Q3 2022 Quantum-Si Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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Ladies and gentlemen, thank you for standing by welcome to Quantum's S. Third quarter 2022 earnings 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 you only need to press star one one on your.
Telephone you will then hear an automated message advising your hand is raised please be advised today's conference is being recorded I would now like to turn the conference to Juan Avendano head of Investor Relations for quantum S. I. One. Please go ahead.
Yeah.
Good evening, everyone. Thank you for joining us today.
<unk> closed quite a masai released financial results for the third quarter ending September 32012.
You too.
A copy of the press release is available on the company's website joining.
Joining me today are Dr. Jonathan Rosberg.
<unk> and chairman of the Board, Jeff Hawkins, our newly appointed Chief Executive Officer, Patrick Schneider, President and Chief operating officer and quality, that's great Chief.
Chief Financial Officer.
Before we begin I'd like to remind you that management will be making certain forward looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding this Chris and uncertainties appears in the section entitled forward looking statements of our press release.
For a more complete list and description of risk factors. Please see the company's filings made with the Securities and Exchange Commission.
This conference call contains time sensitive information that is accurate only as of the live broadcast today November seven 2022.
Except as required by law the company disclaims any intention or obligation to update or revise any forward looking statements.
During this call we will also be referring to certain financial measures that are not prepared in accordance to U S. Generally accepted accounting principles or GAAP, including adjusted EBITDA, a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today.
With that I will turn the call over to Dr. Jonathan Rockford.
As a testament to the promise of our pioneering work quantum edge next generation single molecule protein sequencing technology was recently published in science.
This is the first paper from any company demonstrating next generation protein sequencing published in a major peer reviewed journal.
The paper demonstrates the use of quantum edge size for.
Terry time domain sequencing method to enable digital massively parallel protein sequencing at amino acid resolution.
Unless semiconductor chip.
Dakota linear sequence of immuno assets.
Assets and post translational modifications that makeup of protein and determine its function.
Quantum is sized next generation protein sequencing technology will open.
Block, a new understanding of health and disease.
I was lucky enough to work with the team that brought the world. The first next generation DNA sequencing technology.
Earlier this year I was pleased to see one of my first Nextgen collaborator sponsored Pablo when a Nobel Prize for its work with next generation DNA sequencing.
In a similar manner I am confident that early adopters of quantify size next generation protein sequencing will make equally transformative advances in the life Sciences.
Well I had a productive eight months at the helm of the company as interim CEO .
I am very excited to pass the baton to Jeff Hawkins, our new CEO Jeff.
Jeff is a proven business leader with 20 years of experience.
Some of the world's leading life science and diagnostic companies.
<unk> alumina.
His experience in scaling up next generation DNA sequencing and opening up key markets will be a key factor, enabling quantum ESI success.
I wanted to express my sincere gratitude to the team and all who continue to support and invest in quantum ESI.
Remaining focused on execution and under Jeff's leadership I am confident that we can own the fork in history, we create.
I'll now turn the call over to Jeff to provide a business update.
Thank you Jonathan good afternoon, everyone and thank you for joining us in today's call. We will provide a business update and present, our third quarter financial performance and outlook for 2022, We will then open the line for questions.
Quantum <unk> mission is to transform life Science research and proteomics by becoming the first company to launch next generation protein sequencing I am pleased to join quantum et Si and innovative company with deep technical expertise and a disruptive technology in its quest to transform and democratize the field of proteomics.
Having spent over 20 years in life Sciences, and diagnostics I am keenly aware of the potential for proteomics tools to transform a wide range of markets from research to drug discovery to diagnostics to fully execute on this transformation novel technologies like quantum <unk> next generation protein sequel.
Things are needed.
As I assess the opportunity to join quantum ESI I was excited about two key aspects of the company's approach.
First a bench top system that Leverages the standard laboratory workflow and includes customer friendly analysis software will enable more researchers to have the technology in their lab.
Enabling a larger number of researchers with a new technology like next generation protein sequencing will be critical to accelerating the pace of proteomics research globally.
Second the ability to sequence not only amino acids, but also post translational modifications and Proteoform, who will provide a far richer set of data than existing technologies.
This expanded set of data has the potential to significantly improve the research community's ability to study protein function regulatory mechanisms and other complex protein interactions with potential to change the way drug discoveries performed or develop new biomarker tests that better predict response to therapy or diagnose disease could true.
