Q4 2022 Quantum-Si Inc Earnings Call

Speaker 1: Ladies and gentlemen, thank you for standing by. Welcome to the Quantum Psi-4 Quarter and Fiscal Year 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker 1: Please be advised these conferences being recorded. I would like to turn the conference over to Juan Avendano, Head of Investor Relations for QuantumSci. Juan, please go ahead.

Speaker 1: Good morning, everyone. Thank you for joining us. Earlier today, Quantum Aside released financial results for the fourth quarter and fiscal year ended December 31, 2022. A copy of the press release is available on the company's website.

Speaker 1: Joining me today are Jeff Hawkins, Chief Executive Officer, Patrick Schneider, President and Chief Operating Officer, and Claudia Creighton, Chief Financial Officer.

Speaker 1: 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.

Speaker 1: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

Speaker 1: Additional information regarding this risk and uncertainties appears in the section entitled forward-looking statements of our press release.

Speaker 1: For a more complete list and description of risk factors, please see the company's findings made with the Securities and Exchange Commission.

Speaker 2: This conference call contains time-sensitive information that is accurate only as of the live broadcast today, March 6, 2023.

Speaker 2: Except, as required by law, the company disclaims any intention or obligation to update or revise any forward-looking statements.

Speaker 2: During this call, we will also be referring to certain financial measures that are not prepared in accordance with EOS Generally Accepted Accounting Principles or GAP, including adjusted EBITDA. Today we are going to be talking about Depression and personhood.

Speaker 2: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today.

Speaker 2: With that, I will turn the call over to Jeff.

Speaker 3: Thank you one. Good morning everyone and thank you for joining us today. In today's call, we will provide a business update, present our fourth quarter and fiscal year 2022 financial performance, and provide an outlook for 2023. We will then open the line for questions.

Speaker 3: 2022 was a landmark year for Quantum SI. We achieved several major milestones during the year. To name a few, on the research and development front, we accelerated our product development efforts and successfully demonstrated the ability to recognize 15 out of the 20 amino acids.

Speaker 3: This represents a path to more than 70% coverage of the human proteome, identification of up to 90% of proteins, as well as a greater understanding of protein sequence variation and post-translational modification.

Speaker 3: Our protein sequencing technology was published in the journal Science.

Speaker 3: As a reminder, Quantum SIs next generation single molecule protein sequencing features our proprietary time domain sequencing method that allows us to sequence peptides at the amino acid level in a massively parallel fashion using a semiconductor chip.

Speaker 3: The publication in science is an important validation of our technology as this is the first peer-reviewed paper from any company demonstrating next-generation protein sequencing technology in a major journal.

Speaker 3: On the supply chain front, we worked closely with our suppliers and contract manufacturers to build up the supply of instruments, chips, and reagent kits in support of internal product development needs and commercial launch. In addition, we successfully completed technology transfer and capacity increase activities at our chip assembly and packaging facility.

Speaker 3: in Garnet Valley, Pennsylvania.

Speaker 3: On the commercial front, we increased our marketing efforts, including exhibiting our product at several industry trade shows in the fourth quarter of last year.

Speaker 3: We also added key sales and market development personnel and appointed Dr. Grace Johnson as Chief Commercial Officer in December .

Speaker 3: Grace brings a depth of experience in commercializing new technologies and developing new markets from companies such as Merck Millipore, Tartorius, and most recently, Fortis Life Sciences.

Speaker 3: We welcome Grace and are very pleased to have her on board to lead our global commercialization activities.

Speaker 3: Furthermore, and most notably, we conclude at 2022 with the commercial launch of Platinum, the world's first next-generation single-molecule protein sequencing system for research use only.

Speaker 3: Lastly, on the financial front, we are able to achieve all of these milestones while increasing our fiscal discipline and rigor.

Speaker 3: Last year, we proactively implemented several cost rationalization initiatives that resulted in annual GAAP operating expenses increasing 28% year-over-year. This is well below our original guidance of a 70-80% increase when we entered 2022.

Speaker 3: 2022 was a landmark year for Quantum SI, but as I look forward to this year, I believe 2023 will be an even more significant year for the company. As I mentioned in our previous earnings call, one of the reasons I joined Quantum SI is because I am passionate about new technologies and enjoy the challenges of building companies and creating new markets.

Speaker 3: Quantum SI is now set to cross the chasm as the first company to commercialize next generation protein sequencing.

