Q4 2022 Nautilus Biotechnology Inc Earnings Call

Good day, and thank you for standing by welcome to the novelist biotechnology queue for a full year 2022 earnings conference call.

At this time all participants are in a listen only mode.

The speaker's presentation, there will be a question and answer session.

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Please be advised that today's conference is being recorded and it is now my pleasure to introduce your first speaker today, Alex Con Investor Relations of Nautilus Pfizer Biotechnology. Please go ahead.

Thank you earlier today.

Released financial results for the order in full year ended December 31st 2022.

Haven't received this news release or if you'd like to be added to the company's distribution list. Please send an email to investor relations at <unk> Dot <unk>.

Joining me today for Nautilus or <unk>, co founder and CEO and Annemarie Chief Financial Officer.

<unk> co founder and Chief scientist <unk> will be joining us for Q&A.

Before we begin I'd like to remind you that management will make statements. During this call. It a forward looking within the meaning of the federal Securities laws.

Statements involved material risks and uncertainties that could cause actual results or a bench to materially different from those anticipated.

<unk> information regarding these risks and uncertainties appears in the section titled forward looking statements in the press release Donald's issue today.

Except as required by law.

Any intention of obligation to update or advise any financial our product pipeline projection or other forward looking statements, whether because your information future events or otherwise.

This conference call contains sensitive information is accurate only has it the live broadcast February 23rd 2023.

With that I'll turn the call over to <unk>.

Thanks, Alex Good morning, and thank you to everyone for joining us today on this call will share results for the fourth quarter and full year 2022, and provide an update on a range of recent activities.

The progress of that'd be sharing with you today is due to the extraordinary work cause aren't growing teams in the bay area and Seattle and now in San Diego, where it was opened an office in the University Town Center, one of the largest and most talent rich biotechnology and pharmaceutical hops in the country.

The new office will initially have a focus on instrument engineering.

Agent development software engineering, and bioinformatics divisions, eventually we anticipate some percentage of our commercial team being based there as well.

This expansion of the Nautilus geographic footprint reflects our continued progress and focus on short term development milestones and longer term commercialization goes through these and other efforts we remain ever motivated by our goal to revolutionize pretty omics in the name of improving the lives and health of millions of people around the world.

Our entire team is motivated by this call fully aligned and committed to doing what it takes to make this call that reality.

When I reflect on 2022, I see it as a year of accomplishment and a foundational progress progress that will bear fruit as we move through 2023 and towards our plan to launch our protium analysis platform instruments <unk> in mid 2024.

Here are a few examples.

We made solid progress against our core scientific gold in 2022, our major focus last year with undeveloped then activities such as increasing the scale and robustness of our consumables, both reagents and blood cells.

This progress goes hand in hand, with advancing the quality and customer readiness of our offerings.

Critical to those advances where our efforts to strengthen the core of our R&D leadership team in 2022 with the addition of Sherry Wilcox as V. P of affinity reagent development and Ken Kun as V P of radiation and platform development.

Can ensure you have helped us build a world class development team, which will continue to pay dividends in 2023, as we move towards commercialization.

2022 also saw continued focus on a dancing or commercial instrument the process of taking an instrument from concept to build to commercial use involved number of important phases better closely orchestrated collaboration between diverse teams I'm pleased with the progress I saw last year in this regard.

Throughout the entire R&D organization, we continue to successfully transition to a manufacturing posher across all elements of the platform as we build towards commercial availability that work continues and will accelerate in 2023.

Early in 2022, we thought to augment our internal probe development efforts with external partnerships.

When it became clear that some of those partnerships were underperforming compared to the volume and quality of probes. We received from our own internal effort. We made the decision to put our resources, where they would yield results in the most capital efficient manner.

Our internal committee reagent development pipeline continues to proceed well data we shared at conferences throughout last year demonstrated that our internal teams are able to generate probes that are extremely strong binders across a range of short epitope targets.

These wide ranging transitions and improvements coupled with advances in our on platform workflow has allowed us to radically increase our experimental scale, our internal target for 2022 was to be able to execute on experiments up to 75 cycles, we've not only demonstrated experiments of this.

Scale, but we are now routinely performing experiments of this scale.

The progress achieved throughout 2022 enabled us to present six posters at the Hoopoe World Congress in early December covering all aspects of our platform ranging from the <unk> development to our single molecule deposition approach.

One of these poachers demonstrated decoding of a motto protein from an experiment of 24, multi SMT probes across 70 cycles.

This data demonstrated the full and and integration of our experimental and computational workflows. These.

These were exciting results that continued to expand confidence in our science and we look forward to building on these results in 2023.

Also in 2022, we nearly doubled our patent portfolio to over 40 pending patent families filed in the U S and abroad with a total of 11 granted U S patent thus far.

2023, and billing forward or IP strategy will remain global in reach as we seek protection in the U S and in foreign markets, where we expect to commercialize our platform.

These and many other accomplishments in 2022 make me excited for our future.

While we recognize that much work remains to be done I'm firm in my belief that these and other foundational efforts will continue to pay off in 2023 and beyond.

An important part of revolutionizing proteomics is inspiring others to join US on this journey and it was with that goal in mind that we announced in queue for what we're calling the novelist first access challenge or contest designed to enable researchers from a broad spectrum of disciplines to uncover new biological in.

Sites and explore new areas that are the protium as massive scale.

The response from researchers across the globe has been incredibly rewarding is unlocked the type of creativity, we'd hope to see when we offer them the chance to explore their samples unbounded by the inherent limitations of both traditional methods and are emerging affinity based and peptide sequencing methods.

We're very excited to review the proposals we've received the deadline for submissions has passed and we will announce the winners at the U S. <unk> 2023 confidence in early March stay tuned in the very near future for more on the first access challenge and how it is revealed pent up demand for a comprehensive proteomics coverage.

Our existing collaborations with Janette Tech Amgen and MD Anderson also represent partners, who are joining us on our journey to revolutionize proteomics recently, we announced a new partnership with the translational Genomics Research Institute <unk> to explore the utility of the novelist platform by studying specific.

Nick protein targets and diffuse intrinsic pontine fully Homer D IPG, a rare and often fatal childhood cancer.

The goal of this partnership is to better understand the epigenetic mechanisms at work in D. ITG by interrogating the prettier form landscape of specific proteins at a single molecule level proteoform not possible to detach by peptide base protein analysis methods.

Work should take off early this year and the expectation is that the team will publish its findings when completed.

I'm very excited about the work will be doing with teaching and I'm, especially excited by the broad set of use cases are collaborators are deploying our platform against.

From childhood cancer to aging to Neurogen degenerative diseases, we are seeing interest from researchers across a wide spectrum of applications and use cases.

Our team heard many such use case ideas when as I mentioned earlier, we participated as a primary sponsor of the human proteome organizations World Congress in early December <unk>.

Aside from engaging conversations during our six poster presentations are booth was buzzing with researchers NPI discussing how our platform could enable researchers to act and investigate fundamentally different questions than ever before possible.

It was exciting to hear proteomics researchers.

Many with deep long standing type domestic geometry enthusiastically feed the potential of our platform to serve as a valuable complement to their traditional analysis methods.

Conversations at Hoopoe, and many others throughout the year the strong submissions to our first access challenge and the enthusiastic response of our research partners. All served to strengthen my belief that novelist will bring to the market are highly differentiated platform with a wide competitive mode apply.

A platform that delivers an unmatched value proposition to researchers seeking to unlock the extraordinary potential of the protium.

These researchers have expressed over and over again, a desire for a single molecule solution, one that overcomes the inherent limitations of both traditional methods and of emerging affinity based and peptide sequencing methods in terms of sensitivity scale and reproduce ability.

I'm excited to get our platform into the hands of researchers and assist them as they drive forward their innovative impactful biological research.

As we've previously discussed my management team and I continued to proactively adapter the gravity of the current financial and economic climate, we are tightly managing our resources to maximize our runway well into 2025 and balancing that with investments that will enable us to drive.

Our scientific progress forward.

More on that let me hand, the call over to Anna for a look at our queue for and full year 2022 financials.

And Ah.

Thanks <unk>.

Total operating expenses for the fourth quarter of 2022 for $16.3 million, which was $500000 less than the fourth quarter of last year.

As a result is a testament to our diligently focused on controlling our said.

