brian highlighted total revenue for the third quarter of 2022 was a record $18 9 million as compared to $13 5 million in the third quarter of 2021, representing 40% growth.

Year to date revenue of $53 6 million represents 38% growth over the prior year period.

We see this as extremely strong performance year to date, given the challenging macro environment and gives us increasing confidence that we are in a high growth market that continues to be relatively insulated from the broader economic slowdown.

Product revenue, which includes instruments reagents and software was $14 4 million for the third quarter compared to $10 9 million in the prior year period, representing 32% growth.

Within product revenue instrument revenue was $9 5 million compared to $7 1 million in the prior year period, an increase of 34%.

We had another strong quarter with 55 instruments sold of which 17 were Phoenix <unk> and 38 were from the imager portfolio.

This is 67% growth compared to 33 instruments sold in the prior year period.

We have sold 166 instruments, a year to date and the total installed base of instruments is now 863, which includes 202019 on <unk> and 634 Imagers.

As of September 30, a total of 83 fusion instruments have been shipped since the commercial launch at the start of the year and we now have a total installed base of <unk> 72 for the combined cycle fusion system sold either directly as a combined system.

<unk> upgraded from a previous Standalone fino sigler instrument.

The number of combined unit is an important metric because this combination is projected to drive significant increases in reagent pull through over the next few years.

We continue to track a very impressive fusion to fino cycle or attach rate of over 75% on directly sold combined systems, which is ahead of our expectations of 50% to 60% long term.

Reagent revenue was $4 7 million for the quarter versus $3 4 million in the prior year period, an increase of 38%.

With an annualized pull through in the mid $30 range per instrument for both the <unk> and the imager Ht today, we project the pull through to increase significantly by as much as two to three times over the next several years across the instrument portfolio based on the following factors.

First as researchers become fully trained and expand the use of our rapidly expanding installed base of Pinot cycle infusions.

Second new multi slide and RNA scope upgrades on the Pheno cyclic fusion are up and running.

Third the new.

Code signature panels are utilized on the H T system.

And finally, as our higher plex multi omics contact menus are rolled out commercially.

We continue to project annual reagent revenue growth of approximately 40% per year for the next several years.

Services and other revenue totaled $4 4 million as compared to $2 6 million in the prior year period, representing 69% growth.

Our advanced Biopharma solutions CLIA lab continues to gain significant traction directed to large pharma and other meaningful clinical partnerships.

Gross profit was $10 9 million in the third quarter compared to $8 5 million in the prior year period.

This resulted in gross profit margin of 58% for the quarter consistent with the first half of this year.

We continue to make investments in the CLIA service lab to support clinical trial enrollment and secure clinical diagnostic partnerships, such as <unk> therapeutics, which has a near term impact on margins.

Also experienced some impact on margin from inflationary cost pressures consistent with what most other companies are experiencing.

Instrument pricing continues to improve compared to the promotional pricing on fusion in the first six months of the year.

Operating expenses for the quarter totaled 27, 6 million as compared to $26 $7 million in Q2, and $25 7 million in Q1, maintaining a consistently moderate increase in opex since the start of the year.

Through the remainder of 2022 and in fiscal 2023, we will continue to make targeted investments in the company with a near term focus on the commercial rollout of the female code signature panels.

<unk> and R&D focus to further enhance our assay to analysis speed multi ohmic content menus and clear service capabilities.

We ended the quarter with approximately $82 million of cash and cash equivalents, we project that cash will be more than $70 million as of the end of fiscal 2022, which provides us ample runway to continue to invest in the business.

Common shares outstanding are $37 9 million as of September 30th and fully diluted shares, including the impact of outstanding options and Unvested restricted stock awards totaled $39 7 million.

To summarize we had another record breaking quarter with $18 9 million in revenue a 40% increase over the third quarter. In 2021, we sold 55 instruments across the product portfolio. This quarter 166 instruments year to date and now have a total installed base of 863 instruments.

The sale of 83 fusions in the first nine months of the launch demonstrates the robust demand for our new instrument offering.

We remain very confident in our ability to deliver continued growth. This year and are increasing our full year 2022 preliminary revenue guidance range to 73% to $75 million as we continue to see tailwind for our business and the spatial biology market.

Now I'll turn it back over to Brian for closing remarks.

Thank you Joe in summary, we're pleased to report a strong quarter and announce exciting new developments across the portfolio.

Thankful for the hard work of our fellow dedicated to clients as well as for the support of our customers and shareholders.

<unk> remains very well positioned for growth and we're excited about the opportunities that lie ahead, as we deliver new space solutions.

The discovery to clinical markets at this point, we will open the call up for questions operator.

As a reminder to ask a question. Please press star one one on your telephone.

Please standby, while we compile the Q&A roster.

Our first question comes from Matt <unk> with Stephens. Your line is now open.

Hey, guys. Thanks for taking the question How's everyone doing good Mason how are you.

Doing good.

Maybe to start off here.

Our demand trends across geographies in Q3 and how.

How have they trended in the fourth quarter. So far have you seen any strengthening or weakening worth calling out or has demand across most geographies has been relatively steady sequentially, yes, I mean I don't.

I don't think were really comment on Q4, yet, but I think what we're seeing and the relative geographies as I think sort of reflective of our numbers North America really strong.

In EMEA and APAC delivered solid performance I think as you noted from others and I think as we had indicated prior.

Some increased scrutiny on capital purchases, that's more a commentary on sales cycle versus demand. So there's nothing that we're seeing in either direction certainly in terms of headwinds that would cause us meaningful concern I think thats why we took our numbers to the point, where we're just talked about in raising our guidance slightly.

Got it that's helpful. And then maybe just a follow up here a two part question one with the fusion two point out launch Universal chemistry.

Rene and multi omics.

Are your expectations for.

For throughput per instrument next year as much as you can give there and maybe even qualitatively are you are you thinking about that increase over the next two to three years to be more linear or should we expect a more moderate step up next year and more material ramp in 2024 and 2025.

Starting to rollout.

I think.

I think what Youll see is with all of those things sort of additive to driving application utility to driving samples at a time to driving dollars per sample given that we're sitting on an install base of HTS plus fusions. That's in the 380 range and 230 <unk> out there it's going to be.

A conversion process for all of these things to get out and drive utilization. So with that we expect the pull through to grow consistently over time, and I think you've talked about that before and with the fusion two point.

Theres, a pretty big range and this is where it gets difficult for you all is a pretty big range on throughput as you think about number of markers and tissue size, but you can maybe just think about refusing to point.

