Q1 2023 Akoya Biosciences Inc Earnings Call
Okay.
Good day and thank you for standing by welcome to the acquire Biosciences first quarter 2023 earnings Conference call. At this time all participants are in 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 you will then hear an automated message.
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Today's conference is being recorded I would now like to hand, it over to our speaker.
Thank you operator, and thank you to everyone who is joining us today on this call.
<unk> Shah head of Investor Relations at acquired Biosciences.
On the call today, we have Brian Mcelligott, Chief Executive Officer and.
Johnny Yack, our newly appointed Chief Financial Officer.
Earlier today acquire released financial results for the first quarter ended March 31 2023.
A copy of the press release is available on the company's website.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.
For a list and description of the risks and uncertainties associated with the class business. Please refer to the risks identified in our filings with the U S Securities and Exchange Commission.
Including in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2022 filed on March six 2023, and subsequent filings with the SEC, including our quarterly report on Form 10-Q for the quarter ended March 31, 2023 filed today may eight.
2023.
We urge you to consider these factors and you should be aware that these statements are considered estimates only and are not a guarantee of future performance.
This conference call contains time sensitive information and is accurate only as of the live broadcast today may eight 2023.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
The audio portion of this call will be archived on the investors section of our website later today under the heading events and with that I will now turn the call over to Brian .
Thank you, Brian and good afternoon or evening to everyone. We appreciate you joining us today.
On today's call, we will discuss our performance for the first quarter.
Review, our product strategy and give updates on the upcoming product launches.
Johnny will then provide a more detailed look at our financials business trends and outlook.
I'd like to start by extending a warm welcome to Johnny I joined Acadia as leadership team as Chief Financial Chief Financial Officer in March.
Johnny brings more than 20 years of financial and operational leadership across the diagnostics and life Sciences industries, including at leading companies like metrics Jen Mark.
Johnny succeeds Joe Driscoll following his retirement.
Joe was an integral part of a quite a success over the last four years and guided the company through an incredible growth trajectory, including our IPO.
He will be missed and I wish him, a wonderful and well deserved retirement.
Additionally, we announced the appointment of Jennifer common shy as our new General counsel.
She will be a vital member of the executive leadership team.
Oversee all the company legal activities.
So let me move on briefly to summarize our performance in Q1.
<unk> had a very strong start to 2023.
We also reported record revenue of $21 4 million for the first quarter.
A 27% growth over the prior year.
Our continued robust growth is a byproduct of our leadership in spatial biology, delivering a portfolio of products and services that spans the full continuum of market opportunities from early discovery to translational and ultimately the clinical markets.
Now this is an important and valuable differentiator for our clients.
That is we're achieving success across a broad range of market segments with.
With complete end to end solutions purpose built.
This range and diversity of products provides the company with a strong foundation and the core fundamentals for both near term and long term sustained growth.
A key demonstration of our current and predictor of our ongoing success.
Is the continued and rapid growth of publications.
<unk> platforms.
As of March 31, there are now 860 publications featuring our system our solutions.
A 62% growth from the prior year period.
Additional highlights for the quarter include $5 7 million in recent revenue or 27% sequential quarter over quarter growth and the largest quarterly reagent revenue requires history.
We reported $5 $9 million in service and other revenue a 64% year over year growth driven by the continued success of our lab services business.
Prior to reviewing our forthcoming strategic initiatives I want to spend a minute to review and reiterate.
Korea's multiyear strategy initiated following our IPO in April of 2021.
Our primary goal was to establish a clear as the market leader in spatial biology from discovery to diagnostics.
The first phase was initiated following the IPO and lasted through the end of 2022 and include three distinct strategic objectives.
Following the IPO, we made immediate investments in R&D to develop and deliver a complete an industry leading portfolio of instruments and solutions to serve the discovery translational and clinical markets.
We expanded our SG&A organization to that the scale the expertise the processes and the systems in place.
Third we solidified the clinical readiness of our organization and our product portfolio to set the foundations to achieve our long term goal of penetrating the large spatial biology clinical team.