This past year, we continue to investing in the business growing our head count and making significant progress internally, while decreasing our centers overall.

Research and development expenses in the fourth quarter of 2022 $9.6 million compared to $9.9 million in the prior year.

General and administrative expenses were $6.7 million in the fourth quarter of 2022 compared to $6 $9 million in the prior year.

Overall net loss for the fourth quarter of 2022 with $13.4 million compared to $16.7 million in the fourth quarter of last year.

Bottom line was helped by are pregnant cash investments in debt securities, resulting in net other income at $2.9 million versus $127000 in the fourth quarter of last year.

We continue to take full advantage of the opportunities created by having a strong cash balance and generating earnings from our investment is another source of funding we are maximizing.

Perfect School year of 2022 operating expenses were $63.6 million compared to 50.5 $9 in 2021.

That increase at 26% was driven by growth in personnel costs.

With an increase in expenses tied to our first full year of operating as a public company.

Net loss for the full year with $57 $9 million compared to <unk>.

$53 million in fiscal year, 2021, an increase of 15% year over year.

Dot net loss includes $5.7 million in net other income compared to $183000 in fiscal year 2021.

Finally, turning to our 2023 guidance as we have consistently said, we expect to continue to grow our sense, but in a conservative intentional manner.

This year, we expect our overall operating expenses to grow by approximately 40 per cent from 2022 levels.

However, you can be sure that we will manage our growth in spending tightly to ensure we preserve our ability to invest in the commercial expansion leading up to our platform launch in mid 2024.

Our timeline for product launch are unchanged as we said previously we anticipate meaningful early access engagement and associated revenues to begin at the start of 2024.

Revenue tied to the platform launch is expected to begin in mid 2024.

We ended the year with approximately $314 million in cash cash equivalents and investments, which represents a trailing 12 month cash burn approximately $48.5 million.

All that cash burn, while certainly increase going forward, we continued to anticipate our cash runway extending well into 2025.

With that I'll turn it back to <unk>.

Thanks Anna.

In his report clearly demonstrates our unwavering commitment to responsible financial stewardship with this business and using our resources prudently and to our advantage during these challenging times.

We're excited about what lies ahead for Nautilus and the difference our platform can make in biological science, our mission to positively impact the health and lives of people around the world remains our guiding light and the standard to which we hold ourselves.

I'm grateful to our team are investors, our strategic partners and our research collaborators for joining us on this journey to revolutionize proteomics and empower the scientific community in ways never before thought possible.

We made good progress in 2022 and look forward to building on those successes as we move through 2023 on our way to a commercial launch and beyond.

With that I'll turn the call back to the operator.

Operator.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question Press Star One one again.

Please stand by while we compiled the Q&A roster.

Our first question comes from the line of Mad Max Masucci with Cowen and company next your line is open. Please go ahead.

Thanks for taking my questions.

First one exited the airways.

Over $300 billion in cash low cash burn so with the valuation re raining in the public and private area.

To a degree in.

With a few small M&A deals recently, a specialty tools space, Yeah, How's your appetite for M&A changed at all recently and if the answer is yes.

Hopes of assets could potentially.

<unk> development and commercial timeline.

Good morning, Max's et cetera, Let me take your question here and so yeah.

Yeah, you're right, you're absolutely right that the M&A environment generally in the Dx until space in the wider.

Hi Tech space has picked up.

You know, we fundamentally believe that the product that we are building has a value proposition that is spot on for the customer base and we have a very wide competitive note relative to all sit existing.

Existing traditional approaches and emerging of purchasing proteomics and so with that while I would never say never missed that we really don't see any.

Near term M&A or even even smaller strategic types of assets that we would go after we're really focused at leveraging our balance sheet.

Go add complete the development that platform to build our commercial organization at deadlocks.

Always open tip synergistic technologies out there, but I don't really see anything on the horizon or or anticipate that will that will get you some cash.

Okay, Great makes sense.

And then just in this market environment reality increased scrutiny.

Near term catalyst and milestones that can be used to track progress. So I I guess bigger picture question you know what.

What would you consider the you know the biggest advancement for the company during Q4.

Maybe even in the second half of the year and what should we be keeping our radar for cattle and updates in the first half of.

Of 23.

Yeah, <unk>, let me take the first part of that and I have and I take that to to log to just give you a little bit of detail on your question around the biggest highlight from the quarter.

You look at.

Nautilus is scientific conference scheduled for 2022, one of the things that you would observe is that at each scientific conference we had either a.

<unk> archive or a poster presentation or talk that we gave and as we went through the year. We we slowly introduced to the scientific community more and more data about our platform and more and more sophisticated experiment and as I mentioned in our prepared remarks that culminated in a really interesting.

[noise] experiment in queue for that I would consider that the greatest highlight and we demonstrated that is on a poster at a talk at yes.

The World Hoopoe call Congress in December one that has the <unk> the address just really briefly what that what.

What that poster was about and talk to you a little bit about that.

Thanks.

Oh that would be.

Sorry go ahead go ahead.

Thank you Max so I.

I'd like to just start out 2022 was with a tremendous here for our organization.

We really built out the development side of our organization and brought the scientific community on our journey.

Of with a series of milestones Central mentioned.

Presented a different conferences and.

The.

The largest milestone for me.

That we presented was really the.

The scaling of our processes.

Demonstrating that.

We can comfortably run 70, 80 cycles and do that in a routine basis with dozens of multi affinity per upset were developed by our in house pipelines and.

That really demonstrated the complete and and.

Sample prep all the way through instrument analysis through data analysis uhm aspects of our platform and to accomplish this we had to improve the scale of our agents we had to improve the quality of all of our consumables. We also had to improve our instrument to be able to support.

On that scale and so over the coming year, we expect.

That scale to continue.

The improvement in quality of reagents, and Ah maturing towards our commercial launch uhm so it'll.

Extra match just answer the last part of your question of what to expect in 2023.

Nautilus has had in 2022 and will continue to have an twenty-three a strategy of bringing the scientific community at our potential partners collaborators and customers along on the journey as we complete the development of our platform. It so as we move through conferences on the scientific facts for 2023, starting with the.

The U S. In bulk offerings to early March you should expect us to continue to have talks and continue to have poster.

Poster presentations Mandy set that continue to show our progress all the scientific such add I think that that progress will.

Indicate.

R. R progression towards that goal of a mix of 2024 launch bar instruments and re agents in our system.

Yeah.

Of course, congrats on the on the poster and Hoopoe, you know and and the 70 a cycle around on the platform.

Be curious.

Hear any any feedback.

Received.

Yeah <unk> yeah.

Congress and.

Generally if throughout.

2022.

Rolled out new menu scripts and posters.

How the feedback incentives evolved.

Yeah amongst the scientific community.

Yeah, that's a great question.

We've seen really just tremendous enthusiasm for the platform. It has been at hoopoe, we met with a very large number of of key opinion leaders.

Talked about their their anticipated needs their excitement about the platform.

Sensitivity the scale and it's I think that was underscored as well in the first access challenge.

That we saw just incredibly creative applications from around the world and and so I think what we're seeing overall is N.

<unk> one of the other complaints I'll just mentioned about hoopoe.

At our seminar really great questions Mmm strong engagement standing room only.

In fact lots of people sitting around the waffles [laughter] and it was it was just fantastic to to be able to share our journey with the with the scientific community and to have that kind of feedback.

Oh, that's great. Thank you for taking the questions.

And looking forward to 23.

Thanks Max.

Standby for our next caller.

Our next question comes from Matt Sikes with Goldman Sachs. Matt. Your line is open. Please go ahead.

Alright. Thanks for checking my question is good morning, Social program.

[noise], maybe I just want to start on that last question and can be a little bit more specific on some of that feedback, especially when you mentioned you spoke to a lot of mass spec users and I'm. Just curious as you spoke to them and gathered feedback what are some of the things that they're excited about this relative to what they're doing a mass spec is it.

Throughput is at depth of analysis, what types of specific feedback are you getting from them that can kind of gives you comfort that there is a competitive advantage relative to the mass spec being worked that work done and proteomics that's going on today.

Good morning, Ma'am. This is <unk> comments, you heard earlier from <unk>, but why don't I start.

Here, and then I'm going to pass it to Prague to give you some more specific feedback from from what he heard in December .