You are making your kind of 10 to 15 whole slides samples a week fairly straightforward I am talking about a kind of a whole tissue slide at single cell.

Got it thanks guys.

Please standby for our next question.

Our next question comes from Kevin Chiang with capital One your line is now open.

Hey, thanks.

Brian .

I wanted to just ask you. Obviously you guys are doing well with the <unk> fusion launch.

Could you talk a little bit or provide a little bit of granularity on.

How you expect that product to ramp not only in the U S, but outside the U S. I mean, it seems like you're doing pretty well with that ramp up in the states, but I was just curious.

How much visibility you can provide outside the U S.

Yes ill, let Joe chime in we don't really breakdown units ex U S.

But I think we expect it to ramp.

With equal contribution given the numbers I just mentioned Tim on the on the large installed base still lots of room to up sell our existing customers, but also kind of driving into new customers. So I don't think theres any sort of.

Material or meaningful regional differences in terms of how we think about scaling the product just differences in scale frankly, Tim was about 50% of our revenue kind of in North America and the rest equally split between between EMEA and APAC, Joe I don't know if you want to add anything beyond that no I think thats.

That's right on the money I think we would expect this rollout to be comparable to the rest of our business as Brian just said, 50% North America, 25% EMEA, 25% APAC. So that's the way we're looking at it right now.

Okay, Great and just one quick follow up I noticed your Isps.

Did increase actually I think there are what north of $170000. I mean is this a number that you expect to continue to grow.

As we head into 2023.

Yes, Joe you want to take that yeah sure.

We had promotional pricing in the first six months of this year on the on the fusion launch to really try to.

Take market share and get a lot of excitement in the marketplace.

Yes. The Asps did go up in Q3, I think youll see them tick up again in Q4, and then probably stabilized after that I think where we're finding where our sweet spot is in terms of pricing.

Okay Super Thanks, so much.

Please standby for our next question.

Our next question comes from Mark Massaro with BPI <unk>. Your line is now open.

Hey, guys.

Thanks for the questions and congrats on your third straight beaten raise this year.

Maybe the first question is for you Joe.

You just put up 40% growth here in Q3.

Recognizing that you guys are doing a great job executing this year, but I do want to ask about.

The outlook for Q4, it looks like it's a range of about 20% to 32% for Q4. So is there any reason for us to kind of use some degree of caution because youre coming off of growth rates in the mid to high <unk> to low <unk>.

So how should we think about the slight.

T cell and Q4, yes, I think Theres a couple of factors. There. One is last year's Q4 was extremely strong.

And that makes it a little bit of a tougher comp in this year. The revenues have been I guess more balanced by quarter and so youre not seeing the massive spike between Q3 and Q4 that we've seen in prior years. So.

Just think where we've gotten more.

More regular streams of business throughout the year. This year as opposed to last year, where there was there was a pretty big discrepancy between Q3 and Q4 last year. So we're not we're not concerned or anything like that where we're just trying to maintain a conservative posture in our in our guidance.

Okay great.

Nice to see the Pheno code signature panel is rolling out here.

So recognizing that the plan here is to now increase the reagent pull through per box in the <unk>.

Major HP.

Can you give us a sense for how you're thinking about pricing.

And then how should we think about incremental contribution to growth in 2023.

So.

The pricing question, maybe just directionally as you look at let's say one of our customers on an H T system.

That is <unk>.

Building, a panel and prior to <unk>. They would just get that fluorescent detection reasons from us and largely sourced the antibodies themselves. So in terms of their total spend again antibody prices can vary quite dramatically, but assume that somewhere between 23, 35%.

Our kind of portion of that revenue. So as you look at the pricing of the Pheno code, knowing that we're going to price additional value into those because a lot of the validation of the work that we've done I am not going to give you a dollar price yet, but that should give you a kind of a directional sense as we drive conversion.

Of some existing panels, but primarily market is going to be people developing new plant new panels, where this will help kind of accelerate that work. So I think it's going to be similar maisons questions kind of a step function as we work through the year and see those conversions, but also getting new <unk> customers up and running a little bit faster.

Okay, Great and just last one for me.

Maybe for you Brian can you can you just speak to any other.

Developments going on in companion diagnostics with their business.

Any next catalyst to look for with the acrobat on partnership and then.

Final question is I know you have links to some of the events that city, but is there anything in particular, we should be looking out for.

Thanks.

Yes so.

In terms of acrobat, specifically, we're going to follow obviously their lead on as they reveal advancements of their clinical program, because we're really sort of tied at the hip to that.

Now in terms of milestones I think it's.

It's going to be kind of more qualitative commentary from us as we noted in the earlier comments that since the launch of ABS last year.

Capabilities highlighted.

And codified with the <unk> announcement, it's really just about mark just expanding that that portfolio of clinical trials. We are participate in so that we have a higher higher probability of another CTX deal. While most importantly at the same time as driving additional revenue service revenue, but it also drives additional system.

Placements.

So that's kind of how I would address that again qualitatively and then at cincy Theres just going to be a lot of detail around.

These these <unk> panels in their validation and their work.

A large number of a poster presentation. So I think that would be probably the core event, but I would advise you to.

To look at our earnings press release, there is a link there to the since the advent and what we're doing.

Okay. Thank you thanks Mark.

These standby.

First question.

Our next question comes from Tejas Savant with Morgan Stanley . Your line is now open.

Hi, this is neil on for pages.

Considering the strong demand some of your peers have begun to see has that begun to launch and CTO and lenders that are out.

Any color on how this growing interest is translated for your on order books and what gives you confidence that your incumbent advantage in terms of using an imaging approach will continue to resonate.

As strongly going forward, even after these new and tissue platform was launched in the market.

Yes, maybe to your last question regarding <unk>.

As imaging kind of the long standing methodology just does.

For clarity, our approach and and our imaging methodology, we think that on its own the way. We do the imaging is a significant competitive advantage the underlying microscopy technology again, I'm a little bit biased is arguably but not even argue I think it's the best for us in <unk>.

Your system on the market in terms of speed resolution and quality and with that imaging system tied to our assays. That's what gives us that gives us the power and the speed and the quality from the Ht to the fusion.

And the commentary on imaging, what I would say as ever.

Every single platform that is getting launched.

Is an imaging based approach so thats sort of know universally what's accepted in terms of.

The next generation of spatial biology is doing it via imaging.

With respect to the competitors.