Speaker 3: To guide our execution through the year, QuantumSI has established three corporate priorities for 2023.

Speaker 3: Our first priority is to commercialize platinum, carbon, and the 2M chip.

Speaker 3: We completed the launch of the Platinum System last December and in January we announced that we began shipping against our initial orders. Overall, we are pleased with the market feedback so far. Customer demand is in line with our expectations and we expect to book revenue in Q1 of 2023.

Speaker 3: In addition, as part of our product roadmap, we are on track to launch CARBON, our automated sample prep instrument, later this year. Patrick will provide more details on the timing of the activities related to CARBON in his remarks.

Speaker 3: Our second priority is to lead with innovation.

Speaker 3: Quantum SI is the leader in the protein sequencing space, and we intend to leverage our deep technical expertise and novel technology to transform and democratize the field of proteomics.

Speaker 3: Our technology is also protected by a robust patent estate with over 1,000 issued and pending patent applications. That being said, we are not done innovating in this space.

Speaker 3: As Patrick will comment on later in the call, we continue to push forward with our research and development activities and were optimistic about our ability to further improve the industry-leading proteome coverage capability of our technology in 2023. Our long-term goal is clear. We want to be the first company to enable de novo protein sequencing.

Speaker 3: Our third priority is to preserve financial strength.

Speaker 3: We have executed several cost improvement initiatives that have already yielded tangible cost savings.

Speaker 3: Claudia will share more details during the review of our financial results, but I am glad to report that we now project our current cash position supporting our operations into 2026.

Speaker 3: Our commitment to continuously improving our fiscal discipline has never been stronger.

Speaker 3: In summary, we believe Quantum SI is well positioned for an exciting and productive 2023.

Speaker 3: The company has strengthened its management team and I am confident that we have the technical and financial resources to execute on our strategy.

Speaker 3: I would now like to turn the call over to Patrick, our President and Chief Operating Officer, to discuss additional business updates. Patrick?

Speaker 3: Thank you, Jeff. Starting with product development, we are making good progress on our protein engineering and directed evolution programs.

Speaker 3: We continue to advance our amino acid recognizer systems. Given this, we are well positioned to increase proteome coverage capabilities of our technology in 2023.

Speaker 3: As a reminder, by proteome, we mean not only the 20,000 canonical proteins, but also the millions of proteoforms, including post-translational modifications. As mentioned in our last earnings call, we're enhancing the customer-facing software.

Speaker 2: Since our last update, we added talent, including a very experienced leader, to our bioinformatics Write 2 viaFarmers bargain

Speaker 3: In a matter of weeks, they hit the ground running and have already made notable improvements in the software algorithms for high quality pet-side calls.

Speaker 3: That being said, we expect improvements to our quantum SI cloud analytics to be continuous in nature in order to address ongoing customer feedback from the commercial rollout.

Speaker 3: We are also making inroads with our partnership strategy.

Speaker 3: Earlier this year, we announced that we entered into a partnership and licensing agreement with BioVista, an AI-driven bioscience firm, to integrate BioVista's VISIT database and visualization technology tool into Quantum SI's cloud analytics and help advance proteomics research, biomarker discovery, and drug development applications.

Speaker 3: At the same time, we announced a partnership with Aviva System Biology, a leading provider of antibody, protein, and immunoassay reagent products.

Speaker 3: to co-develop sample preparation kits for protein sequencing research workflows with platinum, including targeted proteoform analysis. Staying on the subject of protein sample prep, we're on track to launch CARBON, our automated sample prep instrument in 2023.

Speaker 3: Carbon will help streamline the end-to-end workflow of our platform.

Speaker 3: Although not required, preliminary data suggests that carbon can enhance protein loading onto our platinum protein sequencer, particularly for those customers who might not be sophisticated in proteomic sample prep techniques.

Speaker 3: We plan to begin beta testing for carbon in Q2 2023 and then move to launch in the second half of the year.

Speaker 3: On the supply chain front, we remain confident in our supply chain and our ability to support both internal product development needs and external customer demand across instruments and sequencing consumables.

Speaker 3: In addition, in preparation for the carbon launch later this year, we're scaling up production and transfer the manufacturing of carbon consumables to our facility in Garnet Valley, Pennsylvania.