You know.

From a broad perspective, the way that we ensure that our product is going to hit the market correctly is by a a.

A constant and wide range of activities that engage where our potential customers and that is one on one conversations voice with the customer study is pricing study it's engagement at scientific compensated engagement.

This imbalance active.

Activity add it as well really spending time and understanding what are the applications packets are interested in and habits are technology apply the first axis challenge of course underscores that as well because that was an opportunity for them to tell us how our platform would apply to their research what we hear time and time again.

Is that traditional methods meetings generally mass spectrometry is.

And then emerging affinity based on peptide sequencing method really the challenge with this is a challenge in terms of sensitivity scale and reproduce ability.

And so to give you an example.

Set to any sensitivity from being able to analyze intact protein molecules without having to digest them into peptides gives good to log sensitivity advantage right off of the top and it's critical for this next phase of proteomics, that's coming over the course of the next five to 10 years.

Gail is another one of those things that's incredibly important to these customers are platform is being designed with a chip that can immobilize up to 10 billion protein molecule that leads to the ability to quantify across an extremely wide dynamic range, which is critical when you're in a wide range of applications for example, and pharmaceutical.

Development, where you're looking at a 96, while playback samples, which is how I see those might be 100 to 1000 cells, which is a typical amplified in each of those well you need a chip that's 10 billion protein molecules large in order to be able to analyze those with the greatest act and they're all.

No platforms that are within many orders of magnitude better better existing today or conceived and so it's those aspects that researchers have really been.

Gravity really been captivated by and.

The conversations that I've had <unk>.

Customers readily are able to see how our specifications and what we're building would be impactful and differentiated for their biological research.

Programs you have add some specific commentary from in December from the Hippo that.

Thanks to Israel.

I think one of the key aspects sense, we look at this field in the space is that.

When we find that even.

Even current mass spec users recognize the need for complimentary tools. So that they are really asking the right question using the right tool and they recognized the key aspect of our platform.

Comprehensive analysis sensitivity dynamic range.

Disability.

One time and the ease of use are are really important factors when they're thinking about their study design.

One of the aspects that we've done as as well as is really a series of deep interviews in 2022 with 40 or.

Weren't keeping and leaders most of whom are mass spec users.

And those design criteria for the platform the ability to get to a single molecule incredibly sensitively the ability to look at Proteus forums, because you are not digesting the proteins.

And are able to look potentially at multiple modifications on the same protein molecule those are capabilities that they're excited about unlocking of a biology.

Great. Thank you very much for that and then Ana just on Opex, you mentioned, the 40 per cent growth and twenty-three.

Two things one should we think about the R&D versus G&A splits as being kind of similar to what you did in 21 22 is sort of that 60 fortyish split between R&D and G&A and then secondly, how should we think about the San Diego facility costs coming through.

Assuming that's the least just.

Either as a percentage of or or just maybe kind of characterize as those costs come through and twenty-three.

That might representative of that growth and opex. Thank you.

Hi, Matt I can definitely speak to that.

As you suggest how're you mentioned the majority of our spending is now I'll definitely going to R&D in 2022 that was that approximately 63 per cent.

And given that we're smell very much <unk> I would expect that to continue for months of 2023, and then dollars. We should have more towards SG&A asthma might come up <unk> commercial launch.

We are very excited about our San Diego facility.

Fairly small consolidates I don't think it will contribute.

Any meaningful Clinton mm.

Those are facts numbers and I think overall our facilities, we've done a really fantastic job.

Our new facilities without a significant amount of cash outlay for adding significant structural sent to our ending forecast.

Got it thank you very much I appreciate it.

Okay stand by while I promote the next caller.

Our next question comes from Brandon Koolade with Jeffries Brandon. Your line is open. Please go ahead.

Hey, Thanks folks good morning.

So.

<unk> on the <unk> partnership I'm curious why they work the next logical collaboration partner.

Why focus on such a rare disease like.

And how many additional partners would you like to add and twenty-three on top of the car Park.

Yeah. So let me take a couple of.

Aspects of your question and then I'll pass it to practice talk specifically about the IPG and why this was an interesting application. When you look at our existing set of collaboration Genentech MGN Amgen MD Anderson and now T. Chad what we've tried to do is.

We've tried to focus on Proteoform use cases that are within the capabilities of platform. Today. So that we can do analysis and deliver to the customer biological I'd say that they can't get from somewhere else.

Additional criteria that we want all of these early collaborators to continue with US on this journey as we move towards platform launch and be great potential.

Early access partners data sites, and then ultimately customers and so that's kind of the initial criteria for us.

I think it's important to have researchers who are focused on really importantly, search word known well and are willing to publish with us. So that we can start building. This this body of evidence around our platform and start charging scientific community data coming off of our system and so with <unk>.

It was able to hit all of those marks now that being said as we start to move deeper into 2023, our attention will switch a bit Dr. These proteoform partnerships, but rarely switch to our early access program, which is a more formal program where the customer may.

Take 24 48 samples random on our platform. Once we are capable of broad scale Proteonomic analysis, and then we were trying to <unk> the data to that we have a small.

Fee for awhile engagement and really those early access partnerships are about about data generation, it's showing the scientific community. What we can do but equally they are important for pipeline generation and starting to drive towards pre orders at the instrumentation.

Talk to you on a chat about the particular application for T gentleman wiped interesting in our portfolio of application.

Absolutely. Thank you for your total.

<unk> J P. G is despite being a relatively rare cancer is a model for many other types of cancers. Additionally, the the particular protein target that we're studying in that collaboration.

Our goal is to measure mutations in post translational modification.

<unk>, an individual histone molecules.

And that ability will provide really critical new insights into how histone modification.

And pretty home variation thereof drive the biology of this disease, but also.

We will provide a window into epigenetic modification in general and that's a tremendous area of scientific interest. It's incredibly exciting teaching is a fantastic partner to work with on on these studies and so we're really excited to to to diving with them.

That's helpful.

He was really updated thoughts on supply chain and as you look out over the next 12 18 months 10 points you anticipated.

Oh, sorry.

Towards commercial launch.

Yeah. So I ended up it's it's a great question and we certainly are continuing to see supply chain pressures out there and most of that pressure is with respect to lead times for various things that can be simple things for simple things like.

<unk> tapped and it can be it can be more complex pieces of instrumentation as well the.

Third area for US is that there are certainly are are some.

Slow parts of the supply chain with respect to some of the parts of our instrument as well and so.

What I would tell you that yes, there is some pressure, but we are managing it well we have a team on the supply chain.

R. S V P of operations supply chain Mary Poplin has been doing this for four decades, and we've we've been doing a good job on our instruments side and making sure that we have pets pipeline for all of the instrument adults that we're planning we're planning our supply chain appropriately given the.

Extensively tabs for a few components.

Gotcha last question may be better for the.

The.

Look.

Maybe another 30 million.

And then.

Then let me mostly related to the back half an hour.

No I think you've been pretty cautious about building the commercials.

Too soon.

Would that'd be get this fixed in the back half I guess generally.

That incremental 30 minutes.

The concentrated.

I can speak to the first part and then.

Maybe you want to attack onto that.

Uhm.

Last year was a bit.

Interesting yeah, we saw in depth and expenses as we consolidated our costume and we picked up in the second half.

I would expect going forward that we would see more consistent growth over the course of the year certainly.

Mm highest spending being towards the end of the year.

And that's really.

Still very much focused on development, we're still continuing to invest their we're preparing.

R scallop quality manufacturing. So those are some of the areas, where we will continue to plant.

Hires N dollars as we scale or experimental capacity.

And then certainly towards the tail end of the year, we will begin hiring and.

Or the commercial launch that we expect in that first half.

And in the middle of 2024.

Yeah. So let me take a second half to take your question here.

Let me take the second half of your question here and then you can dive and Martha.

The things you asked was really.

When to expect the commercial buildup and I think that I will add a little bit of nuance here.

There were some questions earlier about.

Macro environment, and how we're reacting to it and one of the things that that we will do here.

Our commercial launch in mid 2024 is still data commercial teams, but there are two things that you should relax their number one is that the team itself. We believe will be a very efficient team and and it's not going to a team that's going to be huge.

Primary.

<unk> there is that we have a instrument deal price of initial deal price, that's roughly a million dollars and so the transactional load of being able to generate significant bookings from a particular sales rep out there actually is actually really good.