The competitive and preferred with those that come in with a cell cell biology protein based approach and will become increasingly competitive to those customers and spatial that our focus on RNA and spatial transcriptome ex with the paired solution. We've talked about historically, so I think the competitive environment is slightly different.

Depending upon the different market segments, there specifically within discovery, but I would reiterate that our platform the Ht defina image or HG.

The new systems that are coming up from our friends at <unk>. Those are really competing in the discovery market largely within genomics segment. The Ht system is decidedly different and that sort of stands on its own and the translational and clinical markets.

Okay.

Got it thank you.

Given the recent revision to the.

The product timelines can.

Can you speak to water pins your confidence in that decision and any update on my thinking over the last couple of months in light of some of these moving pieces in the macro.

So I'm, sorry, which changes are you referring to your deal.

The re prioritization on the product roadmap.

Yes.

I think the product roadmap is.

I apologize if there is some confusion thats ami, but the roadmap is.

The priorities have remained really solid so I think what we announced today with the fusion two point out heading into production and that being tied to RNA scope I think thats a refinement of our timeline. So I hopefully that you see that is consistent with prior.

And then the second part of your comment deal was what your question Robert.

Okay.

I guess.

Just kind of an idea on how that thinking has evolved over the last couple months in light of some of these moving pieces in the macro whether it be budgetary concerns in Europe .

Via reagent headwinds in China, Yes, it's a good question nothing has really changed in terms of how we prioritize obviously as we all kind of looking in the face of a of a recession just during our current strategic planning and budgeting process you just become even more focused on every dollar in and a return on cash.

That comes out of that it just is forcing a lot more rigor and I think you see that reflected in that decision, making is already reflected in the commentary Joe gave around our asymptotic spend quarter over quarter.

Quarter after quarter, rather sequentially in terms of our Opex this year.

Okay.

Got it. Thank you and then one last for me so as you begin to make that push it.

<unk> market segment.

Do you see as the key drivers there to really start building a road wariness around the offerings given that this customer likely less familiar with acquire.

Without introducing other ASP dynamic thinking about 23 or so.

You cut out right with your money question I think you said space of transcript omics as the market saving you are asking about.

Correct, Yeah, So I think for us the way, we look at that as how can we deliver with our existing core capabilities and expertise of protein how can we think about delivering.

Excuse me something that has differentiated value and some of the feedback that I alluded to.

Coming out of <unk> in the opening comments is really part of our current voice of customers and product roadmap decision, making which is how do we build a platform that leverages the best of our capabilities with proteomics and our growing capabilities in the RNA, both in discovery setting and the validation setting with our own technology and RNA scope respectively.

So with that we've been really exploring and doing a lot of work on exploring multi omics solutions.

Or are you contemplate your protein content in your RNA content.

So that they become really.

Catalytic in terms of the value they both bring to the scientists not so much focused on.

Some sort of arbitrary flex more but really focusing on the science and the panel development.

Got it I appreciate the time and congrats on the strong quarter. Thanks, Tim Thank you.

Please standby for the next question.

Our next question comes from John Quinn with J P. Morgan Your line is now open.

Hi, this is each one on for Kimberly I'll. Thank you for taking my questions. So first congrats on the quarter very impressive. So I did a quick math about the placements for fusion this quarter. It seems like it is.

Slide 21 compared to the last two quarters is the slightly dropped.

I'm just curious like how should I or should we think about the driver for fusion placements moving forward is it more rely on the touch men with sigler or its more rely on the standalone orders.

So.

So yes, so we don't really report out the fusion separately, but I'll, let Joe take it from there I think what you see as Joe alluded to we have a fairly consistent total instrument number.

Quarter for each of the quarters. This year, there's always going to be a slight mix shift.

As you go from a Q1 to Q2 to Q3, but overall I think what we look at is that overall instrument number.

And the fusion.

Placements are being driven both from paired with <unk>, but also to some extent selling into our existing installed base.

Where they are upgrading from a third party scope to the fusion Joe I don't know if you want to add anything yeah. So really the first six months of this year.

We really went out with promotional pricing on the fusion to really try to get market share.

Really try to convert existing recycler users to buy a fusion.

That was really the driver of the kind of the units that youre looking at for the first six months of the year versus Q3, I think Q3.

More normal quarter I guess in terms of.

Fusion placements.

And once again just to reiterate.

When we're selling a pinot cycle or the attach rate with our fusion to sell at the same time is exceeding 75% right now which is way above our expectations. So we're selling a lot more bundled.

Cyclic fusions than what we had expected but in the first six months of the year, you're really seeing the impact of that promotional pricing to truly try to drive market share.

Okay.

Thank you Thats about helpful. My next question is about the ramp.

The Universal chemistry and the.

Darren a panel next year. So I'm just curious like how should we think about their adoption on the <unk>.

The fusion customers compared to those.

<unk> fusion or hydro per standalone customers, yes.

Really appreciate that question to help provide some more clarity.

So, yes, a little bit on the science so the.

The field of co chemistry is really essentially a hybrid between some of the underlying codecs chemistry that runs on the <unk> and the historical <unk> chemistry.

And that assay. The Pheno code assay is really for the high flex capabilities not I'm, sorry, the high throughput capabilities not the high Plex. So the chemistry is really it will probably most widely adopted on the HTS system.

And so you can think about the adoption of <unk>.

PNR code again qualitatively.

Happening.

Happening the fastest with new customers as they get new panels up and running and with existing customers as they migrate over from the historical Opel chemistry to the new <unk> chemistry. So it really is about it.

It really is a solution or the AC system and the fusion to some extent.

Okay.

Okay. One last question I haven't had the chance to look at the city posters, maybe you guys can share with me on a high level about the Pheno co like how many biomarker.

How many of fixed harmonia customizable.

The customized panels specifics that tumors with patients and E&S stages or is a scalable to clinical data in the future or to other diseases like such like.

In fact shows the linear or does it just give me a high level overview.

High level I would say the high level I would tell you is that we looked across several hundred publications and what you see is this histogram. We're 10 to 15 particular antibodies dominate the cancer landscape.

And many of those are deployed across multiple multiple cancers and what we have are a series of panels that are generally about a five plus with allow us allows you to customize.

And also position ourselves and Theyre designed to answer specific questions. For example, one is designed to look at.

Immune cell exhaustion. Another one has to look at macro based organization. Another one has to look at a tumor infiltrating lymphocytes, so theres sort of thematic Lee design.

But really highly valid.