Speaker 3: Moving on to commercialization, as previously disclosed, we've shipped instruments to our first set of customers. They actually kingdom up their programs and provide you with their nice products and

Speaker 3: So far, we're pleased with the level of customer interest. As expected, most of the interest and focus has been in the academic research market.

Speaker 3: On one hand, we're seeing customers who want to be first to explore and tinker with the technology. These customers are directly moving forward with buying our protein sequencing instrument. On the other hand, there are folks who are interested and have studies in mind, but they want to ensure the technology can address their needs before committing to a purchase.

Speaker 3: As mentioned in investor conference earlier this year, in order to advance these interested folks through the sales process, we're offering a proof of concept testing service through which they can send us two or three samples and we can process those samples and show them data for a modest fee.

Speaker 3: If we succeed, we would expect them to buy and insource the technology.

Speaker 3: But we want to make it clear that we don't intend to run a high volume testing service business.

Speaker 3: This is not the business we're in. We only plan to do this to the extent that it will help us acquire those customers who may require more technology validation ahead of a purchase decision.

Speaker 3: Overall, we're pleased with the market feedback so far. Social customer demand and the sales funnel are progressing in line with our expectations.

Speaker 3: Applications of interest include the analysis of proteoforms, PTMs, and protein barcoding.

Speaker 3: We're also encouraged by the fact that customers have been able to install and implement platinum in their labs mostly on their own.

Speaker 3: This was a key factor for us in the design of the platform and should prove to be advantageous as we scale our business model.

Speaker 3: So far the majority of the demand has been from inbound activity.

Speaker 3: And this is sufficient to support our internal projections for the first half of the year.

Speaker 3: This week we are attending the annual US HUPO Conference in Chicago where we have a booth and a poster presentation.

Speaker 3: In the second half of the year, we plan to increase our outbound sales and marketing activities.

Speaker 3: I will now turn the call over to Claudia to review our financial results.

Speaker 4: Thank you, Patrick. Hello, everyone. Let's discuss the details of our Q4 and fiscal year 2022 financial performance.

Speaker 4: Research and development expenses in the fourth quarter of 2022 were $18.2 million compared to $14.4 million in the fourth quarter of 2021.

Speaker 4: The increase was primarily due to higher internal and external product development activities and higher personnel costs as a result of increased headcount.

Speaker 4: Selling, general and administrative expenses in the fourth quarter of 2022 were $11.2 million compared to $13.4 million in the fourth quarter of 2021.

Speaker 4: The decrease was primarily the result of lower stock-based compensation expense associated with the business combination that took place last year, a reduction in consulting services, insurance and other professional fees.

partially offset by an increase in compensation costs as a result of higher headcount.

In aggregate, total operating expenses in the fourth quarter of 2022 were $38.8 million compared to $27.8 million in the fourth quarter of 2021.

Operating expenses included a $9.5 million non-cash impairment charge in the fourth quarter of 2022 for goodwill recorded as part of the M Japan Troubles example is available classically depending on theICH targeted officer of the US House of Representatives and any Government in printag if you wish to access this app weEL Austin E crashes the certification of

Net loss for the quarter was $33.1 million compared to $29.4 million in the fourth quarter of 2021. Total year net loss was $132.4 million in 2022 compared to a loss of $95 million in 2021.

Adjusted EBITDA was a loss of $24.5 million compared to a loss of $20.4 million in the fourth quarter of 2021.

For the year, adjusted EBITDA was a loss of $100.6 million in 2022 compared to a loss of $64 million in 2021.

A reconciliation table of adjusted EVA-DA to GAAP net loss is provided in a press release filed earlier today.

As of December 31, 2022, we had $351.3 million in cash and cash equivalents in investments in marketable securities.

As previously disclosed at an investor conference early this year, we began shipping orders of platinum in Q1 2023.

As a result, we expect to book revenue in Q1.

That being said, given the early state of commercialization, we do not plan on providing revenue guidance until we have a few quarters of commercial activity under our belt.

With regard to operating expenses, we continue to increase our efforts to optimize costs and improve efficiencies despite ongoing investments in R&D and higher investment needs and commercialization activities.

As Jeff mentioned earlier, preserving our financial strength is one of our three corporate priorities for 2023.

To this end, we expect non-GAAP operating expenses to be approximately flat in 2023 relative to the prior year.

In addition, thanks to our cost improvement initiative, we now project that our current cash position can support our operations into the year 2026.