That leaves itself to sales efficiency and helps us with the cost structure of our commercial organization.

The other thing to think about it that when.

When capital is readily available in the wider market you would build your commercial team and start your Papa formal activities earlier in the in the cycle and when things are tight like the environment is today, you'll build the commercial team much closer to the launch and so.

I'm not going to commit to exactly what the timing isn't that commercial team built out, but what I will tell you guys that that we will compress that down pretty tight.

In front of that commercial launch and that while that might affect.

Our revenue ramp right right. After the commercial launch it's our job as a management team to try to mitigate that but we think that that's probably the most prudent thing to do because the last thing we want to do it is overbuilt a commercial organization and then have some sort of timing difficulties that leads to an additional pressure on our own.

Gotcha.

Okay. Our last question comes from <unk> Savant with Morgan Stanley .

Hold please while I connect you.

<unk>. Thank you for taking the questions.

I guess the first one for me would be a procedure. Thank you for the color on the access challenge, but I was thinking aside from the <unk> and your conference presentation that releases.

Also you're keeping customers engaged ahead of you may 24 launch.

Yeah. So that's a that's a really great question. So I think that there are a lot of different ways that we are keeping the the scientific community needing the the researchers and architectural collaborators and customers engaged so.

First and foremost we've had a large number of conversations hundreds of conversations over the course of the company's six year life with with potential customers and partners and the response has been incredible we continued to engage with those customers given them regular updates we engage with them.

On on surveys and.

My voice of the customer types of interviews.

We meet with them at various conferences and spend time, keeping them up to date. So that's number one number two with that.

One of the things that's really <unk>.

Really been great here at model is that there is there is quite a bit of inbound activity for potential partners and customers because of the excitement around our platform and the capabilities that we've we've begun to show at scientific comprehensive and so we we have a steady stream of conversations with customers getting them up to speed of doing presentations.

Because of that in doubt types of activity.

One of the other things as well that we did in 2022 is that we.

Gauged with about 40, K O L. Most of whom are mass spec users and we did deep interviews with them and getting them on on where their pain points are what they're looking for out of a proteomics solution that that really tries to make a significant impact on their biological research and through those engagements we've had ah.

Continued meaningful dialogue so all of those things together the first access challenge the data released.

We have we have a very very good.

Good interface with architectural customers and collaborators authors.

Got it that's helpful and <unk> I'm just wondering if you look over the past year and all of the changes in the proteomics landscape How's your views on the competitive landscape changed at all over the past few months and are you anticipating any dynamic changes ahead of you in maintaining for lunch.

Yeah, that's that's a great question.

<unk> over 2022 in the first couple of months here of 2023 continues to reinforce for me that we are building a highly differentiated product with a wide competitive boats.

What I've seen from the.

The traditional method competitors does that seem continued evolutionarily improvements to their platforms, but nothing.

That really is fundamentally game changing and from the emerging competitive landscape.

Few names that are performing quite well on the targeted side of proteomics, which is different and highly complimentary to what we're doing.

But on the discovery side, where there are some companies looking to improve sample preparation from that are focused on peptide sequencing methods. When we look at the capabilities of those platforms and how the evolved over.

Over the course of the last 12 to 14 months. If I include the first couple of months of 2023, I'm not seeing any major capability improvements or anything on the horizon that would that would.

That would close the gap with the capabilities of our platform that we're building.

Great and one final one for me I guess, it's a little bit looking out into the longer term, but the clinical market is a huge opportunity for you guys and with a clinical market today, relying primarily on single biomarker assays, what do you think it'll take to drive that market too.

Using a broader set of proteins and the clinic and I know you guys highlighted sensitivity scales disability, sometimes and ease of use as key characteristics, but what do you think are some of the key features that this specific market would be looking for.

Okay I think that's a great question I think when we when we look at at the clinical market.

We've seen a similar trend in transition from single marker based studies two panels occurring genomics and it started with you providing the research data across a wide spectrum of initially mutations in genomics.

So the people were able to take a more comprehensive look.

In a retrospective manner.

From that comprehensive look it just made sense to start using panels, there was a point that.

Measuring those panels bi orthogonal means.

Was inefficient and it was it was easier it was faster.

To simply use the discovery platform as a clinical platform.

So we anticipate a similar.

Transition will occur in proteomics initially people will use the discovery platforms look at a wide variety of markers understand the synergies between them understand the predictive power that comes from being able to look at many biochemical axes at the same time.

Well as diving into pretty farms, and really looking at that molecular heterogeneity as a marker.

As those panels get larger and larger and it becomes <unk>.

Challenging to convert them into traditional assay is alyse as others <unk>.

It'll spur a natural transition towards using our discovery platform.

As a clinical platform.

And we are excited about that opportunity going forward, we're preparing for that opportunity going forwards.

Mmm.

I think it's it's a really natural evolution of the field.

Great. Thank you guys for the time today.

Okay.

That does thank you. Thank you everyone for your participate conference. This does conclude the program and you may now disconnect.

Hello, Eric can you hear me.

Yes.

Oh nice cough.

Just have a few things I wanted to just go with you.

Usually I, probably know which ones you're going to say, but you go ahead.

Okay. The first one you've probably nothing I guess, but it has to do with the chat to have to do with the <unk>. The first one to chat is when Alex Con sent you the script.

Once you have opened it up and had a quick look you should respond I know they want you to respond like within 20 seconds, but <unk> you should let him know I'll, let the client know that you did receive it and that you were able to eat.

Will you receive it and you were able to look at it.

Very good point Yep I didn't do that.

Also oh, you're welcome for the Q&A.

Also lessen a chat.

Normally they asked a week before the last person.

They ask if you can ask do you want me to re prompter Q&A instructions.

Oh I know they said before but you just wanted to verify that they do not want you to read prompt <unk>.

Cause sometimes they change their mind.

I texted I tested them about 10 minutes ago.

Did you see the text that I put in there Oh, yes, and but I don't know whether anyone was monitoring the chat.

Respond.

Yeah, well the thing is that's why I normally do it like two or three questions.

Questions before like before I would've done it yeah, I would've done it what at the Max Sykes.

Matt Sykes went up I would've been tested online I left the planet the chain I'll close the call. After the teacher's questions. So address is right is that what you think will that be okay or is that is that good.

And then at the very end, while they're doing the closing remark, though to put it and it's been a pleasure to work with you all.

And let's just say that the very very end, while they were setting up instead of putting it together. They may have just thought that that was the first part with just a formality mmm.

Yeah.

No you're right, yeah, I I expected.

Think that I expected someone to respond and I was needing to make sure that they wanted me to go straight to closing, but you're right. If I had if I had reached out a little bit earlier I think I was just expecting someone to be monitoring the chat with him. It didn't look like anyone was but yeah.

Which is understandable because Alex Con made it sound like he was gonna do that cause he was moving.

<unk> on the Henry So it was natural for you to think that.

Usually I just ask is someone going to be monitoring and once I like <unk>.

I don't see that as a problem. It's just that yes, the only I guess the only thing was that once they.

The last participant has finished and say thank you for answering my questions.

Muslim back into the.

Moving from the speakers and this goes straight into the script, just don't even worry whether they're going to say anything on that just go straight into it mmm Mmm Mmm does otherwise cause there's no way of knowing unless they jump they actually say something there is no way of knowing and there's going to be that dead air right. They don't like to do.

<unk> did you all thought I was going to talk about yet never announced a participant.

They have big promoter.

Exactly [laughter].

I was clicking around there.

Those multiple things that you have to confirm and all of that and then I realized as soon as I started speaking I thought Oh, my God I'm introducing him before I've actually promoted him.

So yeah that was a good safe, but yeah. It was just the fact that you started noticing him Jose Okay. So I'll just take the X games.

Too long, but yeah, you have to wait till after you're done totally did you say will be for the next person [laughter]. Yeah. That's what I said standby, while I, while I connect you or something like that I realized the politically right in the middle of the time that I was speaking, but no. Thanks I appreciate I appreciate the feedback.

No problem the only other thing is.

This is one you might Wanna ask Chuck on.

Starting at 855 with Matt Sikes, there was sort of like distortion on the line.

Initially.

I thought it was just Sykes line I didn't think anything of it but I noticed both <unk> and.