We validated so you can pick across one of those themes and then plug in kind of an antibody or so for yourself to customize so it's sort of a hybrid between a fixed.

Fixed panels and hybrid and customizable panels that are designed to really accelerate the time to get those new channels up and running.

Okay. That's very helpful. Thank you okay.

Please standby for our next question.

Our next question comes from Kyle Mixon with Canaccord. Your line is now open.

Hi, This is al ticket level on for Kyle Nixon.

Concurrent with the earnings release, we also announced the mix shelf offering of $150 million. So I was just curious based on your current operating cash flow burn up roughly $10 million to $20 million per quarter do you expect any.

Other financing for the near term thanks.

Yes, I appreciate the question and I appreciate you kind of seeing all that come out today. So maybe just to reiterate as Joe noted, we've got $82 million.

In cash at the end of the quarter.

So really really strong cash position. So we do not have any need any pressing need at all for additional cash, but but I think as we noted in prior calls we've been indicating that we sort of intended to be opportunistic.

And one of those mechanisms is is really non dilutive capital and we announced with that filing Rx expanded midcap facility.

Provide really cost effective capital they've been they've been really a longstanding partner or acquire.

And we work with them recently as you'll note in the filing of our restructured debt facility that provides.

Not only access to additional funds, but a longer interest only period, so that that mid cap restructuring sort of.

Further solidifies our cash position, but until today, we didn't have a shelf in place a shelf registration in place and so the filing today with that ATM is really comp commonplace and we sort of look at it as simply sort of good good corporate housekeeping, but again I'd just reiterate we don't have a pressing need for <unk>.

Cash.

There is nothing immediate is really as I noted taking.

Taking advantage of our partnership with mid cap to give us another a path.

For non dilutive capital restructuring.

Interest only period and just being prepared.

And staying close to watch the markets. If there is an opportunity.

Alright, Thank you very much for that color and just one last one. So you previously discussed that the promotional pricing was one of the key drivers of this higher attach rate that we're seeing for the Athena cyclic nature.

I was just curious.

How much longer do you think that we should expect to see that higher attach.

The attach rate of 70 plus percent range, which is above that 60% Lindsay quoted previously.

I'm just trying to think about how we should model it out thank you.

Yes, Joe you want to take that yeah sure.

It seems like that attach rate has been it's been a relevant now for the last several quarters. So we're still watching it closely but I I believe we're going to end up kind of increasing our 50% to 60% long term attach rate to something more like 70%, maybe even more to 70% to 80%.

<unk> attach rate over time.

What we're seeing now people really see the value in buying the pheno cycle or an infusion as one combined unit and so I think I think that attach rate is going to be probably higher than what our long term estimates have been.

Got it thank you very much.

Yes.

As a reminder to ask a question. Please press star one one on your telephone.

Please standby for next question.

Our next question comes from Jon Petersen with Piper Your line is now open.

Hi, guys. This is John on for Dave. Thanks for taking the question could you just.

Tell us about any differences in culture between.

The customers, who have fusions versus those who are currently utilizing look thank you.

Yes. Thanks for the question John I think as we said on the last quarter. It takes.

Takes a few quarters to get sufficient data.

Can be quantitative around the pull through differences.

But what I, what I would say is that Directionally, we are seeing a pretty active shift now within many of our larger customers from running some of their larger projects on the Athena recycler versus the <unk> on the fusion you don't really want to change platform midstream, but I think as we get into perhaps next corner quarter, we can.

Start being a lot more at the end of next quarter increasingly quantitative around around tracking those differences of what we do but we do expect as we've noted for the <unk> for the quarter number on Athena cycle fusion to be higher than the <unk> alone just because of the speed the increased flex capabilities et cetera.

Great. Thank you Andy could you just talk about the appetite from spending generally.

The appetite for what I'm sorry.

For pharma spending.

Yes so.

The pharma spending our HTS are actually increasingly going into large pharma, that's an area we're actually seeing.

More penetration that historically.

Whether it's pharma or other market segments segments. As I noted there is some increased diligence around capital spend we're not heavily reliant and I assume this might be kind of behind the question, we're not really heavily reliant nor largely penetrated in some of the small emerging biopharma. It's largely it is.

While many of the large kind of more well funded biopharma that have multiple projects in Q and multiple biomarker projects, where we're seeing a lot of our penetration not a lot of the emerging biotech with there's been some commentary around funding challenges.

Alright, great. Thanks for taking the question.

At this time I am showing no further questions I would now like to turn the conference back to Brian Mcelligott for closing remarks, yes, we already kind of spoke a little bit on the closing I just wanted to reiterate and thank everybody for their time their attention the answer.

Four questions and Michelle Thank you for your help and support so we will talk to you. All soon thank you. So much. Thank you. Thank you.

The Prince call. Thank you for participating you may now disconnect.

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Okay.

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Yeah.

[music].

Good day, and thank you for standing by Walker.

Sciences third quarter 2022 earnings conference call at this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

To ask a question. During this session you will need to press star one one on your telephone.

You will then hear an automated message advising your hand just rate please.

Please be advised that today's conference is being recorded.

Now like to hand, the conference over to your Speaker today, <unk> Shah head up.

Makes sense.

Thank you operator, and thank you to everyone who is joining us today on this call.

I preempt Shah head of Investor Relations at acquired Biosciences.

Our call today, we have Brian Mcelligott, Chief Executive Officer, and Joe Driscoll Chief Financial Officer.

Earlier today, a quiet released financial results for the third quarter ended September 32022.

A copy of the press release is available on the company's website.

Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 995.

Statements contained in this call that relate to expectations or predictions of future events.

Our forward looking statements actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.

We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

This conference call contains time sensitive information and is accurate only as of the live broadcast today November seven 2022.

We would like to inform listeners that acquire will be participating in the upcoming Stephen Nash 2022 investment conference in Nashville. Additionally, we look at participating in the Canaccord Med Tech and the Piper Sandler healthcare conferences in New York This month.

Please see our Investor relations page for pertinent data and webcast information.

Lastly, we will be hosting our second annual spatial day virtual that on December 15th registration information can be found in our press release today and we hope to see many of you attended and with that I'll now turn it over to Brian .

Thank you <unk> and good or good afternoon to everyone and thank you for joining us today.

Korea had a very strong third quarter of 2022.

And continues to demonstrate success in revenue.

Total instruments placed and publication spanning the discovery translational and clinical segments of the spatial biology market.