Really transform the future of healthcare.
I am about one month into my role here at <unk> Si.
I'm continually impressed by the caliber of people at the company and their sincere commitment to our success.
Personally I am passionate about new technologies and enjoy the challenges of building companies and creating new markets.
With an amazing technical team already in place here at quantum ESI I can focus more of my time on building out the commercial organization and setting the market development strategy for our next generation protein sequencing technology, given my experience in next generation DNA sequencing and the reality that next generation protein sequencing could have a similar.
<unk> or even larger impact on both research and clinical markets.
We must get this right.
Next I would like to turn to the business and update you on our progress over the past quarter.
In October we published the first next generation protein sequencing paper in the Journal Science. This paper demonstrated the broad capabilities of our novel protein sequencing technology, which the team continues to build upon some of the key findings in the paper are the following.
Quantum F&I bench top platform and semiconductor chip based technology is capable of detecting hundreds of thousands of single molecules in parallel.
We demonstrated the ability to sequence peptides from protein based upon kinetic signatures.
Using these kinetics signatures, we showed that we cannot only identify amino acids, but also post translational modifications and proteoform.
Technology demonstrated in the science paper has the potential to unmatched critical regulatory mechanisms of protein function and interactions that could advanced biomarker discovery.
Drug development and lead to the discovery and development of new diagnostic tests.
Science paper is just one of many first that we will establish in this deal over the course of the next several quarters.
Turning to the status of our product development program. The team is laser focused on the final steps towards launch specifically finalizing the customer facing analysis software and completing transfer to manufacturing and scale up activities.
We expect to complete the remaining internal activities over the coming weeks.
Based upon that timeline, we expect to launch the platinum instrument and start to take orders before the end of this year and begin shipping product in Q1.
We are excited about the upcoming launch of the platinum instrument and look forward to partnering with our customers to demonstrate the capabilities of our next generation protein sequencing technology.
Finally, I would like to provide an update with regards to our facilities earlier. This year, we signed a lease and announced that we would be relocating our headquarters to Winchester works of technology and life Sciences hub in New Haven, Connecticut.
Following a thorough review of our business infrastructure needs and consistent with our ongoing efforts to optimize our cost structure, we have decided not to move to this facility. Instead, we have identified a new space in Branford, Connecticut, where we can continue to grow and fulfill our infrastructure needs in a more capital efficient way.
As mentioned in our previous earnings calls our entire team understands that this is the time to get more out of our expenditures for our investors.
I would now like to turn the call over to Patrick our President and Chief operating officer to discuss additional business updates before doing so I wanted to thank Patrick for his engagement and support during my time as the candidate and most recently as part of my Onboarding with quantum ESI Patrick.
Thank you, Jeff starting with development, we've made good progress on product sizing, our technology, where in the last steps of the process scaling validating and finalizing the customer facing software.
We're also continuing to push the technology development forward as we incorporate the new binders that we described last quarter, giving us even more protium coverage.
Can't be more proud of the team and their accomplishments on all the development trends.
One of the most important components of our technology is the recognized our system and we have a world class team working at the intersections of various backgrounds, including molecular biology, computational biology, chemical biology and protein engineering to develop this key component of the system.
This last quarter, we strengthened our development partnership with ESP Ci and welcome new team members in France with unique skills and expertise and directed evolution of.
Proteins to further our advancement.
Moving into commercialization our strategy for the next few quarters is to develop and test the market in our selection of key application areas, which include biologics discovery and protein validation through protein sequencing we continued.
To develop our leads and funnel and we'll prioritize customers for these applications as we start to take orders or initial rollout will include the platinum sequencing instrument.
The carbon sample prep instrument will go through a beta testing phase in early 2023.
We fill positions in our customer success team to continue to support early adopters and expect to ramp up the commercial team in a metered way as we build momentum for our platform over the next few quarters.
In line with our business development plans, we've also ramped up our participation at industry trade shows and academic conferences.
In late October we attended the American Society of Human Genetics annual meeting.
Where we experienced significant interest in our platinum as the first next generation protein sequencing system.
We gave demonstrations of the instrument the chips and the data output.
Last week. We also attended the single molecule protein sequencing conference and Delta the Netherlands.