These names again.

$2 per rug, yeah. They started having the same type of distortion. It was the only on those three lines.

You may want to check it started at 855 with that site, but you know.

I want to check the check to see if you need to do a Zen dex ticket for that.

If it was just okay. Yeah. It was just the participant.

Worried I wouldn't worry about it but when it started happening it it doesn't and I understand <unk>.

They are not they're not only going to best weather [laughter].

Luckily it was especially which I noticed with Anna's call and I had I had actually put myself on mute and typed out something to put in the chat to recommend because I asked them. Initially I said I recommend that anyone who is not speaking put themselves on mute and there was that guy Chris Blessington.

It was on the call the hold time, but he was not muted and then at one point when Anna was speaking there was four people.

We're all on lies and I noticed that her call was a little bit distorted and I had typed out.

A prompt to ask people too.

To put themselves on mute and then it actually it righted itself and so I erased it.

I see yeah, I didn't really notice it on her line like I said I just noticed it.

Maybe a little distortion, but because also you didn't do a sound check with her you just asked for her you know just to say hi to her.

There was no way to know whether there was anything wrong with her lying on it was a <unk>.

<unk> Yeah. When C came on C C spoken off of extended or I.

Good point, Yeah, I mean, I felt like she had spoken enough to where I can hear that she actually sounded like the clear as one when she first came on on the line, but yeah, but as it just it just as a formality cause I didn't like I said I didn't notice it and thankfully Chris did keep his line quiet.

So he didn't interrupt.

One or two other people [laughter].

But yeah. It was just as soon as she came on.

I thought I basically forgot the fact that they were since.

Since you didn't have a sandwich I I forgot what she sounded like so I was just okay. So I heard there's a little bit off but everyone can understand it I just couldn't hear she's gonna sound good on the recording no worries.

The site cause I was like Oh, [laughter]. So so should I ask <unk> to check the recording.

Yeah.

At eight eight minutes and 55 seconds into the Q&A.

Is that what you said you said 855, but is it 855 when sites came on task is classified into Q&A, well 855 P. M out my time [laughter] Oh, Okay. Thank you I could <unk> about 10 minutes after the.

Cause he took about 10 minutes about 10 minutes. After the recording ended that's when I started hearing it.

Okay Yeah.

Okay, alright, good good feedback I'll reach out to check about that as well and if he does they put it as antiquing is going to you can still chat me on Microsoft teams I'll try to help as much as possible. The only thing is when you put if you do put down 855 am make sure it's eastern time okay.

Cause I don't know what time it was for you when the <unk>. It's 330 in the afternoon for me. Okay. So is heading to three three now that we're a little bit to about 255 for you.

You're talking about 255, okay yeah.

Okay.

Just $3.

Matt Sikes put out.

And basically the owner of the corner desk interesting cause they weren't even together but.

But they have both of them have problems.

The oldest did it start I thought that I thought that both of them pirog, particularly sounded very clear to me.

And the only the only person that.

I found difficult to hear.

Was Brandon <unk>.

He was I found him.

I found him very very.

Clear.

What.

But otherwise.

Otherwise iPhone it sounded clear to me.

Alright, we're gonna have to go so talk to Chuck but it looks like someone else is trying to get in so we need to end the call <unk> Oh, Okay alright.

I'm I'm ending it hang on just a SEC alright, and once again <unk> overall good call [laughter].

Thank you appreciate that and now it's not letting me.

L.

Huh It just oh.

Okay, Firstly, we need to do is.

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

[music].

[music].

[music].

[music].

Good day and thank you for.

Standing by and welcome to the novelist Biotechnology Q4, and full year 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 the session you will need to press star one one on your telephone.

SAR one one and then you'll hear an automated message advising you that your hand is raised to withdraw your question Press Star one again.

Please be advised that today's conference is being recorded and it is now my pleasure to introduce your first speaker today, Alex Conde Investor Relations of novel Biotechnology. Please go ahead.

Thank you earlier today <unk> released financial results for the quarter and full year ended December 31, 2022. If you haven't received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investor relations at Nautilus stockpile.

Joining me today from Novelis, our Suzhou Hotel co founder and CEO and Annemarie, Chief Financial Officer, <unk> co founder and Chief scientist Parag Miller will be joining us for Q&A.

Before we begin I'd like to remind you that management will make statements. During this call that are forward looking within the meaning of the federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

Information regarding these risks and uncertainties appears in the section titled forward looking statements in the press release issued today.

Except as required by law knowledge disclaims any intention or obligation to update or revise any financial our product pipeline projections or other forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information and is accurate only as of the live broadcast February 23rd 2023.

With that I'll turn the call over to <unk>.

Thanks, Alex.

And thank you to everyone for joining us today on this call we will share our results for the fourth quarter and full year 2022, and provide an update on our range of recent activities.

The progress I'll be sharing with you today is due to the extraordinary work of our growing teams in the Bay area and Seattle and now in San Diego, where we opened an office in the University Town Center, one of the largest and most talent rich biotechnology and pharmaceutical hubs in the country.

The new office will initially have a focus on instrument engineering reagent development software engineering and bioinformatics positions. Eventually we anticipate some percentage of our commercial team being based there as well.

This expansion of the Nautilus geographic footprint reflect our continued progress and focus on short term development milestones and longer term commercialization goals through these and other efforts we remain ever motivated by our goal to revolutionize proteomics in the name of improving the lives of millions of people around the world.

Our entire team is motivated by this goal fully aligned and committed to doing what it takes to make this goal a reality.

When I reflect on 2022, I see it as a year of accomplishment and a foundational progress progress that will bear fruit as we move through 2023 and towards our plan to launch our protium analysis platform instruments and reagents in mid 2024.

Here are a few examples.

We made solid progress against our core scientific goal in 2020, our major focus last year was on development activities, such as increasing the scale and robustness of our consumables, both reagents and flatten out.

This progress goes hand in hand, with advancing the quality and customer readiness of our offering.

Critical to the advances where our efforts to strengthen the core of our R&D leadership team in 2022 with the addition of Sherry Wilcox as VP of affinity reagent development and 10-Q as VP of reagent and platform development Kennan.

Kenyan Sherry helped us build out a world class development team, which will continue to pay dividends in 2023, as we move towards commercialization.

2022 also saw continued focus on advancing our commercial instrument the process of taking the instrument from concept to build to a commercially it involved a number of important basis better closely orchestrate the collaboration between diverse teams I am pleased with the progress that you saw last year in this regard.

Throughout the entire R&D organization, we continue to successfully transition to a manufacturing posture across all elements of the platform as we build towards commercial availability that work continues and will accelerate in 2023.

Early in 2022, we thought to augment our internal product development efforts with external partnerships.

When it became clear that some of those partnerships were underperforming compared to the volume and quality approach, we were seeing from our own internal efforts. We made the decision to put our resources, where they would yield results in the most capital efficient manner.

Our internal affinity reagent development pipeline continues to proceed well data we shared at conferences throughout last year demonstrated that our internal teams are able to generate probes that are extremely strong binders across a range of short epitope targets.

These wide ranging transitions and improvements coupled with advances in our on platform workflow has allowed us to radically increase our experimental scale, our internal target for 2022 was to be able to execute on experiments up to 75 cycles with not only demonstrated experiments.

Scale, but we are now routinely performing experiments at this scale.

The progress achieved throughout 2022 enabled us to present six posters at the Hoopoe World Congress in early December covering all aspects of our platform ranging from the <unk> development to a single molecule deposition approach.

One of these purchase demonstrated the coating of a model protein from an experiment of 24 multifamily probes across 70 cycles.

This data demonstrated the full end to end integration of our experimental and computational workflows. These.

Were exciting results that continue to expand confidence in our science and we look forward to building on these results in 2023.

Also in 2022, we nearly doubled our patent portfolio to over 40 pending patent families I hope in the U S and abroad with a total of 11 granted U S patents, thus far in two.

2023, and going forward, our IP strategy will remain global in reach as we seek protection in the U S.

And in foreign markets, where we expect to commercialize our platform.

These and many other accomplishments in 2020 to make me excited for our future.

While we recognize that much work remains to be done I am firm in my belief that these and other foundational efforts will continue to pay off in 2023 and beyond.