We reported record revenue of $18 9 million in the third quarter, representing a 40% growth compared with the third quarter of 2021.

<unk> robust growth quarter after quarter.

As a byproduct of three key drivers.

Strategic product development commercial.

Execution.

Our balanced portfolio of revenues by product category by market segment and geography.

We sold a total of 55 instruments in the third quarter, consisting of 17, recyclers and 38, imagers, representing a 67% growth in placements from the prior year period.

And we ended the quarter with an installed base of 863 instruments on track to reach 1000 in the next few quarters.

The rapidly accelerating publication volume featuring <unk> platform now over 690 to date and a near doubling from a year ago.

Is a key leading indicator that the adoption of our platforms will continue.

<unk> product portfolio is setting the industry standard for spatial biology, and delivering meaningful value to our customers.

Imaging based approaches now dominate in spatial biology.

Which gives affirmation to acquire foundational cycling an imaging based in situ technology on which the company was founded.

We have built on the success now delivering second generation solutions that provide single cell phenotyping to industry, leading optics and the fastest workflow available.

Our platforms are each purpose built for the discovery translational and clinical market segments, delivering meaningful discoveries in immunology oncology neurobiology infectious disease transplant medicine and more.

At the upcoming society of immunotherapy of cancer conference or city.

Taking place this week in Boston and also announced today, we will be unveiling our new coach signature panels previously referred to as our universal protein chemistry.

The commercial launch will take place by year end and at <unk>, We will outline these new validated antibody panels for use on the piano imaging platforms.

The Bureau coach signature panels were created for the rapidly advancing immuno oncology therapy landscape that includes nearly 6000 ongoing clinical trials.

With tissue based Biomarkers central to these trials.

Need for a robust rapid horsefly multiplex tissue imaging and analysis solution to identify prognostic and predictive biomarkers has never been more important.

The piano Coke signature panels are designed to run on our P&L imager platforms.

These pre design panels focused on distinct areas of tumor biology, and response to therapy. They are of greatest interest to translational and clinical research.

Extensively tested by a quit.

And available and modules with the flexibility to customize.

The piano Coke signature panels will rapidly accelerate biomarker assay development and validation for our pheno image of customers, particularly in the fields cancer and immunotherapy.

With the launch of these panels.

<unk> now provides a complete end to end solution.

For our translational and clinical customers now, including the full suite of necessary antibody and reagents.

To summarize acquires new coach signature panels, one provide readymade and customizable panels for our pheno image of customers.

The panels address distinct areas of tumor biology, and responsive therapy that are of greatest interest to translational clinical researchers in cancer immunotherapy.

And two they will simplify and accelerate biomarker assay development and validation.

By delivering a full end to end spatial phenotyping workflow.

Three.

They will drive higher system utilization.

And an increase in revenue per sample.

Resulting in expanded pull through on our FEMA imaging platforms.

Our pipeline of programs with leading oncology companies.

As discussed last quarter.

Our agreement with acrobat therapeutics to develop and commercialize a first of its kind spatial signature companion diagnostic for <unk> targeted oncology agent.

Is an important milestone and developing an expanded clinical menu offering and indicates a clear path.

Towards addressing the large spatial biology clinical Tam.

Turning now to the upstream discovery market, we have several product innovations underway, including adding new applications.

Further platform advancements to drive additional speed and productivity and enabling expanded software solutions.

First we will be completing the automation of biotech. These RNA scope on the <unk> refused by year end.

Are any scope is the industry's leading space whole transcriptome its technology with a focus on targeted applications with nearly 6000 publications to date and a massive customer base.

By automating RNA scope on the <unk> of the fusion and.

Co marketing the shared offering with biotech me.

Coyote and biotech we can accelerate the adoption of both platforms to drive incremental growth.

In parallel we are on track to complete our upgrades to the phenotype of infusion by year end.

We will begin implementing this upgrade into production builds for new instruments by year end and initiating field upgrades in early 2023 for existing customers.

This upgrade further increases the platform's speed and capacity and includes improvements to the hardware fluidics and software.

For example, we will be delivering a multi slide carrier for parallel processing of tissue samples.

The result will be a near doubling of sample throughput.

This upgrade is also required to support the R&D scope integration. So the launch of both the synchronized.

These peanuts accurate infusion speed and capacity increases.

And the addition of the RNA scope spatial transcript omics applications.

Our part of <unk> ongoing efforts to simplify and accelerate our workflow.

While simultaneously expanding available applications.

It is the combination of the two more speed and more applications.

That are central to driving increased utilization and system.

Simultaneously, we continue to further develop our proprietary RNA technology, which we demonstrated at the <unk> conference in June .

We highlighted a proof of concept for a 100 plex on the phenotype of infusion.

At the conference. We also showcased the industry's first proof of concept of 100, Plex RNA and protein on the same tissue section.

In the months following Hebt merging market survey suggests an overwhelming demand for multi omics analysis on the same tissue sample.

We will be providing more details on our RNA portfolio and the timing for early access and commercial launch our spatial day in December .

We do anticipate initiating early access by year end.

To summarize our third quarter, we are very pleased with our strong financial and commercial performance year to date.

As we continue to expand our leadership position in the spatial biology market.

As we have outlined we are focused on the following targeted initiatives for the balance of the year.

First drive the continued adoption and improvements of the peanuts actually fusion as the best in class in situ imaging platform.

Second.

Continued to deliver new applications and drive further workflow and speed improvements across the instrument portfolio to drive expanded pull through.

As Prem noted <unk> will be hosting our second annual spatial day on December 15th.

It will include a review of our new product introductions and presentations from top researchers and the discovery translational clinical markets all of whom are found tremendous value in our core <unk> product offerings.

With that I will turn the call over to Joe to discuss our financial results Joe.

Thanks, Brian and Hello, everyone.

Brian highlighted total revenue for the third quarter of 2022 was a record $18 9 million as compared to $13 5 million in the third quarter of 2021, representing 40% growth.

Year to date revenue of $53 6 million represents 38% growth over the prior year period.

Product revenue, which includes instruments reagents and software was $14 4 million for the third quarter compared to $10 9 million in the prior year period, representing 32% growth.

Within product revenue instrument revenue was $9 5 million compared to $7 1 million in the prior year period, an increase of 34%.

We had another strong quarter with 55 instruments sold of which 17 were Phoenix <unk> and 38 were from the image of your portfolio.

This is 67% growth compared to 33 instruments sold in the prior year period, we have sold 166 instrument year to date and the total installed base of instruments is now 863, which includes 200 2019 recyclers.

