Q4 2022 Somalogic Inc Earnings Call

Speaker 1: Welcome to Summa Laude's fourth quarter and full year 2022 earnings call. All participants are in a listen only mode. We will take questions following prepared remarks. I will now turn the call over to Marissa Byas of Gilmartin Group for introductory disclosures.

Speaker 2: Thank you. Today, SomaLogic released financial results for the quarter and year ended December 31, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make forward-looking statements during this call within the meaning of federal securities laws.

Speaker 2: which are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995.

Speaker 2: Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.

Speaker 2: All forward-looking statements, including, without limitation, those relating to our market opportunity, gross margin and future financial performance, protein content and database growth, customer-based diagnostic pipeline, expectations for hiring, and growth in our organization are based upon our current estimates and various assumptions.

Speaker 2: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Speaker 2: Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risks, Factors section of our 410k filed with the Securities and Exchange Commission today.

Speaker 2: This conference call contains time-sensitive information and is accurate only as of the live broadcast, today, March 28, 2023. Sumo Logic disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise.

Speaker 2: I will now turn the call over to Troy Cox, Executive Chairman of Stomalogics Board of Directors.

Speaker 3: Thanks, Marissa. Good afternoon and thanks for joining us. As a long time believer in the potential of proteomics, I had the opportunity to join the Somalogic Board in 2021 and was appointed Executive Chairman in October of last year. Before Adam and Sean discuss our fourth quarter results and now look for 2021, I would like

Speaker 3: and overseeing the process to becoming a public company. And we'd like to thank him for his efforts.

Speaker 3: Over the last six months, working at a more operational level, I've gained a better understanding of the company and the people.

Speaker 3: Given my extensive background running commercial functions, it was clear that Sumo Logic was at a stage that it needed seasoned leaders to accelerate market adoption.

Speaker 3: Adam Page is an example of that kind of talent, having joined Sumo Logic over a year ago with highly relevant and diverse experience across multiple senior roles in Thermo Fisher Scientific.

Speaker 3: In the third quarter of last year, we promoted Adam to Senior Vice President of Life Sciences with ownership of all commercial activities and operations functions, which is about half of Sumo Logic's employees.

Speaker 3: There was more work to do, but together with Adam and the rest of the management team and board, we made some really important decisions to focus the company and deliver results in a more efficient manner.

Speaker 3: Adam will talk about this as well as how he has strengthened our commercial foundation and pipeline.

Speaker 3: Adam has earned the confidence of his peers and the board that he's the right leader for Somalogic as we make this important transition.

Speaker 3: To help fuel the company's next chapter, we are bringing some really impressive talent to the Somalogic Board of Directors with the addition of industry veterans Jason Ryan, Kathy Hibbs,

Speaker 3: Tom Carey and Tygo Peterson.

Speaker 3: I'm very pleased that Jason Ryan will join the board as chairman. I will remain on the board and support Jason's transition.

Speaker 3: I personally had the opportunity to see Jason's unmatched ability to move from strategy to tactical execution and connect all the dots in between when we work together at Foundation Medicine.

Speaker 3: Since then, Jason has further demonstrated his proven track record in expanded and diverse roles.

Speaker 3: Kathy Hitz will also join our board, bringing towering strengths in many areas such as regulatory legal, compliance, quality, privacy, technology, and public company considerations.

Speaker 3: all coming from diverse experiences in the areas of Somalogics Focus.

Speaker 3: I've personally seen Kathy deliver impressive value from these strengths and much more over the last few years from our work together with Sophia Genetics.

Speaker 3: When it comes to people related competencies, there's no one better than Tom Carey. I'm thrilled that Tom will also join our board.

Speaker 3: Tom has strengthened leadership and teams across so many companies while gaining a deep knowledge of the landscape, players, and strategies and adjacencies that will serve Sumo Logic well.

Speaker 3: His expanded breadth via leadership and growth life science companies, including over eight years on the exact science and board will bring tremendous value.