An important part of revolutionizing proteomics is inspiring others to join US on this journey and it was with that goal in mind that we announced in Q4, what we're calling the Nautilus first access challenge a context designed to enable researchers from a broad spectrum of disciplines to uncover new biological.

Sites and exploring new areas of the proteome at massive scale.

The response from researchers across the globe has been incredibly rewarding is unlocked the type of creativity, we'd hope to see when we offer them the chance to explore their samples unbounded by the inherent limitations of both traditional methods and are emerging affinity based and peptide sequencing methods.

Very excited to review the proposals we have received the deadline for submission of this path and we will announce the winners at the U S. Through 2023 conference in early March.

In the very near future for more on the first access challenge.

And how it has revealed pent up demand for comprehensive proteomics coverage.

Our existing collaborations with Genentech Amgen and MD Anderson also represent partners, who are joining us on our journey to revolutionize proteomics recently, we announced a new partnership with the translational Genomics Research Institute P. J to explore the utility of the Nautilus platform by studying.

<unk> protein targets in diffuse intrinsic pontine glioma D IPG, a rare and often fatal childhood cancer.

The goal of this partnership is to better understand the epigenetic mechanisms at work in the ITG by interrogating the pretty a form landscape with specific proteins at the single molecule level proteoform not possible to detached by peptide based protein analysis methods.

Where it should kick off early this year and the expectation is that the team will publish its findings when completed.

I'm very excited about the work, we'll be doing with PJM and I'm, especially excited by the broad set of use cases, our collaborators are deploying our platform again.

From childhood cancer to aging <unk> degenerative diseases, we are seeing interest from researchers across a wide spectrum of applications and use cases.

Our team heard many such use case ideas when as I mentioned earlier, we participated as a primary sponsor of the human Proteome organization World Congress in early December .

Side from engaging conversations joining our six poster presentations, our booth was buzzing with researchers NPI discussing how our platform could enable researchers to act and investigate fundamentally different question than ever before possible.

It was exciting to hear proteomics researchers there.

Any with deep longstanding ties to mass spectrometry enthusiastically feed the potential of our platform to serve as a valuable complement to their traditional analysis methods.

Conversations that hoopoe and many others throughout the year the strong submissions to our first access challenge and the enthusiastic response of our research partners all serve to strengthen my belief that <unk> will bring to the market our highly differentiated platform with a wide competitive moat a.

Our platform that delivers an unmatched value proposition to researchers seeking to unlock the extraordinary potential of the proteome.

These researchers have expressed over and over again, a desire for a single molecule solution one.

That overcomes the inherent limitation of both traditional methods and are emerging affinity baked and peptide sequencing methods in terms of sensitivity scale and reproducibility.

I'm excited to get our platform into the hands of researchers and assist them as they drive forward their innovative impactful biological research.

As we've previously discussed my management team and I continue to proactively adapt to the gravity of the current financial and economic climate, we are tightly managing our resources to maximize our runway well into 2025 and balancing that with investments that will enable us to drive.

Our scientific progress powered.

For more on that let me hand, the call over to Anna for a look at our Q4 and full year 2022 financials.

Anna.

Thanks, Joe.

Total operating expenses for the fourth quarter of 2022 were $16 3 million, which was $500000 loss in the fourth quarter of last year.

This result is a testament to our diligent focus on controlling our spend.

This past year, we continued investing in the business growing our head count and making significant progress internally, while decreasing our expenses overall.

Research and development expenses in the fourth quarter of 2020 296 million compared.

Compared to $9 $9 million in the prior year.

General and administrative expenses were $6 $7 million in the fourth quarter 2020, compared to $6 9 million in the prior year.

Overall net loss for the fourth quarter of 2022, with $13 4 million compared to $16 7 million in the fourth quarter of last year.

Our bottom line was helped by our prudent cash investments in debt securities, resulting in net other income of $2 9 million.

Versus $127000 in the fourth quarter of last year.

Continue to take full advantage of the opportunities created by having a strong cash balance and generating earnings from our investment as another source of funding we are maximizing.

For fiscal year 2022, operating expenses were $63 6 million.

<unk> to $55 million in 2021.

That increase of 26% was driven by growth in personnel costs, along with an increase in expenses tied to our first full year of operating as a public company.

Net loss for the full year was $57 9 million compared.

Compared to $53 million in fiscal year, 2021, an increase of 15% year over year.

Net loss includes $5 7 million and net other income compared to $183000 in fiscal year 2021.

Finally, turning to our 2023 guidance as we've consistently said, we expect to continue to grow our spend but in a conservative intentional manner.

This year, we expect our overall operating expenses to grow by approximately 40% from 2022 level.

However, you can be sure that we will manage our growth in spending tightly to ensure we preserve our ability to invest in our commercial expansion leading up to our platform launch in mid 2024.

Our timeline for product launch are unchanged as we said previously we anticipate meaningful early access engagement and associated revenues to begin at the start of 2024.

Revenue tied to the platform launch is expected to begin in mid 2024.

We ended the year with approximately $314 million in cash cash equivalents and investments, which represents a trailing 12 month cash burn of approximately $48 5 million.

While that cash burn will certainly increase going forward, we continue to anticipate our cash runway extending well into 2025.

With that I'll turn it back to Peter.

Thanks Anna.

And his report clearly demonstrate our unwavering commitment to responsible financial stewardship of this business and using our resources prudently and to our advantage during these challenging times.

We're excited about what lies ahead for Nautilus and the difference our platform can make in biological science.

Our mission to positively impact the health and lives of people around the world remains our guiding light and the standards to which we hold ourselves.

I'm grateful to our team our investors our strategic partners and our research collaborators for joining us on this journey to revolutionize proteomics and empower the scientific community in ways never before possible.

We made good progress in 2022 and look forward to building on those successes as we move through 2023 on our way to a commercial launch and beyond.

With that I'll turn the call back to the operator.

Operator.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question Press Star one again.

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

Our first question comes from the line of Matt Max Masucci with Cowen and company Max Your line is open. Please go ahead.

Hi, Thanks for taking the questions.

First of all on exited the Airways.

Over $300 million in cash low cash burn so with the valuation re rating in the public and private arena.

To a degree.

With a few small M&A deals recently in the specialty tools space has your appetite for M&A changed at all recently and if the answer is yes.

What types of assets could potentially.

<unk> development.

Commercial timelines.

Good morning, Matt Let me take your question here and so.

Yes, youre, absolutely right that the M&A environment, generally and the Dx until space and the wider.

Biotech space has picked up.

We fundamentally believe that the product that we are building has a value proposition.

Proposition that is spot on for the customer base and we have a very wide competitive moat relative to.

Existing traditional purchase and emerging of purchasing power.

With that well I would say never say never with that we really don't see any.

Near term M&A or even even smaller strategic types of assets that we would go after we're really focused on leveraging our balance sheet to go and complete the development of that platform too.

Our commercial organization at that work.

We're always open to synergistic technologies out there, but I don't really see anything on the horizon or anticipate that that will be a use of cash.

Okay, Great makes sense.

And then just.

This market environment.

Increased scrutiny.

Near term catalysts and milestones that can be used to track progress. So I guess bigger picture question.

What would you consider the biggest advancement for the company during Q4 or maybe even in the second half of the year end.

What should we be keeping on our radar for catalysts and updates.

First half was.

23.

Okay.

Yes, Mr. Sergio let me take the first part of that and I'm going to kick that to Kellogg to just give you a little bit of detail on your question around the biggest highlight from the quarter.

As you look at.

<unk>.

Scientific conference scheduled for 2022, one of the things that you would observe is that at each scientific conference we had either a.

A manuscript that we got the bio archive or a poster presentation or talk that we gave and as we went through the year.

Slowly introduced at the scientific community more and more data about our platform and more and more sophisticated experiment.

As I mentioned in our prepared remarks that culminated in a really interesting extended in Q4 that I would consider that the greatest.

And we demonstrated that at a on a poster at a talk at yes.

At the World.

Congress in December .

Bob said address just really briefly what that what that poster was about and talk to you a little bit about that.

Thanks again.

That would be.

Sorry go ahead go.

Go ahead.

Thanks Max.

I'd like to just start out 2022 was a tremendous year for our organization.

Really built out the development side of our organization and brought the scientific community on our journey.

Of.

With a series of milestones as a central mentioned.

Presented at different conferences.