634 Imagers.

As of September 30, a total of 83 fusion instruments had been shipped since the commercial launch at the start of the year and we now have a total installed base of 72 for the combined <unk> fusion system sold either directly as a combined system or upgraded from a previous.

Standalone Peanuts sigler instrument.

The number of combined unit is an important metric because this combination is projected to drive significant increases in reagent pull through over the next few years.

We continue to track a very impressive fusion casino sigler attach rate of over 75% on directly sold combined systems, which is ahead of our expectations of 50% to 60% long term.

Reagent revenue was $4 7 million for the quarter versus $3 4 million in the prior year period, an increase of 38%.

First as researchers become fully trained and expand the use of our rapidly expanding installed base of Dino cyclic fusions.

Second new multi slide and RNA scope upgrades on the Pheno cyclic fusion are up and running.

Third.

The new.

Signature panels are utilized on the H T system.

And finally, as our higher plex multi ohmic content menus are rolled out commercially.

We continue to project annual reagent revenue growth of approximately 40% per year for the next several years.

Services and other revenue totaled $4 4 million as compared to $2 6 million in the prior year period, representing 69% growth.

Our advanced Biopharma solutions CLIA lab continues to gain significant traction directed to large pharma and other meaningful clinical partnerships.

Gross profit was $10 9 million in the third quarter compared to $8 5 million in the prior year period.

This resulted in gross profit margin of 58% for the quarter consistent with the first half of this year.

Also experienced some impact on margin from inflationary cost pressures consistent with what most other companies are experiencing.

Instrument pricing continues to improve compared to the promotional pricing on fusion in the first six months of the year.

Operating expenses for the quarter totaled 27, 6 million as compared to $26 7 million in Q2, and $25 7 million in Q1, maintaining a consistently moderate increase in opex since the start of the year.

Through the remainder of 2022 and in fiscal 2023, we will continue to make targeted investments in the company with a near term focus on the commercial rollout of the female code signature panels.

<unk> and R&D focus to further enhance our assay to analysis speed multi ohmic content menus and clear service capabilities.

We ended the quarter with approximately $82 million of cash and cash equivalents, we projected cash will be more than $70 million as of the end of fiscal 2022, which provides us ample runway to continue to invest in the business.

Common shares outstanding are $37 9 million as of September 30th and fully diluted shares, including the impact of outstanding options and Unvested restricted stock awards totaled $39 7 million.

The sale of 83 fusions in the first nine months of the launch demonstrates the robust demand for our new instrument offerings.

Now I'll turn it back over to Brian for closing remarks.

Thank you Joe in summary, we're pleased to report a strong quarter and announce exciting new developments across the portfolio.

Thankful for the hard work of our fellow dedicated the clients as well as for the support of our customers and shareholders.

<unk> remains very well positioned for growth and we're excited about the opportunities that lie ahead, as we deliver new space solutions.

The discovery to clinical markets at this point, we will open the call up for questions operator.

As a reminder to ask a question. Please press star one one on your telephone.

Please standby, while we compile the Q&A roster.

Our first question comes from Mesa Kericho with Stephens. Your line is now open.

Hey, guys. Thanks for taking the question How's everyone doing good Mason how are you doing good.

Maybe to start off here.

Our demand trends across geographies in Q3 and.

I don't think were really comment on Q4, yet, but I think what we're seeing and the relative geographies as I think sort of reflective of our numbers North America really strong.

In EMEA APAC delivered solid performance I think as you noted from others and I think as we had indicated prior.

Increased scrutiny on capital purchases, that's more a commentary on sales cycle versus demand.

There is nothing that we're seeing in either direction certainly in terms of headwinds that would cause us meaningful concern I think thats why we took our numbers to the point, where we're just talked about in raising our guidance slightly.

Got it that's helpful. And then maybe just a follow up here a two part question one with the fusion two point out launch Universal chemistry.

Rene and multi omics.

What are your expectations for.

We're starting to rollout.

I think.

A conversion process for all of these things to get out and drive utilization. So with that we expect the pull through to grow consistently over time and I think we've talked about that before and with the fusion two point.

You are making your kind of 10 to 15 whole slides samples a week fairly straightforward I am talking about a kind of a whole tissue slide at single cell.

Got it thanks guys.

Yes.

Please standby for our next question.

Our next question comes from Kevin Chiang with capital One your line is now open.

Hey, thanks.

Brian .

I wanted to just ask you. Obviously you guys are doing well with the appeal cycle fusion launch.

Could you talk a little bit or provide a little bit of granularity on.

How you expect that product to ramp not only in the U S, but outside the U S. I mean, it seems like you're doing pretty well with that ramp up in the states, but I was just curious.

How much visibility you can provide outside the U S.

Yes, I mean ill, let Joe chime in we don't really breakdown units ex U S.

But I think we expect it to ramp.

Material and meaningful regional differences in terms of how we think about scaling the product just differences in scale frankly, Tam was about 50% of our revenue kind of in North America and the rest equally split between between EMEA and APAC, Joe I don't know if you want to add anything beyond that no I think thats.

Okay, Great and just one quick follow up I noticed your asp's.

Did increase actually I think there are what north of $170000. I mean is this a number that you expect to continue to grow.

As we head into 2023.

Yes, Joe you want to take that yes sure.

We had promotional pricing on the first six months of this year on the on the fusion launch to really try to.

Take market share and get a lot of excitement in the marketplace.

Yes. The Asps did go up in Q3, I think youll see them tick up again in Q4, and then probably stabilized after that I think where we're finding where our sweet spot is in terms of pricing.

Okay Super Thanks, so much.

Please standby for our next question.

Our next question comes from Mark Massaro with BPI <unk>. Your line is now open.

Hey, guys.

Thanks for the questions and congrats on your third straight beaten raise this year.

Maybe the first question is for you Joe.

You just put up 40% growth here in Q3.

Recognizing that you guys are doing a great job executing this year, but I do want to ask about.

So how should we think about the slight.

T cell and Q4, yes, I think Theres a couple of factors. There. One is last year's Q4 was extremely strong.

Just think where we've gotten more.

Okay great.

And nice to see the Pheno Coke signature panel is rolling out here.

So recognizing that the plan here is to now increase youre reagent pull through per box.

Imager Ht.

Can you give us a sense for how you're thinking about pricing.

And then how should we think about incremental contribution to growth in 2023.