I would now like to turn the call back over to Jeff for closing remarks.

Thank you, Claudia. We are excited about commercializing Platinum and look forward to partnering with our customers to demonstrate the capabilities of our next generation protein sequencing technology.

The launch of platinum is an important milestone and turning point not only for quantum SI but also for the industry as we believe that our unique ability to sequence amino acids and characterize proteoforms and post translational modifications can lead to novel proteomic insights, better diagnostics, improved drug development and truly transform the future of healthcare.

Operator, please open the line for questions. Hello, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered, you can still hear yourself in the queue, please press star 1-1 again. One moment for our first question. If you have a question or a comment at this time,

Our first question comes from Alex with Canada Corps Genuity. Your line is open.

Hi, this is Alex on for Kyle Nixon.

Thanks for the update call, guys. Just a quick question. So in terms of...

the current order volume. I was wondering if you could provide some background on that.

Additionally, if you could provide any color on...

number of Platinum's you expect to ship or will be shipped in 2023 as well as just some more color on the timing of carbon that'd be appreciated. Thanks.

Yeah thanks Alex for that question. I'll take the first two and then hand it over to Patrick who can give you a little more color on carbon.

With respect to the, to the rollout, you know, as Claudia mentioned in her remarks, we're not giving quantitative. Guidance yet today we're really using this initial. Roll out to measure sort of the implementation timeframe, how quickly people ramp to full utilization, the types of questions that that.

you know, we know will be asked as we start to give out quantitative guidance. But to reiterate what we said, the demand for the machine, the implementation, being able to be done by the customer, these things are all moving in line with our expectations, and we're very pleased with the feedback we're getting as well as

The funnel building to support the demand throughout the year. Patrick, would you like to provide a little more guidance around carbon? Sure, and thank you for that question. I mean, just to reiterate. Obviously, we're focused on platinum right now, and so that's a big push.

For carbon, it's basically an end-to-end solution together as a sample prep for automated sample prep. The intention is for us to do beta testing in Q2.

And if all goes well with that, to launch at the end of this, at the end of 2023.

Thank you very much.

One moment for our next question.

The next question comes from you inside with B. Riley. Your line is open.

Good morning. Thank you for taking our questions. I have a couple of them. First, just curious when you share the progress related to commercial launch of Plantinum, can you clarify what metrics would you share there in addition to units shipped and the top line revenue?

Thanks for that question. As we said, we are measuring metrics such as placements. We are measuring the pull through that those placements generate. Really looking at the timeframe from when somebody receives a platinum instrument to when they have some Lis

Begin to run their studies and get to that utilization rate and then obviously the top line. Metric all rolled up would be revenue. So those are the sort of internal metrics. We're using today again, early data. Is in line with with our internal models. So quite pleased with the early progress.

Thank you for that, Tyler. And a follow-up here. Can you provide an update of the interaction with customers? Thank you for the color around the test runs that you are conducting for potential customers. In your view speech is universal.

what's holding them back after their test runs? So today there's nothing holding the customers back after test runs. I think what, you know, maybe to build upon what Patrick had mentioned in his remarks, you know, there are customers today who are in academic research centers.

You know, people that those of us in industry would consider key opinion leaders, they're acquiring the platform and the technology and going straight into. Various studies they're looking to perform. There are some other customers, though, who, as Patrick mentioned. Want to have a small number of samples tested.

to demonstrate that the technology is going to address sort of the study design they have in mind. And that's where really the proof of concept testing service comes in. It's really a method to enable people to move through the sales funnel more quickly and get that sort of early technology demonstration and then ultimately move to acquire the...

the platform and in-source the work. So that's sort of how the two different types of customers are progressing today.

Thank you for taking our questions. Not showing any further questions at this time. I'd like to turn the call back over to Juan.

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 day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

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Ladies and gentlemen, thank you for standing by. Welcome to the Quantum 5-4 Quarter and Fiscal Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. For the speaker's presentation, there will be a question and answer session.

To ask a question, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised these conferences being recorded. I would like to turn the conference over to Juan Abendano, head of investor relations for QuantumSci. Juan, please go ahead. Juan Abendano, founder and CEO of QuantumSci.

Good morning, everyone. Thank you for joining us. Earlier today, Quantum Aside released financial results for the fourth quarter in fiscal year-ended December 31, 2022. A copy of the press release is available on the company's website.