So.

<unk> milestone for me.

That we presented was really the.

The scaling of our processes.

<unk>.

We can comfortably run <unk>.

<unk> 70 to 80 cycles and do that on a routine basis.

With dozens of multi affinity probes were developed by our in house pipelines.

And that really demonstrated the complete end to end Sam.

Sample prep all the way through instrument analysis through data analysis.

Aspects of our platform and to accomplish this we had to improve the scale of our reagents, we had to improve the quality of all of our consumables. We also had to improve our instrument to be able to support.

Runs on that scale and so over the coming year, we expect.

That scale to continue.

The improvement.

Movement in quality of reagents.

And maturing towards our commercial launch.

Sure Joe.

Thanks, Matt.

And that's just to answer the last part of your question of what to expect in 2023.

<unk> has had in 2022 and we'll continue to have in 2003, our strategy of bringing the scientific community and our potential partners collaborators and customers along on that journey as we complete the development of our platform and so as we move through conferences.

Scientific side through 2023, starting with the U S and bulk offerings in early March you should expect us to continue to add talks adds continue to have.

Poster presentations many steps that continue to show our progress all the scientific spot and I think that that progress will.

Indicate.

Our our progression towards that goal of a mid 2024 launch of our instruments and reagents and our simple.

Yes.

Of course, congrats on the on the poster and Grupo.

And the 70 cycle run on the platform.

Would be curious.

Here and any feedback you received.

Yes.

The annual Congress.

Yes generally.

Throughout 2022, yeah, as you've rolled out new menu scripts.

And posters.

How the feedback incentives evolved.

Yes, amongst the scientific community.

Yes.

Question.

We've seen really just tremendous enthusiasm for the platform.

It has been at hoopoe.

We met with a very large number of <unk>.

Key opinion leaders.

<unk> talked about there.

Sure.

Anticipate and manage their excitement about the platform.

The sensitivity of the scale and it's.

I think that was underscored as well in the first access challenge.

That we saw just incredibly creative applications from them.

Out in the World and.

And so I think what we're seeing overall is.

And one of the other point ill just mentioned about hoopoe.

At our seminar really great questions.

Strong engagement standing room only.

In fact lots of people sitting around the waffles.

And it was it was just fantastic to be able to share our journey with the with the scientific community and to have that kind of feedback.

Well that's great.

Thank you for taking the questions.

And looking forward to 2000.

Thanks, Matt.

Standby for our next caller.

Our next question comes from Matt <unk> with Goldman Sachs. Matt. Your line is open. Please go ahead.

Great. Thanks for taking my questions good morning, Social program.

Maybe I just wanted to start on that last question a little bit more specific on some of that feedback, especially you mentioned you spoke to a lot of mass spec users.

Just curious as you spoke to them and gathered feedback what are some of the things that they are excited about our knowledge relative to what theyre doing a mass spec is it.

Throughput is it depth of analysis, what types of specific feedback youre getting from them that kind of gives you comfort that there is a competitive advantage relative to the mass spec being worked that work done in proteomics thats going on today.

Good morning, Matt. This is Joe comments, you heard earlier, we're from provide but why don't I start.

And then I'm going to pass it to Brad could you be more specific feedback from from what <unk> heard it in December .

From a broad perspective.

Way that we ensure that our product is going to hit the market correctly is buy a car.

Constant and wide range of activities that engage with our potential customers.

And that is one on one conversations voice of the customer study is pricing steady engagement scientific compensate that engagement.

Inbound.

Activity add it as well.

Really spending time and understanding what are the applications scientists are interested in and how does that technology apply the first axis challenge of course underscores that as well because that was an opportunity for them to tell us how our platform would apply to their research what.

We hear time and time again is that traditional method, meaning generally mass spectrometry.

And then emerging affinity based and peptide sequencing method really the challenge with those is a.

A challenge in terms of sensitivity scale and reproducibility and so to give you an example.

Sensitivity, perhaps being able to analyze intact protein molecules without having to digest them into peptide gives you got two lots sensitivity advantage right off the top and it's critical for the next phase of proteomics, that's coming over the course of the next five to 10 years Gail is another one of those things that.

Incredibly important to these customers our platform is being designed with a chip that can mobilize up to 10 billion protein molecule that lead to the ability to quantify across an extremely wide dynamic range, which is critical when you're in a wide range of applications. For example in pharmaceutical development, where you are.

Looking at maybe swap play to have samples, which was how do I say those might be 102000, <unk>. The typical to amplify in each of those well you need a chip that's 10 billion protein molecules large in order to be able to analyze those with the greatest gap and there are no platforms better than many.

Orders of magnitude better better existing today or conceived and so those aspects that researchers have really been.

Grab it really been captivated by and in the conversations that I've had.

Customers rapidly are able to see how our specification and what we're building would be impactful and differentiated for their biological research.

<unk> had some specific commentary from December from the Hippo.

Thanks, Joe.

I think one of the key aspects as we look at this field in this space.

Yes.

And we find that.

Even.

Even current mass spec users.

Ignite is the need for complementary tools, so that they are really.

Asking the right question using the right tool.

And they recognize the key aspects of our platform.

Comprehensive analysis sensitivity dynamic range.

Reproducibility.

<unk> time and ease of use are really important factors when they're thinking about their study design.

One of the aspects that we've done as.

As well as really a series of deep interviews in 2022 with 40.

Our more key opinion leaders most of whom are mass spec users.

And those design criteria for the platform the ability to get to single molecule incredibly sensitively the ability to look at protein forms because you are not digesting the proteins.

And are able to look potentially at multiple modifications on the same protein molecule.

Those are capabilities that theyre excited about unlocking novel biology.

Great. Thank you very much for that and then just on Opex you mentioned, the 40% growth in 'twenty three.

Two things one should we think about the R&D versus G&A splits as being kind of similar to what you did in 'twenty, one 'twenty two with sort of that $60 Fortyish split between R&D and G&A and then secondly, how should we think about the San Diego facility costs coming through I'm, assuming that's a lease just.

Either as a percentage of ore or just maybe kind of characterize as those costs come through in 'twenty three.

That might represent of that of that growth in opex. Thank you.

Hi, Matt.

I can definitely speak to that.

As you suggest how are you.

Mentioned.

The majority of our spending is definitely going to R&D in 2022 that was that approximately 60%.

And given that we're still very much focused on development I would expect that to continue for most of 2023 and then once you have more towards SG&A as we've not come up closer to that commercial launch.

All right.

We are very excited about our San Diego facility, it's a fairly small will consolidate and I don't think it won't contribute any meaningful downtime.

Hi.

Those opex numbers.

Overall, our facilities, we've done a really fantastic job.

Looking on new facilities without a significant amount of cash outlay for adding significant structural spend to our ending markup.

Got it thank you very much I appreciate it.

Okay standby, while I promote the next caller.

Our next question comes from Brandon Couillard with Jefferies. Brandon. Your line is open. Please go ahead.

Hey, Thanks folks good morning.

So Joe on the T. Gen partnership I'm curious why they work the next logical collaboration partner.

Why focus on such a rare disease like <unk> and how many additional partners would you like to add in 'twenty three on top of the card products.

Yes, So let me take a couple of <unk>.

Thanks for your question and then I'll pass it to product to talk specifically about the IPG and why this is an interesting application. When you look at our existing set of collaboration Genentech Amgen Amgen MD Anderson and now T. J, what we've tried to do is.

We've tried to focus on Proteoform use cases that are within the capabilities of the platform. Today. So that we can do analysis and deliver to the customer biological insight that they can't get from somewhere else.

Additional criteria that we want all of these early collaborators to continue with US on this journey as we move towards platform launch and be great potential.

Early access partners data sites, and then ultimately customers and so thats kind of the initial criteria for us.

It's important to us.

Researchers who are focused on really important research, who are known well and are willing to publish with after what we can start building. This.

Its body of evidence around our platform and start trading scientific data coming off of our system.

And so with T G I.

It was able to hit all of those marks now that being said as we start to move deeper into 2023 our attention.

Switch a bit back to these proteoform partnerships, but rarely switched to our early access program, which is a more formal program where the customer may.

Yes take 24 to 48 samples run them on our platform. Once we are capable of broad scale Proteomic analysis, and then we would return that data to them we might have a small.