Speaker 3: I don't think it's possible to be in our industry and not know Tygo Peterson, who will also join our board. I think that's one of the most important things.

Speaker 3: I'm excited for the board and the company to benefit from his unprecedented experience from 23 years at JP Morgan as Managing Director and Lead Equity Analyst covering medical devices, life science tools, and Diagnostics.

Speaker 3: This experience is being leveraged and enriched from serving as a CFO of another innovative life sciences growth company, Adaptive Biotechnology.

Speaker 3: So welcome Tyco, Tom, Kathy, and Jason. Our next chapter is fueled by great leadership with some of industry's top talent.

Speaker 3: Before I turn it over to Adam, I want to reiterate what I said in the press release.

Speaker 3: We recognize that it is a dynamic time in the industry and a volatile one in the broader market.

Speaker 3: It puts Swiimologic in a unique position. Having an attractive and growing core market, combined with our strong balance sheet, we are well positioned to pursue strategic options.

Speaker 3: As mentioned, we plan to work with our advisors and our newly strengthened board leadership to evaluate strategic and transformative opportunities and will provide updates as appropriate.

Speaker 3: Now I'll turn the call over to Adam to review 2022 key achievements and strategic priorities looking forward.

Speaker 3: Great, thank you Troy and thank you all for joining us here on the call this afternoon. I'm absolutely thrilled to have the opportunity to lead this company into the next phase of growth and evolution.

Speaker 3: Having taken on broader commercial leadership responsibilities in the third quarter of last year, I've been encouraged by the early momentum and opportunity to expand our reach in the proteomics market.

Speaker 4: There is work to do, but the mandate is clear and I'm committed to it.

Speaker 4: driving sustainable growth while importantly bringing improved operational discipline and cash management to this organization. I am accountable for this mandate.

Speaker 4: Before I dive in, I'd first like to thank our committed teams across the globe. I took over broader leadership in the second half of last year and have watched the organization undergo significant changes in that time. While challenging, the team has been impressive in their dedication and focus, and I'm confident that as we navigate through this leadership transition,

Speaker 4: It will continue to remain focused on consistent execution and improving every day to meet our customers needs and expand our commercial impact.

Speaker 4: Together with the board, we are employing a deliberately simple business strategy.

Speaker 4: bringing an acute focus on delivering innovative solutions to our expanding global customer base of biopharma, academia, and government institutions, while maintaining tight expense and cash discipline. Everything flows from this strategy and is built on the core business belief.

Speaker 4: that if we build an efficient and profitable business that can accelerate and improve customers' R&D productivity, we will as a company increase value for customers and importantly for you, our shareholders.

Speaker 4: We need to recognize that while Sonologic is a 25 year old leading innovation company, it is only a two year old commercially focused enterprise. It has been a journey to transition the company, but we are firmly on pace now.

Speaker 4: In the coming quarters and years that pace will accelerate with a target of getting back to 20% top line road of exiting this year. Set it on commitment.

Speaker 4: To help do it, we need the right people and right processes.

Speaker 4: Success is all about the team and we recently brought on a new global commercial leader, Mike DiMaggio, to add significant industry depth and global experience to the commercial effort.

Speaker 4: We have a great product. We just need to do the basic blocking and tackling of commercial execution to make that product easier and better for customers to use.

Speaker 4: Mike and his team are doing the necessary work and building the right processes and early indications are that it is having an impact. And of course, if you can't measure it, you can't manage it. Simple yet informative metrics are now in place and visible daily to monitor our forward progress.

Speaker 4: To achieve commercial growth in our core after birth based proteomic solution, we must continue to make it easier to access our technology platform, and we need to diversify the number of users on it. We have two strategies to do this. One is through the work we are doing with Illumina.

Speaker 4: which brings the flexibility and power of Somescan to Illumina's market-leading install base of instruments.

Speaker 4: theirs is the largest install base in the world and there is already significant interest from customers to utilize our combined solution.