This conference brought together, leading researchers pioneering the development of single molecule protein sequencing techniques. We were pleased to present, our advancements and bring our thought leadership to the topic of single molecule protein sequencing as we are the first in this new category.
From now through the end of the year, we're looking forward to building on our business development efforts at more industry Tradeshows, including the society for neuroscience and the human Proteome organization World Conference.
On the supply chain front the team stands ready to support commercialization. We continue to work closely with our contract manufacturers to build up our inventory of platinum instruments.
The validation of our chip Assembly and packaging capacity ramp up at our granite Valley, Pennsylvania facility is in progress. According to plan and we are on track to meet our monthly chip and cartridge production goals.
We're also working diligently to incorporate our latest chemistry improvements into our reagent consumables and scaling to meet demand.
I will now turn the call over to Claudia to review our financial results.
Thank you Patrick Hello, everyone.
Got the details of our Q3 2022 financial performance.
Research and development expenses in the third quarter of 2022 was $16 7 million.
Care to $11 1 million in the third quarter of 2021.
The increase was primarily due to higher internal and external product development activities and.
And higher personnel cost as a result of increased headcount.
Selling general and administrative expenses in the third quarter of 2022 were $11 million.
<unk> to $14 1 million in the third quarter of 2021.
A decrease was primarily the result of lower stock based compensation expense associated with the business combination that took place last year.
Reduction in consulting services insurance and other professional fees.
Partially offset by an increase in compensation costs as a result of higher head count.
In aggregate total operating expenses in the third quarter of 2022 or 20.
$27 7 million compared to $25 2 million in the third quarter of 2021.
Net loss for the quarter was $31 7 million compared to $18 1 million in the third quarter of 2021.
Adjusted EBITDA was a loss of $22 9 million compared to a loss of $17 5 million in the third quarter of 2021.
A reconciliation table of adjusted EBITDA to GAAP net loss is provided in our press release filed earlier today.
As of September 32022, we had $372 1 million in cash and cash equivalents.
Investments in marketable securities.
We believe that this cash position can support our operations through the year 2024.
In addition, we continue to increase our efforts to manage costs and improve efficiencies.
So we're lowering our operating expense guidance for a second consecutive time.
We now expect GAAP operating expenses to grow 25% to 30% year over year in 2022.
Down from our prior expectation of 40% to 60%.
I would now like to turn the call back over to Jeff for closing remarks.
Thank you Claudia quantum assai is hitting an inflection point in terms of progress and the company is at the cusp of revolutionizing proteomics I am looking forward to leading this exceptional team as we advance the launch of our Revolutionary next generation single molecule protein sequencing platform and work to make it an indispensable tool for life.
Sciences researchers operator, please open the line for questions.
Thank you as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Okay.
And our first question comes from the line of Alex <unk> with Canaccord Genuity. Your line is open.
Yeah.
Thank you very much.
A quick follow on for <unk>.
Thank you very much for the great update I just had a few questions.
I don't want to elaborate on a few things Scott.
A good place to start is that.
We were wondering if you could discuss whether youll be providing any revenue guidance for 2023, and the immediate and near term. Thanks.
Yes, Alex this is Jeff I'll take that one we're not providing any guidance yet for 2023, obviously the focus right now is getting the product launched and opening up the orders. So we can begin to see what that backlog would look like guidance for next year I think will be something we'll look to do.
Once we get the initial read on the uptake.
Got it thank you.
And then kind of.
Changing gears a bit here. So additionally, you previously discussed the ability to potentially detect up to 15 have roughly 20 amino acids.
I was hoping you could update us on things like the targeted detection levels as well as any other recent prelaunch update that will be implemented to the system.
That will be launched in <unk>.
Yeah.
Yes, Thanks, Alex we'll let Patrick take that one.
Hi, Alex. Thank you for that question. So yes. So we discussed last quarter five recognizer system that gets us to roughly 15 amino acids.
We're absolutely continuing on the development.
Yes.
Process as we as we look for more binders and more.
Access to more amino acids, the interesting thing though is that.
With this system that we have now we can get a lot of information. So we have access to two a lot of the proteome, even with with the Recognizer system. We have now so we're certainly satisfied with with launching.
That being said, we're continuing to put our development efforts into <unk>.
Accessing give them more of a protein.
Got it thank you very much.
Had one last one for John .
So I was just wondering if you could highlight some of the <unk>.
Things like tracking each of the business alone you discussed previously.