Joining me today are Jeff Hawkins, Chief Executive Officer, Patrick Schneider, President and Chief Operating Officer, and Claudia Creighton, 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 press and uncertainties appears in the section entitled for looking statements of our press release.

For 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, March 6, 2023.

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 with EOS Generally Accepted Accounting Principles or GAP, including a just-for-visit app. We will be referring to certain financial measures that are not prepared in accordance

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 Jeff. Thank you, Juan. Good morning, everyone, and thank you for joining us today. In today's call, we will provide a business update, present our fourth quarter in fiscal year 2022 financial performance, and provide an outlook for 2023. We will then open the line for questions. 2022 was a landmark year for Quantum SI.

We achieved several major milestones during the year. To name a few, on the research and development front, we accelerated our product development efforts and successfully demonstrated the ability to recognize 15 out of the 20 amino acids.

This represents a path to more than 70% coverage of the human proteome, identification of up to 90% of proteins, as well as a greater understanding of protein sequence variation and post-translational modifications.

Our protein sequencing technology was published in the journal Science.

As a reminder, Quantum SIs next generation single molecule protein sequencing features our proprietary time domain sequencing method that allows us to sequence peptides at the amino acid level in a massively parallel fashion using a semiconductor chip.

The publication in science is an important validation of our technology as this is the first peer-reviewed paper from any company demonstrating next-generation protein sequencing technology in a major journal.

On the supply chain front, we worked closely with our suppliers and contract manufacturers to build up the supply of instruments, chips, and reagent kits in support of internal product development needs and commercial launch. In addition, we successfully completed technology transfer and capacity increase activities at our chip assembly and packaging facility.

in Garnet Valley, Pennsylvania. On the commercial front, we increased our marketing efforts, including exhibiting our product at several industry trade shows in the fourth quarter of last year. We also added key sales and market development personnel and appointed Dr. Grace Johnston as Chief Commercial Officer in December .

Grace brings a depth of experience in commercializing new technologies and developing new markets from companies such as Merck Millifor, Tartorius, and most recently, Fortis Life Sciences.

We welcome Grace and are very pleased to have her on board to lead our global commercialization activities. Furthermore, and most notably, we concluded 2022 with the commercial launch of Platinum, the world's first next-generation single molecule protein sequencing system for researchers only.

Lastly, on the financial front, we are able to achieve all of these milestones while increasing our fiscal discipline and rigor. Last year, we proactively implemented several cost rationalization initiatives that resulted in annual GAAP operating expenses increasing 28% year-over-year. For more information, visit www.fema.gov

I mentioned in our previous earnings call, one of the reasons I joined Quantum SI is because I am passionate about new technologies and enjoy the challenges of building companies and creating new markets.

Quantum SI is now set to cross the chasm as the first company to commercialize next generation protein sequencing. To guide our execution through the year, Quantum SI has established three corporate priorities for 2023.

Our first priority is to commercialize platinum, carbon, and the 2M chip.

We completed the launch of the Platinum system last December , and in January we announced that we began shipping against our initial orders.

Overall, we are pleased with the market feedback so far. Customer demand is in line with our expectations, and we expect to book revenue in Q1 of 2023. In addition, as part of our product roadmap, we are on track to launch CARBON, our automated sample prep instrument, later this year. Patrick will provide more details on the timing of the activities related to CARBON in 2020.

by a robust patent estate with over 1,000 issued and pending patent applications. That being said, we are not done innovating in this space. As Patrick will comment on later in the call, we continue to push forward with our research and development activities and we're optimistic about our ability to further improve

the industry leading proteome coverage capability of our technology in 2023. Our long-term goal is clear. We want to be the first company to enable the NOVO protein sequencing. Our third priority is to preserve financial strength. We have executed several cost improvement initiatives.

that have already yielded tangible cost savings. Claudia will share more details during the review of our financial results, but I am glad to report that we now project our current cash position supporting our operations into 2026. Our commitment to continuously improving our fiscal discipline has never been stronger.

In summary, we believe Quantum SI is well positioned for an exciting and productive 2023. The company has strengthened its management team and I am confident that we have the technical and financial resources to execute on our strategy. I would now like to turn the call over to Patrick.

our President and Chief Operating Officer to discuss additional business updates. Patrick. Thank you, Jeff. Starting with product development, we are making good progress on our protein engineering and directed evolution programs.