Speaker 4: Once our silvascan assay is available on NGS, it will change the way proteomic research is done at scale across the world.

Speaker 4: Second, we are going to accelerate the expansion of our authorized sites for kids' business.

Speaker 4: open up more Somalogic authorized sites to allow institutions around the world to run the Somascan assay in their own labs.

Speaker 4: This is the type of format solution that other vendors use, and we've been slow to catch up.

Speaker 4: We only formally launched this initiative late last year, but are now in full scale launch of our Authorized Science program and see growth in it over the years ahead.

Speaker 4: engagements, we must continue to operate as a thoughtful partner to our customers, ingraining ourselves into their clinical, translational, and early discovery projects by helping them understand how to maximize the application of our technology.

Speaker 4: In the long term, we expect our position with these key accounts to enable migration to larger multi-year partnerships.

Speaker 4: We are also expanding our geographic reach to better serve the needs of the global scientific community. Our team is focused on establishing footholds in the Asia Pacific.

Speaker 4: In December of last year, Tokyo-based Fonus Life Corporation signed on as the first Somalogic-authorized site in Asia.

Speaker 4: Early in 2023, G42 Healthcare became the first announced site in the Middle East. Many more agreements are in the works with a substantial increase in our pipeline since we first announced the program. It is critical to say that while growth is important, we must manage the business efficiently and with more difficulty.

sure it's protected.

Sean will provide more details on our financial performance and historic spend with some cash burn expectations later in the call. There are more efficiencies to drive in this business and my day one focus is to deliver them. The Life Science Tools business model when run at scale and run well is one of the most lucrative in the industry.

We will do everything operationally, organically, and as Troy said, inorganically, to get to that scale and profitability.

Now, let me conclude with a couple of product development objectives for 2023 to look out for.

The launch of our 10K-SomaScan product is on track to launch by the end of the year, which will extend our leadership in proteomics measurement capabilities.

We remain confident that our leadership and content allows our customers to discover even more biologically important proteins in a precise manner.

Our work with Illumina to develop NGS proteomics products also remains on track with expectations to fully commercialize in 2024. Based on the focused and disciplined approach I've just described, we are optimistic that we are re-positioning the business for success. I look forward to providing updates on these strategic and product milestones over the coming year.

I will now turn the call to Shawn Blakeman, CFO , to review our financial performance and outlook.

Thanks Adam.

Turning to our financial results for the fourth quarter in full year. Revenue for the three months ended December 31, 2022 with $18.8 million.

an 18% decrease from $23 million in the same period of the prior year.

Revenue for the full year 2022 was $97.7 million, a 20 percent increase from $81.6 million in the prior year. camel...

Fourth quarter 2022 revenue reflects early traction in our kit rollout, nearly tripling our kit business over Q4 2021, which to echo what Adam said, is a critical component of our strategy to return to a self-market growth.

But the current quarter also reflects the change in our new England BioLabs royalties recognition. With zero recognized this quarter versus 1.9 million dollars in the fourth quarter of 2021.

Gross margin for the fourth quarter of 2022 was 31.1% compared to 54.5% in the fourth quarter of the prior year.

Gross margin for the full year 2022 was 55.6% compared to 59% in the prior year.

Full year margins are in line with expectations.

and our fourth quarter growth margins were primarily an effect of human technical or HTI volume as signaled in previous earnings calls.

Net of HCI, our core service margins remained approximately 50%. Total operating expenses for the fourth quarter of 2022.

our core service margins remained approximately 50%. Total operating expenses for the fourth quarter of 2022 were $60.4 million.

48% increase from 40.9 million dollars in the 4th quarter of 2021.

Operating expenses for the full year 2022 were $230.1 million, an 89% increase for $121.5 million in the prior year.

R&D expenses for the fourth quarter of 2022, or $22.6 million.

compared to $11.2 million in the fourth quarter of 2021. Full year 2022 R&D expenses were $73.4 million compared to $43.5 million in the prior year.

sales, general and administrative expenses for the 4th quarter of 2022 for $37.8 million.

compared to $29.7 million in the fourth quarter of 2021.