And also are there any other strategic initiatives that you could discuss in detail perhaps.
They hope to have <unk> in the near to medium term. Besides some of the more obvious ones that you've already got thank you.
Sure. Thanks, Alex.
As I said in my prepared remarks, I think the approach with certainly.
A draw for me bench top.
And at the cost points. The company was planning for I think we're attractive to get a broader base of users that should ultimately help with the pace of discovery and also really the depth of the data we're going to get so I think those two things hold for me the other thing I liked.
I like to look for complementary opportunities in terms of my skill sets with the team and I think what I, what I learned in the process was really the quality of the technical team here.
Not only what they've done to date to get to what you saw in the science paper, but also just their thinking about what the art of possible could be with this technology over time and I think what was what was missing was additional capabilities and experience in the go to market and the scale upside, which I brought so I thought that that was a nice.
Complement.
The existing team.
Second question was more around strategic initiatives.
One month into the job. So we're really focused on immersion into the business focused on supporting Patrick and the team with the launch focused on helping the commercial team. That's here really refine that strategy and be ready to go I think as we as we get through this phase and get the product out the door.
We will look to provide more updates on these types of initiatives.
Earnings calls coming up in the future.
Got it. Thank you very much really appreciate your time.
And as a reminder to ask a question. Please press star one one on your telephone.
Moment, please for our next question.
And our next question comes from you on Z with B Riley Your line is open.
Hi, this is <unk>.
Carrying on for you on thanks.
Thanks for taking our questions can you talk about the market potential beyond basic research.
So I'll start and then I'll pass it over to Patrick.
I think if we if we reflect on sort.
The Nexgen DNA sequencing world right. It started with basic research people proving out the capabilities proving out the early applications and over time as more people became aware of the capability more and more applications evolved I would expect a very similar evolution here. So I think what it looks like on day, one we will.
Look very different at year, one and year three.
So on in terms of how large is the market or maybe some specific.
Application interest, we're hearing I'll turn it over to Patrick to provide a little additional color.
Yeah, Thanks, Jeff and thank you for the question, Yes, certainly as we're as we're developing the market.
We're seeing certain areas application areas and interest areas.
A lot in the drug discovery and biologics identification and screening.
A lot in very basic research.
Also seeing.
Protein validation.
Reagent validation et cetera.
And so those are on the research side, but then theres certainly applications and not just yet but in the future applications around the clinical side right. So you can you can imagine.
Identifying characterizing particular proteins in the protein forms and then moving that into clinical applications as well so.
Certainly on our Roadmaps, we're continuing to develop those markets and.
And Thats real interest.
For us as we drive adoption.
But first and foremost is driving driving that adoption and making sure we get it right.
And that we're supporting.
The early adopters, which will amplify the message right will amplify.
The applications that.
We go into.
Thanks.
Thats helpful.
Maybe if you are wondering.
If you could provide some sort of an example.
Proteins sequencing can be incorporated into the <unk>.
Process that provides diagnosis.
Clinical applications.
Yes.
Yeah, I'll start and again pass to Pat.
Trick maybe four.
Potential example, I think the important thing to do.
As I think as we said, we're focused and really enabling dose.
That research community on sort of day, one when we when we go out to the market I think a big part of the long term success of the company will be about engaging with the research community and getting published evidence of the capabilities of the technology in the range of potential applications I think ultimately the <unk>.
<unk> intelligence of the research community will be a powerful tool to really fully unlock all the opportunities for the technology clinical obviously has many flavors.
CLIA lab version of clinical labs could validate their own test.
With our technology and then you have the very long term, which as you know at some point does it become a regulated product, but maybe Patrick do you have any thing you'd like to add on.
Yes.
That's right, Jeff and I guess I would maybe just add a little bit color around.
Sort of clinical research right I mean, there's this there's this.
We've identified the research identify as a potential biomarker.
This could help accelerate getting that biomarker into into the clinical research. These are some of the things that we're thinking about continuing to have discussions around potential.
Potential collaborators.
Okay. Thanks Thats helpful. Thanks for taking our question.
Youre welcome. Thank you.
And I am showing no further questions at this time I would now like to turn the conference back to Juan Avendano for closing remarks.
Thank you all for your participation today, we look forward to updating you on our progress in the next quarterly earnings call have a good evening.
And this concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise Johan during Q&A you can dial one one.
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