So to the pricing question, maybe just directionally as you look at let's say one of our customers on an H T system.

That is building.

Our kind of portion of that revenue. So as you look at the pricing of the Pheno coat, knowing that we're going to price additional value into those because a lot of the validation of the work that we've done I am not going to give you a dollar price yet, but that should give you a kind of a directional sense as we drive conversion.

Okay, Great and just last one for me.

Maybe for you Brian can you just speak to any other.

Developments going on in companion diagnostics with their business.

Any next catalyst to look for with the acrobat on partnership and then.

Final question is I know you have links to some of the events that T. But is there anything in particular, we should be looking out for.

Thanks.

Yes so.

In terms of accurate <unk>, specifically, we're going to follow obviously their lead on as they reveal advancements of their clinical program, because we're really sort of tied at the hip to that.

Now in terms of milestones I think yes.

It's going to be kind of more qualitative commentary from us as we noted in the earlier comments that since the launch of ABS last year.

Capabilities highlighted.

And codified with the acrobat announcements, it's really just about mark just expanding that that portfolio of clinical trials. We are participate in so that we have a higher higher probability of another CTX deal. While most importantly at the same time as driving additional revenue service revenue, but it also drives additional system.

<unk>.

So that's kind of how I would address that again qualitatively and then at cincy Theres just going to be a lot of detail around.

These <unk> panels in their validation and their work there's a large number of a poster presentation. So I think that would be probably the core event, but I would advise you to.

To look at our earnings press release, there is a link there too to the since the advent and what we're doing.

Okay. Thank you thanks Mark.

These standby.

Next question.

Our next question comes from Tejas Savant with Morgan Stanley . Your line is now open.

Hi, this is neil on for pages.

Considering the strong demand some of your peers have begun to see has that begun to launch and CTO et cetera, any color on how this growing interest is translated fear on order books and what gives you confidence that youre incumbent advantage in terms of using an imaging approach will continue to resonate as strongly going forward. Even after these new and tissue platform was launched on the market.

Yes, maybe to your last question regarding <unk>.

Imaging kind of the long standing methodology, just just for clarity.

Our approach and and our imaging methodology we.

We think that on its own the way we do the imaging is a significant competitive advantage the underlying microscopy technology again, I'm, a little bit biased as arguably about not even argue I think it's the best fluorescent imaging system on the market in terms of speed resolution and quality and with that imaging system tied to our app.

Assays, that's what gives us that gives us the power and the speed and the quality from the ESG to the fusion.

And the commentary on imaging, what I would say is.

Every single platform, that's getting launched.

Is an imaging based approach so that's sort of know universally what's accepted in terms of.

Next generation spatial biology is doing it via imaging.

With respect to the competitors.

I think theres going to be certainly growing.

Our growing competitive environment.

Largely.

I would assume that we're still going to be highly competitive and preferred with those that come in with a cell cell biology protein based approach and will become increasingly competitive to those customers and spatial that our focus on RNA and spatial transcriptome ex with the <unk> solution, we've talked about historically.

I think the competitive environment is slightly differently, depending upon the different market segments, there specifically within discovery, but I would reiterate that our platform the HG defina image or HG.

The new systems that are coming out from our friends at <unk>. Those are really competing in the discovery market largely within genomics segment. The Ht system is decidedly different and that sort of stands on its own and the translational and clinical markets.

Got it thank you.

Given the recent revisions.

The product timelines can.

Can you speak to water pins your confidence in that decision and any update on that thinking over the last couple of months in light of some of these moving pieces in the macro.

So I'm, sorry, which changes are you referring to the deal.

The re prioritization on the product roadmap.

Yes.

I think the product roadmap is.

I apologize if there is some confusion thats ami, but the roadmap is.

And then the second part of your comment deal was what your question Robert.

Okay.

I guess.

Just kind of an idea on how that thinking has evolved over the last couple months in light of some of these moving pieces in the macro whether it be budgetary concerns in Europe .

The reagent headwinds in China, Yes, it's a good question nothing has really changed in terms of how we prioritize obviously as we all kind of looking in the face of a of a recession just during our current strategic planning and budgeting process you just become even more focused on every dollar in and a return on cash.

That comes out of that it just is forcing a lot more rigor and I think you'll see that reflected in that decision, making is already reflected in the commentary Joe gave around our asymptotic spend quarter over quarter.

Quarter after quarter, rather sequentially in terms of our Opex this year.

Okay.

Got it. Thank you and then one last for me so as you begin to make that pushing.

<unk> market segment.

Do you see as the key drivers there to really start building a wireless around the offerings given that this customer likely less familiar with the clear.

Without introducing other ASP dynamic thinking about 23 or so.

You cut out right with your money question I think you said space of transcript omics as the market saving you are asking about.

Correct, Yeah, So I think for us the way, we look at that as how can we deliver with our existing core capabilities and expertise of protein.

Can we think about delivering.

Excuse me something that has differentiated value and some of the feedback that I alluded to.

So with that we've been really exploring and doing a lot of work on exploring multi omics solutions, where you contemplate your protein content in your RNA content.

So that they become really.

Catalytic in terms of the value they both bring to the scientists not so much focused on.

Some sort of arbitrary reflects more but really focusing on the science and the panel development.

Got it I appreciate the time and congrats on the strong quarter. Thanks, Tim Thank you.

Please standby for the next question.

Our next question comes from Sean Quinn with Jpmorgan. Your line is now open.

Hi, This is Ian on for Kimberly I'll. Thank you for taking my questions. So first congrats on the quarter very impressive. So I did a quick math about the placements for fusion this quarter. It seems like it is.

Slide 21 compared to the last two quarters is the slightly dropped.

Im just curious.

How should I, what should we think about the driver for fusion placements moving forward is it more rely on the touch men with sigler or its more rely on the standalone orders.

So.

So yes, so we don't really report out the fusion separately, but I'll, let Joe take it from there I think what you see as Joe alluded to we have a fairly consistent total instrument number.

Quarter for each of the quarters. This year, there is always going to be a slight mix shift.

As you go from a Q1 to Q2 to Q3, but overall I think what we look at is that overall instrument number.

And the fusion.

Placements are being driven both from paired with <unk>, but also to some extent selling into our existing installed base.

Where they are upgrading from a third party scope to the fusion Joe I don't know if you want to add anything yes. So really the first six months of this year.

We really went out with promotional pricing on the fusion to really try to get market share.

Really try to convert existing recycler users to buy a fusion.