SG&A expenses for the full year 2022 were $156.6 million compared to $78 million in 2021.

The year-over-year increase in our expenses was primarily associated with our commercial team expansion, public readiness, and stock-based compensation charges associated with restructuring.

Adjustment even after the fourth quarter of 2022 was a loss of $49.9 million.

compared to an adjusted EBITDA loss of $27.7 million in the fourth quarter of 2021.

Full year 2022 adjusted EBITDA was a loss of 160.5 million dollars compared to an adjusted EBITDA loss of 63.6 million dollars in 2021.

Please see our press release on file with the SEC as of this afternoon for a reconciliation between GAAP net loss and non-GAAP adjusted EBITDA. And we ended the year with $539.6 million in cash, cash equivalents and short-term investments. Turning to our full year outlook.

We forget 2023 revenue in the range of 80 to 84M.

Taking into effect the significant accounting impact of our new mini-beading treatment.

This represents 12 to 17 percent growth on an apples to apples basis at the midpoint of our guidance.

As we continue to ramp up our distributed kit business, our guidance is also driven by a return of substantial growth in our service business.

as we are starting to see the benefits of our commercial expansion, with more sales reps in front of customers and an international presence.

Our Q4 2022 results are reflective of operations going into Q1, so we expect similar revenue. In terms of gross margins, we expect full year gross margins in the low 50% range.

which is a result of our assumption for little or no any view evidence this year.

However, there will be a phasing as we have some carryover in ETI sample impact in Q1, which will drive Q1 margins in the low 40% range, with subsequent quarters improving to drive the full year number back over 50%. In this province, we've made significant expense reductions for 2023 to reduce our cash burn.

Excluding M&A-related cash burn, our Q3 2022 burn rate was an organic high point at nearly $40 million. And our expense reductions are expected to drive that down by 50% to a year-end burn rate of approximately $20 million a quarter this year.

Keep in mind that in Q1 we will see the cash impact of our 2022 restructuring items.

But from there, our cash firms start significantly declining to reflect our improved cost structure.

Including these restructuring related items, we still anticipate 2023 cash burns will be less than $120 million.

As Adam expressed, our primary objective in 2023 is to continue to focus on applying process and fiscal discipline to the commercial strategy to remove costs and preserve cash. We see opportunities to make meaningful improvements over what is projected above and look forward to updating you in the coming quarters on our success. At this point, I would like to turn the call back to Adam.

Great, thank you Sean. Operator, we are now ready for Q&A.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone and please limit yourself to one question and one follow-up. One moment while we compile the Q&A roster.

And our first call will be coming question will be coming from Dan Brennan of how your line is open

Great, thank you. Thanks for taking the questions. Congrats on the new role, Adam and team. Maybe Adam, could you start off?

Just listed as interim CEO and the press release. It sounds like you are the full-time CEO . I just want to clarify that if you don't mind. And then B, you laid out a lot of the things that you've already seen traction with in your current role. But I'm just wondering, as we look ahead, you talked about making products easier to use.

better for customers to use them building the right processes. Could you just maybe speak to as we think about 23 and 24, how you would articulate what are the kind of key changes or initiatives that you'll be deploying to drive more efficient growth? Let me take the second part of the question first and then I'll...

that kits or authorized sites business up and running. Another item to mention as it relates to that sort of easier to use frankly is the technical support and bioinformatics required around our solution. And what we have here it's not any more complex than other innovative market leading solutions out there in the market.

At the same time, I think we were underestimating the amount of lift it required to get a customer up and running and confident on the platform. And the last thing I would mention is we think about ease of use is really the incredible program we've got in place with our partner Illumina. And so, in part, ease of use is really just allowing and enabling our customers out there who...

further strengthen our pipeline and our performance as well as manage expenses and preserve our cash.

We felt interim is simple as this was appropriate in the context of simultaneously bringing on four seasoned strategic leaders as new board members.