We continue to advance our amino acid recognizer systems. Given this, we are well positioned to increase proteome coverage capabilities of our technology in 2023.

As a reminder, by proteome, we mean not only the 20,000 canonical proteins, but also the millions of proteoforms, including post-translational modifications.

As mentioned in our last earnings call, we're enhancing the customer-facing software. Since our last update, we added talent, including a very experienced leader, to our bioinformatics team. In a matter of weeks, they hit the ground running and have already made notable improvements in the software algorithms for high-quality pet-side calls. To learn more about our care providers, go to the service award.org Nursing Systems step fin for Homeattering BoysHa epitome.menus. Sha DLC. Show us how you can help. For more information on our next

That being said, we expect improvements to our quantum SI cloud analytics to be continuous in nature in order to address ongoing customer feedback from the commercial rollout. We are also making inroads with our partnership strategy. Earlier this year, we announced that we entered into a partnership and a licensing agreement with Biowista in AI-driven bioscience firm.

At the same time, we announced a partnership with Aviva System Biology, a leading provider of antibody, protein, and immunoassay reagent products.

to co-develop sample preparation kits for protein sequencing research workflows with platinum, including targeted proteoform analysis.

Staying on the subject of protein sample prep, we're on track to launch CARBON, our automated sample prep instrument in 2023.

Carbon will help streamline the end-to-end workflow of our platform. Although not required, preliminary data suggest that carbon can enhance protein loading onto our platinum protein sequencer, particularly for those customers who might not be sophisticated in proteome example prep techniques.

We plan to begin beta testing for carbon in Q2 2023 and then move to launch in the second half of the year. On the supply chain front, we remain confident in our supply chain and our ability to support both internal product development needs and external customer demand across instruments and sequencing consumables.

In addition, in preparation for the carbon launch, later this year, we're scaling up production and transfer the manufacturing of carbon consumables to our facility in Garnet Valley, Pennsylvania. Moving on to commercialization, as previously disclosed, we've shipped instruments to our first set of customers.

So far, we're pleased with the level of customer interest. As expected, most of the interest and focus has been in the academic research market. On one hand, we're seeing customers who want to be first explored and tinker with the technology. These customers are directly moving forward with buying our protein sequencing instruments.

On the other hand, there are folks who are interested and have studies in mind, but they want to ensure the technology can address their needs before committing to a purchase.

As mentioned in investor conference earlier this year, in order to advance these interested folks through the sales process, we're offering a proof of concept testing service through which they can send us two or three samples and we can process those samples and show them data for a modest fee. If we succeed, we would expect them to buy an in-source system.

Overall, we're pleased with the market feedback so far. Initial customer demand and the sales funnel are progressing in line with our expectations. Applications of interest include analysis of proteophores, PTMs, and protein barcoding. We're also encouraged by the fact that customers have been able to install and implement

sufficient to support our internal projections for the first half of the year.

This week we are attending the annual USUPA conference in Chicago where we have a booth and a poster presentation.

In the second half of the year, we plan to increase our outbound sales and marketing activities. I will now turn the call over to Claudia to review our financial results.

Thank you, Patrick. Hello, everyone. Let's discuss the details of our Q4 and fiscal year 2022 financial performance. Research and development expenses in the fourth quarter of 2022 were $18.2 million compared to $14.4 million in the fourth quarter of 2021. The increase was primarily due to higher internal and external product development activities and the increase in the amount of money that was spent in the first quarter of 2021. This year, the total amount of money that was spent in the first quarter of 2021 was $18.4 million. And the increase was mainly due to higher internal and external product development activities and the increase in the amount of money that was spent in the first quarter of 2021.

compensation expense associated with a business combination that took place last year, a reduction in consulting services, insurance, and other professional fees, partially offset by an increase in compensation costs as a result of higher headcount. In aggregates, total operating expenses in the fourth quarter of 2022,

for $38.8 million compared to $27.8 million in the fourth quarter of 2021. Operating expenses included a $9.5 million non-cash impairment charge in the fourth quarter of 2022 for goodwill recorded as part of the Mantelec acquisition in 2021.

Net loss for the quarter was 33.1 million compared to 29.4 million in the fourth quarter of 2021. Total year net loss was 132.4 million in 2022 compared to a loss of 95 million in 2021.