For web engagement and really those early academic partnerships are about.

Data generation and showing the scientific community, what we can do but equally they are important for pipeline generation and starting to drive towards preorders of the instrumentation.

Tom do you want to come back.

<unk> application for T J, and then wiped interesting at all.

Polio or applications.

Absolutely. Thank you CFO .

I think the IPG is despite being a relatively rare cancer is a model for many other types of cancers. Additionally, the particular protein target that we're studying in that collaboration.

Our goal is to measure mutations and post translational modification.

<unk> forums on individual histone molecules.

And that ability will provide really critical new insights into how histone modification.

And pretty hard variation thereof drive the biology of the disease, but also.

We will provide a window into epigenetic modification in general and that's a tremendous area of scientific interest. It's incredibly exciting <unk> is a fantastic partner to work with on on these studies. So we're really excited to two to dive in with them.

That's helpful.

Any updated thoughts on supply chain as you look out over the next kind of 12 to 18 months can you pinpoint you anticipated.

I'm sorry towards the commercial launch.

Yes, Brian .

It's a great question and we certainly are continuing to see supply chain pressures out there and most of that pressure is with respect to lead times for various things that can be simple things for simple things like cubes and bypass tapped and it can be it.

It can be more complex pieces of instrumentation as well the third area for us.

There are certainly are some.

Slow parts of the supply chain with respect to some of the parts of our instrument as well and so.

What I would tell you that yes, there is some pressure, but we are managing it well we have a team.

On the supply chain, the slide by our SVP of operations and supply chain.

<unk> has been doing this for four decades and we.

We do.

Do you think a good job on our instrument side and making sure that we have pipeline for all of the instrument adults that we're planning we're planning our supply chain.

Appropriately given the extensive lead times for a few components.

Okay.

Got you last question, maybe better for Anna.

Thanks outlook.

Maybe another 30 million.

Incremental spend let me, mostly weighted to the back Jonathan Jonathan.

<unk> been pretty cautious about building the commercial team.

Too soon.

Will that be gives and takes.

In the back half.

Yes, generally where it will that incremental $30 million.

The concentrated.

I can speak to the first part and then Joe maybe you want to tag on to that.

Last year was a bit of intra.

Interesting here, we saw a dip in expenses as we consolidated our costs and then we picked up in the second half.

I would expect going forward that we would see more consistent growth over the course of the year certainly.

Higher spending being towards the end of the year.

And that's really.

Yes.

Still very much focused on development, we're still continuing to invest there we're preparing.

Or scale up quality manufacturing. So those are some of the areas where we can.

<unk>.

Off hires and dollars as we scale our experimental capacity.

And then certainly towards the tail end of the year, we would begin hiring.

For the commercial launch that we expect on that.

First half.

And then the middle of 2024.

Yes, So let me take the second half of your question here.

Brandon Let me take the second half of your question here.

So one of the things you asked was really.

When do you expect the commercial Buildout.

I'll add a little bit of nuance here.

Yes, there were some questions earlier about the Mac.

Macro environment and how we are reacting to it and one of the things that that we will do here.

Our commercial launch in mid 2024 is build out a commercial team.

But there are two things that you should relax there number one is that the team itself. We believe will be a very efficient team and it's not really a team that's going to be huge in the.

Primary reason there is that we have a instrument deal price and initial deal price, that's roughly a $1 million in cash.

No.

The transactional load of being able to generate significant bookings from a particular sales rep out there is actually it's actually really good at that.

That leads itself to sales efficiency and helps us with the cost structure of our commercial organization.

The other thing to think about it.

When.

When capital is readily available in the wider market you would build your commercial team and start your offer formal activity earlier in the cycle.

When things are tight like the environment is today youll build the commercial team much closer to the launch and so on.

I'm not going to commit to exactly what the timing is of that commercial team build out, but what I will tell you is that we will compress that down pretty tight.

In front of that commercial launch and that while that might affect.

Our revenue ramp rate right after the commercial launch.

As a management team to try to mitigate that but we think that thats, probably the most prudent thing to do because the last thing we want to do it is overbuilt. The commercial organization and then have some sort of timing difficulties that lead to an additional pressure on our opex.

Gotcha.

Yes.

Okay. Our last question comes from Josh <unk> with Morgan Stanley .

Hopefully well I commit to you.

Milan for patients. Thank you for taking the questions.

I guess the first one for me it would be pursued Joe. Thank you for the color on the access challenge, but I was thinking aside from the Axis challenge in your conference presentations and data releases.

Also you are keeping customers engaged ahead of May 24 launch.

Yes.

Yes.

Really great question. So I think that there are a lot of different ways that we are keeping the scientific community.

The researchers and architectural collaborators and customers engage so.

First and foremost we had a large number of conversations hundreds of conversations over the course of the company's six year life with with potential customers and partners and the response has been incredible we continue to engage with those customers given them regular updates we engage with them.

On on surveys and global voice of the customer types of interviews.

We meet with them at various conferences and spend time, keeping them up to date.

Number two is that.

One of the things Thats really.

Really been great here at model is that there is there is quite a bit of inbound activity from potential partners and customers because of the excitement around our platform and the capabilities that we have begun to show at scientific conferences.

We have a steady stream of conversations with customers getting them up to speed and doing presentations because of that in that type of activity.

What are the other things as well.

That we did in 2022 is that we engaged with.

About 40, Kols, most of whom are mass spec users than we did deep interviews with them engaging them on on where their pain points are what they are looking for out of proteomics.

Solution that that really tries to make a significant impact on their biological research and through those engagements. We've had a continued meaningful dialogue. So all of those things together. The first access challenge the data release. So we have we have a very very.

Good interface with architectural customers and collaborators and partners.

Got it that's helpful and then Sue Joe I'm, just wondering if you look over the past year.

All of the changes in the proteomics landscape has your views on the competitive landscape changed at all over the past few months and are you anticipating any dynamic changes.

May 'twenty for lunch.

Yes.

Yes.

Great question.

I'm seeing over 2022 in the first couple of months here of 2023 continues to reinforce for me that we are building a highly differentiated product with a wide competitive moat.

I've seen from.

The traditional method competitors does that team continued evolutionary improvements to their platform, but nothing.

That really is fundamentally game changing.

And from the emerging competitive landscape.

A few names that are performing quite well on the targeted side of proteomics, which is different and it's highly complementary to what we're doing.

But on the discovery side, where there are some companies looking to improve sample preparation from better focused on peptide sequencing methods. When we look at the capabilities of those platforms and how they've evolved.

Over the course of the last 12 months to 14 months. If I include the first couple of months of 2023, I'm not seeing any major capability improvements or anything on the horizon that would that would.

That would close the gap with the capabilities of our platform that we're building.

Great and one final one for me I guess is a little bit looking out into the longer term, but the clinical market is a huge opportunity for you guys and with the clinical market today relying primarily on single biomarker assay is what do you think it will take to drive that market to.

Using a broader set of proteins in the clinic.

I know you guys highlighted sensitivity scale reproducibility titles and ease of use as key characteristics, but what do you think are some of the key features that this specific market we'd be looking for.

Okay, I think Thats a great question I think when we look at the clinical market.

We've seen a similar trend in transition from single marker based studies two panels occur in genomics and it started with <unk>.

Providing the research data across a wide spectrum of initially mutations in genomics. So that people were able to take a more comprehensive look.

In a retrospective manner.

From that comprehensive look it just made sense to start using panel there was a point that.

Measuring those panels by orthogonal means.

Yes.

Does inefficient and it was.

It was easier it was faster.

To simply use the discovery platform as the clinical platform.

And so we anticipate a similar.

Transition will occur in proteomics initially people will use the discovery platforms look at.

A wide variety of markers understand the synergies between them understand the predictive power that comes from being able to look at many biochemical axes at the same time.

As well as diving into a pretty farms and really looking at that molecular heterogeneity as a marker.

Those panels get larger and larger and it becomes.

Challenging to convert them into traditional assays Elisa as others.

It will spur a natural transition towards using our discovery platform.

As a clinical platform.

And we are excited about that opportunity going forward, we're preparing for that opportunity going forward.

And.

Sure.

It's a really natural evolution of the field.

Okay.

Great. Thank you guys.

Okay.

Thank you everyone for your participation in today's conference. This does conclude the program and you may now disconnect.