Okay, so he, I'm sorry, so he is, he's the full time guy or you're not conducting a simultaneous search.

Okay, so he, I'm sorry, so he is, he's the full time guy or you're not conducting a simultaneous search in addition to having Adam in the seat or you are.

Yeah, Adam's in charge of the company, effective today as CEO . We're in the near term. We're going to focus on onboarding our new board members and empowering Adam to execute on our strategy.

Terrific, great. And then maybe a follow-up. I know, Troy, you mentioned this at the onset, unique position to leverage our balance sheet and new board leadership to pursue strategic and transformational options for maximum shareholder value. Can you just maybe speak to that a little bit? I mean, the balance sheet's in great shape. The technology's terrific. You guys should have a...

a real pathway ahead to accelerate growth hopefully. But what else are you guys considering with the balance sheet? Are you guys looking to do big deals? Are you looking to be acquired? Just maybe a little more color on what the plans are here for this balance sheet.

Sure, the overall context is, as you've mentioned, where we find ourselves in a unique and fortunate position to expand our footprint further in a really super attractive and growing market of proteomics. And now with a strong team and board in place and combine that.

about maximizing shareholder value. I think to get into more specifics, Dan, is difficult because I think this effort has diverse possible outcomes and will only be pursued if we meet that simple goal of maximizing shareholder value. So we'll keep you updated at key milestones and as we reach conclusions.

I'm going to sneak one more in just on the kit business and then the base service business. Can you just give us a little color on how you're thinking about the rollout of the kits? Why is the rollout so gated? Is there a lot of technical complexity for a customer to adopt the kits? Are these ready for prime time?

Is there a lot of interest rolling in the summer boys? So maybe a little color on the rollout itself and then how would we think about the split implicit in your guidance for the year 80 to 84 between how much of that will be kit generated versus the service related? Thank you. Sure, Dan, let me just start with the 2nd part of your question. So we're not going to break out that. That difference between kitchen service, but what I would say is.

We still expect the services business here in 2023 to be the primary driver of our growth and of our business for this year. In terms of some of those gating items that you mentioned, and I think the company mentioned it in the past, there were some supply chain challenges that sort of got in our way of getting the sites up and running. We're past that, so we're making incredible progress getting sites up and running.

We built out a field application support team that's really required to be there on site for about the week that it takes to get a site installed, trained, and up and running. And the pipeline is tremendous in terms of the opportunities that we have. Thank you.

Okay, that was close enough. Hi guys Adam

Welcome aboard. I wanted to ask a question about customer growth if I could, Adam. You guys have done a really nice job growing out the account base. I think on the slide it says 60% plus over the last year. But obviously the revenue growth is well below. So where do you see the disconnect there? Is it just that the new accounts are taking time?

to contribute more or less to your point on sort of underestimating the ramp up there? Or is it that they are contributing and it's just being offset by some that are existing and that are trending downward? And then I guess within that, if you could just talk to how you feel about volume growth at some of your sort of anchor pharma accounts, that would be great.

to your point on sort of underestimating the ramp up there? Or is it that they are contributing and it's just being offset by some that are existing and that are trending downward? And then I guess within that, if you could just talk to how you feel about volume growth at some of your sort of anchor pharma accounts, that would be great.

Sure, Dan. Yeah, I think you rightly know that we've done a fantastic job, the commercial team out there building up the account base.

And, you know, as you would expect in a business like this, the accounts that we onboard come in and they come in, you know, typically with a small, maybe even a pilot study. So fairly small amount of revenue. They go through the cycle of analyzing and understanding, you know, how to best use and utilize that information and the discoveries. You know, and then ideally we're doing our jobs around customer retention. They come back.

And so, yes, a lot of the customers that we onboarded during the course of last year do really start as small accounts. But we have demonstrated as a track record, though, of bringing on customers. And if you go back and look at customers, for instance, that came on in the second half of 2021.