Adjusted EBITDA was a loss of 24.5 million compared to a loss of 20.4 million in the fourth quarter of 2021. For the year, adjusted EBITDA was a loss of 100.6 million in 2022 compared to a loss of 64 million in 2021.

A reconciliation table of adjusted EBITDA to GAAP net loss is provided in a press release filed earlier today. As of December 31, 2022, we had $351.3 million in cash and cash equivalents and investments in marketable securities.

As previously disclosed at an investor conference early this year, we began shipping orders of Platinum and Q1 2023.

As a result, we expect to book revenue in Q1. That being said, given the early stage of commercialization, we do not plan on providing revenue guidance until we have a few quarters of commercial activity under our belt.

With regards to operating expenses, we continue to increase our efforts to optimize costs and improve efficiencies despite ongoing investments in R&D and higher investment needs and commercialization activities.

As Jeff mentioned earlier, preserving our financial strength is one of our three corporate priorities for 2023. To this end, we expect non-GAAP operating expenses to be approximately flat in 2023 relative to the prior year. In addition, thanks to our cost improvement initiatives, we are able to provide a better

Proteoplatinum is an important milestone and turning point not only for Quantum SI but also for the industry as we believe that our unique ability to sequence amino acids and characterize proteoforms and post-translational modifications can lead to novel proteomic insights, better diagnostics, improved drug development and truly transform the future of healthcare.

Operator, please open the line for questions. The ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered, you are still with yourself from the queue. Please press star 1-1 again. One more for our first question. All right.

order volume, I think if you could provide some background on that.

Additionally, if you could provide any color on

the number of platforms you expect to ship or will be shipped in 2023 as well as just a more color on the timing of carbon. I'd appreciate it. Thanks. Thanks Alex for that question. I'll take the first two and then hand it over to Patrick who can give you a little more color on carbon.

With respect to the to the rollout, you know as Claudia mentioned in her remarks were not giving quantitative Guidance yet today. We're really using this initial rollout to measure Sort of the implementation timeframe how quickly people ramped to full utilization the types of questions that that you know We know will be asked as we start to give out quantitative guidance

But to reiterate what we said, the demand for the machine, the implementation being able to be done by the customer, these things are all moving in line with our expectations and we're very pleased with the feedback we're getting as well as the funnel building to support the demand throughout the year. Patrick, would you like to provide a little more guidance around carbon? Sure. And thank you for that question. I mean, just to reiterate.

Obviously we're focused on platinum right now, and so that's a big push. For carbon, it basically, and it really brings our end-to-end solution together as a sample prep for automated sample prep. The intention is for us to do beta testing in Q2.

And if all goes well with that, to launch at the end of 2023. Sorry, thank you very much. One more for our next question.

The next question comes from you and say, with the Rally, your line is often.

Good morning. Thank you for taking our questions. I have a couple of them. First, just curious when you share the progress related to commercial launch of Plantinum, can you clarify what metrics would you share there in addition to units shipped and the top line revenue?

Good morning. Thank you for taking our questions. I have a couple of them. First, just curious, when you share the progress related to commercial launch of Platinum, can you clarify what metrics would you share there in addition to units shipped and the top-line revenue? Thanks for that question.

As we said, we're measuring metrics such as placements, we're measuring the pull through that those placements generate, really looking at the timeframe from when somebody receives a platinum instrument to when they begin to run their studies and get to that utilization rate. And then obviously the top line metric all rolled up would be revenue. So those are the sort of internal metrics we're using today. Again, early data is in line with our internal models.

So quite pleased with the early progress. God, thank you for that, Tyler. And follow up here. Can you provide an update of the interaction with customers? Thank you for the color around the test runs that you are conducting for potential customers. In your view, what's holding them back after test runs? So today there's nothing holding the...

There are some other customers, though, who, as Patrick mentioned, want to have a small number of samples tested. Please demonstrate that the technology is going to address sort of the study design they have in mind. And that's where really the proof of concept testing service comes in. It's really a...

a method to enable people to move through the sales funnel more quickly and get that early technology demonstration and then ultimately move to acquire the platform and insource the work. So that's sort of how the two different types of customers are progressing today. Got it. Thank you for your panel of questions.

I'm not showing any further questions at this time. I'd like to turn the call back over to Juan for any 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 day.

Ladies and gentlemen, self-conclude to today's presentation. You may now disconnect and have a wonderful day.