That was really the driver of the kind of the units that youre looking at for the first six months of the year versus Q3, I would say Q3.

More normal quarter I guess in terms of.

Fusion placements.

And once again just to reiterate.

When we are selling a pinot cycle or the attach rate.

Fusion to sell at the same time is exceeding 75% right now which is way above our expectations. So we're selling a lot more bundled.

Cyclic fusions than what we had expected but in the first six months of the year, you're really seeing the impact of that promotional pricing to truly try to drive market share.

Okay. Thank you that's about helpful. My next question is about the ramp.

The Universal chemistry.

Darn a panel next year. So I'm just curious like how should we think about their adoption.

The fusion customers compared to those.

<unk> fusion or hydro per standalone customers, yes.

Really appreciate that question to help provide some more clarity.

So, yes, a little bit on the science so the.

The field of co chemistry is really essentially a hybrid between some of the underlying codecs chemistry that runs on the <unk> and the historical <unk> chemistry.

And so you can think about the adoption of <unk>.

Pheno code again qualitatively.

<unk>.

<unk> happening the fastest with new customers as they get new panels up and running.

With the existing customers as they migrate over from the historical Opel chemistry to the new <unk> chemistry. So it really is about it.

It really is a solution or the AC system and the fusion to some extent.

Okay.

One last question I haven't had the chance to look at the city posters, maybe you guys can share with me on a high level about the sunoco like how many biomarker.

How many of fixed how many a customizable.

The customized panels specifics to tumors with patients and E&S stages or is this scalable to clinical data in the future or to other diseases like such like.

In fact shows the linear or does it just gives me a high level overview.

High level I would say.

The high level I'll tell you is that we looked across several hundred publications and what you see is this histogram. We're 10 to 15 particular antibodies dominate the cancer landscape.

And many of those are deployed across multiple multiple cancers and what we have our series of panels that are generally about a five <unk> to allow us to allows you to customize.

And also position ourselves and Theyre designed to answer specific questions. For example, one is designed to look at.

Immune cell exhaustion. Another one has to look at macro based organization. Another one has to look at a tumor infiltrating lymphocytes, so theres sort of thematic Lee design.

But really highly valid highly validated so you can pit across one of those themes and then plug in kind of an antibody or so for yourself to customize so it's sort of a hybrid between.

Fixed panels and hybrid and customizable panels that are designed to really accelerate the time to get those new channels up and running.

Okay. That's very helpful. Thank you okay.

Please standby for our next question.

Our next question comes from Kyle Mixon with Canaccord. Your line is now open.

Our ticket level on for Kyle Nixon.

Concurrent with the earnings release, we also announced the next shelf offering of $150 million. So I was just curious based on your current operating cash flow burn up roughly $10 million to $20 million per quarter do you expect.

Any other financing for the near term thanks.

Yes, I appreciate the question and I appreciate you kind of seeing all that come out today. So maybe just to reiterate as Joe noted, we've got $82 million.

In cash at the end of the quarter.

So really really strong cash position. So we do not have any need any pressing need at all for additional cash, but but I think as we noted in prior calls we have been indicating that we sort of intended to be opportunistic.

And one of those mechanisms is is really non dilutive capital and we announced with that filing or expanded mid cap facility.

That provides really cost effective capital they've been they've been really a longstanding partner or acquire.

We worked with them recently as you'll note in the filing of our restructured debt facility that provides.

Not only access to additional funds, but a longer interest only period, so that that mid cap restructuring.

Further solidifies our cash position, but until today, we didn't have a shelf in place a shelf registration in place. So the filing today with that ATM is really comp commonplace and we sort of look at it as simply sort of good good corporate housekeeping, but again I'd just reiterate we don't have a pressing need for.

Cash.

There's nothing immediate is really as I noted taking.

Taking advantage of our partnership with mid cap to give us another path.

For non dilutive capital restructuring that.

Interest only period and just being prepared.

And staying close to watch the markets. If there is an opportunity.

Alright, Thank you very much for that color and just one last one. So you previously discussed the promotional pricing was one of the key drivers for this higher attach rate that we're seeing so that's in effect our future I was just curious.

How much longer do you think that we should expect to see that higher attach.

Attach rate of 70, plus percent range, which is above that 50%, 60% Lindsay quoted previously.

Just trying to think about how we should model it out thank you.

Yes, Joe you want to take that yeah sure.

It seems like that attach rate has been it's been relevant now for the last several quarters. So we're still watching it closely but.

I believe we are going to end up kind of increasing our $50 to 60% long term attach rate to something more like 70%, maybe even more to.

78% attach rate over time, that's what we're seeing now people really see the value in buying the pheno cycle or an infusion as one combined unit.

And.

So I think I think that attach rate is going to be probably higher than what our long term estimates have been.

Got it thank you very much.

Yes.

As a reminder to ask a question. Please press star one one on your telephone.

Please standby for next question.

Our next question comes from Jon Petersen with Piper Your line is now open.

Hi, guys. This is John on for Dave. Thanks for taking the question could you just.

Tell us about any differences in culture between the.

Customers, who have fusions versus those who are currently utilizing them. Thank you.

Yes. Thanks for the question John I think as we said on the last quarter. It takes.

It takes a few quarters to get sufficient data.

It can be quantitative around the pull through differences.

But what I would say is that Directionally, we are seeing a pretty active shift now within many of our larger customers from running some of their larger projects on the Athena recycler versus the Pheno cycle. There on the fusion you don't really want to change platform midstream, but I think as we get into perhaps next corner quarter. We.

Sorry, being a lot more at the end of next quarter increasingly quantitative around around tracking those differences, but we do but we do expect as we've noted.

So the number for the pull through number on Athena confusion to be higher than the <unk> alone just because of the speed increased flex capabilities et cetera.

Great. Thank you and could you just talk about the appetite from the spending generally.

The appetite for what I'm sorry.

For pharma spending.

Yes.

The pharma spending our HTS are actually increasingly going into large pharma, that's an area we're actually seeing.

More penetration that historically.

Alright, great. Thanks for taking the questions.

At this time I am showing no further questions I would now like to turn the conference back to Brian Mcelligott for closing remarks.

Yes, we already kind of spoke a little bit on the closing I just wanted to reiterate and thank everybody for their time their attention the insightful questions and Michelle. Thank you for your help and support so we'll talk to you. All soon thank you. So much. Thank you. Thank you.

Prince call. Thank you for participating you may now disconnect.

Q3 2022 Akoya Biosciences Inc Earnings Call

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