We've got a fairly good demonstrated track record of increasing from a sort of land and expand when you think about getting into the account and then expanding our reach within that whether that's a different therapeutic area or whether that's moving from discovery into translation and translational a pretty good track record of working through that and so that's really what the expectation is and we've got the right...

to find the customer base, which is really where we've been focusing our time and effort.

Okay, helpful. And then maybe just from a strategic standpoint, I mean, as you think about what's most important over the next 12 or 24 months, how much of a priority do you see the work being done in the Precision Medicine Initiative?

you know, obviously a lot of promise in clinical proteomics, but assay development there is a heavy lift in a lot of ways. So just curious how we should think about that as a part of your investment focus over the next year or so.

Yeah, Dan, I think the best way to think about that, and this is Adam here.

You know really as we announced at the end of last year We're going to execute really on our focus related to the life sciences side of our business. Now most certainly some of our biopharma accounts and certainly there are accounts in academia and government who do work into that precision Medicine and those types of initiatives, but for us it's really focusing on that core R U O research.

the time of the IPO was one of the more compelling aspects of the business just in the sense that I think you had 14 commercial folks in 2020 and that was going to something like 50 to 100. So where do you think from here the commercial team ads will be most evident when it comes to growing the revenue base? Is it overseas?

application, what should we look for just in terms of the impact that that commercial scale up can have?

Sure, yeah, and this is Adam again. You're absolutely right. I think building out that team, I think it took, you know, it has taken longer, particularly if you're selective, which I think we have been in ensuring we get the right professionals on board. It takes time. We're in a really good spot right now as it relates to the team that we have in North America, both from a sales and service and support standpoint.

We're continuing to expand here in 2023 in EMEA. Which is a focused area of growth and a particular focus on the authorized site front. And then we're building up from what was effectively a team of 1 or 2 last year in APAC to a more substantial team. We're being selective there. We want to make sure that we're

targeting the markets that are already ripe for HyFlex proteomics, but there's plenty of opportunities for us to continue to build there in APAC. Thank you. One moment while we prepare for the next question. And our next question is coming from Brandon Collier.

that contract, will those be higher or lower now than they were before?

Yeah, thanks, Brandon. It's Adam here. I think the key point I want to mention is it relates to Novartis. We've had a long history with them, an extremely deep relationship with Novartis in various areas of their research, various geographic areas in which we serve them. And the key thing that we were working through as it related to that was the extension.

Right? So, you know, from a Novartis perspective, we're very excited to be their proteomics provider of choice you know for many many years to come. We continue to try to find ways, innovative ways to add value to that partnership.

Okay, and then maybe one for Sean, in terms of the revenue outlook for the year, any color in terms of phasing? I mean, 22 was more of a seesaw pattern, but historically, the revenues have been more 4Q weighted. How do you see 23 playing out in...

how would you sort of, I guess, describe the degree of maybe added conservatism you've embedded in the outlook, given all the change going on in the organization right now? Yeah, I mean, you know, I would say, you know, we've always kind of put out there that as a service business, it's, you know, hard sometimes to predict any given quarter and we don't really

you know, factor in a certain significant material seasonality. I mean, you know, you heard in my remarks that I put the Q1 will look substantially like Q4, you know, going into this year. And so, you know, I would model it with kind of really a mild phase going up. I wouldn't, you know, we don't expect to have any particular quarter that's heavy.

We don't have a back-loaded forecast. There will be a slight ramp up. We were driven more or less by more kids coming online, but as Adam pointed out, that's not a huge material number, so it's not adding this huge hot piece at the end.

Thank you. On to our next question. Okay. Okay.

And our next question will be coming from Kyle Mikeson of Canaccord. Your line is open.

Thanks for taking the questions. Congrats to Adam.

Good to have people work. So let me just ask one, I guess for Troy here about kind of like the why now and then and why now is the right time for this evolution, these board editions as well. You mentioned there was not enough seasoned market leaders. I mean, the company performance has been not spectacular, but not really terrible either. So just given that trajectory, you were seeing like, what are the main areas you want the company to improve on going forward, whether that's profitability, the account productivity.

or diversifying the customer base. I guess basically what was not going up to your standards and what will come to be laser focused on kind of going forward. Thanks.

You know, Kyle, it's Troy, you know, our announcements are grounded on we want to do the most with the resources and assets that we have and. At the center of that is something really special. There's a special sauce with. With regards to our technology, it's logic and then particularly how we advance that technology.

going forward. So we have a great deal of confidence in our business and I've personally seen Adam take the reins from mid last year and you'll see that if you look at our corporate deck how he's moved the needle on the key metrics and indeed the cycle the sales cycle time it can be lengthy, but Adam has done all the right things and has helped bend those curves in terms of the

and you think about it from a short-term perspective. We've got to execute. So we had arguably too many priorities, and we were spreading ourselves fairly thin. We've got an incredibly talented and passionate employee base. At the same time, if everyone's working on 7 to 10 programs, it's tough to do any of them well. furniture ornamentation

So we've made a significant shift there. We've really focused on a far fewer set of priorities focused on serving our life sciences customers. The 2nd thing is really continue to build out and strengthen that commercial foundation. I touched on that earlier in terms of where we're expanding geographically. And I also touched on. What we need to be doing to really support our customers in both that pre sales and post sales journey.

as well as what we're doing with Illumina. And I'd be remiss if I didn't mention, because there's been a heck of a lot of hard work going, frankly, for years here at Somalogic to launch the 10K Somascan assay by the end of this year, which will continue to extend our market leadership as it relates to content, which we're highly confident will provide greater discoveries for our customer base.

Okay, that was great. Thanks guys. And then Adam, just one for you on, I'm just kind of wondering would you have to make any structural changes to the company as it stands today in order to kind of enable and potentially accelerate the decentralized kids strategy and then related to that, is there any update on the diagnostics, you know, strategic alternative strategy that was announced a few months ago?

Sure, Kyle. I think as it relates to structural changes, those are consistent with what we mentioned at the end of last year, maybe in advance of JP Morgan. We're going to focus on the life sciences side of our business. So we have pivoted the organization fairly firmly in a way that's focused on serving both that customer base commercially.

as well as ensuring that the innovation, the product that we've got in our R&D pipeline and product management pipeline, are all focused really on that life sciences core set of customers. As it relates to the the DX side, yeah, I think as we mentioned we were going to explore strategic options there and we did that.

journey from discovery all the way through translational and clinical.

I was curious about the commitment to Palomedics and notice that it's in your long-term roadmap here. 2025 is when that chip-based prototype could be announced. But Adam, you were with the company when the deal was announced, but Troy you came on after I believe. How excited are you guys for that asset and are there other companies or technologies like Pal smarter about sending what I locate and we open up in front of you kids through bring the content of our projects off the shelf. I Saw that the company was saying a weirdbie skew.

they kind of have your eyes on like for the future that you know just giving your balance sheet could be interactive kind of going forward. Sure Kyle yeah and you're right I was on board when that deal was announced and closed. I'm extremely excited about the work that team in San Diego is doing. You know in addition to strong intellectual property and other

and the intangible assets. We got an incredibly smart group of scientists and professionals there. And so diversifying our base of operations just modestly out of the Boulder area into that team there in San Diego. We're already seeing some amazing synergy.

and really some amazing output from that team. Thank you. That concludes today's Q&A session. I would like to turn the call over to Adantash for closing your marks. Please go ahead.

Great, thank you so much, operator, and thank you everyone just for listening in. I want to give a special thanks to the investment community, our dedicated employees, and of course, our customers.

Thank you so much, operator, and thank you everyone just for listening in. I want to give a special thanks to the investment community, our dedicated employees, and of course our customers. Thank you very much.

Goodbye. This concludes today's conference call. Thank you all for joining. You may disconnect now and please enjoy the rest of your evening.

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Thanks for watching!