Our revenue performance 1000 instruments in the field and nearly 900 publications are the most obvious metrics that highlight our solid R&D and commercial execution.
And now in 2023, we are embarking on the second phase.
This multi year strategy to lead in spatial biology from discovery to diagnostics and now underway. The objectives of this second phase include the following.
First with our organization now at a scale.
To deliver on our strategic priorities.
We will focus on improving operational leverage by limiting and targeting our investments.
Also continuing to deliver robust top line growth.
Second we're focusing our R&D initiatives on workflow improvements and reagent solutions that drive increases in consumable revenue and system culture.
Overall, we expect that these high margin regions will contribute a growing percentage of our total overall revenue driving an increase in our gross margins.
Third we will continue to focus on advancing our clinical and market development efforts lab services, and advancing and expanding key partnerships like <unk> and agile and to begin to address the significant special clinical opportunity.
The goal of this second phase of our strategy will be to deliver sustained high top line growth with increasing margins.
Achieved cash flow positivity in 2025.
To expand on our success in the clinical market.
So now let me walk through our product roadmap for this year with the goal its continued workflow simplification and consumable revenue growth.
We have coordinated priorities for investments and improvements across reagents instruments and software.
We expect that our expanded reagent menu with our Pheno code discovery and signature panels will drive an increase in system utilization plex and pull through.
Our planned hardware upgrades on both the piano cycle with fusion and the HG.
We will further simplify our workflows and also contributing to utilization and pull through growth.
And our expanding ecosystem of software partners will reduce our customers' time.
Some data to answer.
Let me talk in more detail detail on each of these first starting with our reagents strategy.
We are expanding our recent menu this year with ready made panels for both the phenotype of the fusion for high Plex discovery and.
The Pheno imager Ht for high throughput translational Stakes.
These biomarker panels.
All under our Pheno code reagent brand and.
And include our female co discovery panels for.
The phenotype of fusion.
And the clinical signature panels.
The piano Imager HG.
The discovery panels will have a rolling launch throughout 2023.
The first panel.
Focused on immune profiling was launched at this years ACR.
The next re panels will launch throughout the second half of this year. These panels are designed in a modular fashion of 10 to 20 markers, providing our customers the ability to combine them, while also including additional acquire catalog antibodies or their own as needed.
For the translational and clinical markets.
We're launching five Phoenix <unk> signature panels for the piano Imager Ht.
The first three panels were launched in Q1 in the next two are due in the second half of this year.
These panels were created for the rapidly advancing immuno oncology therapy landscape that includes nearly 6000 ongoing clinical trials.
The signature panels enable fast and scalable assay, the development and deployment and accelerating utilization and higher revenue per sample on our HD system.
With the launch of these high value reagent panels.
We're also making continued workflow improvements across all of our systems to.
To simplify and accelerate our workflows.
As previously discussed.
2.0 instrument field upgrade is planned for this the second quarter and we will deliver an increase in throughput.
And workflow simplification for our customers.
This upgrade includes a multi slide carrier on the fusion for parallel processing.
Which effectively doubles the system throughput.
From approximately 10 samples per week to.
Up to 20 or more samples per week.
This upgrade also includes the necessary hardware and software components to support biotech. These RNA scope to be used on a beta site with fusion.
On the piano Imager HP.
We are continuing our efforts to simplify and streamline our informatic workflow and post processing to a true clinical standard.
In mid 2023, we plan to introduce further improvements to the HG that moves the post processing of tissue analysis steps directly onto the HG for on instrument real time can compute.
The result will be a several fold reduction in image post processing of turnaround time.
This upgrade supports our translational and clinical customers demand for a rapid and standardized workflow to drive throughput and standardization.
Expanding our content menu and streamlining our workflows are two out of the three necessary improvements to drive increased system use.
Continue to advance and improve our data analysis and software solutions is the final piece.
As we have discussed our software strategy is grounded in two assumptions that are absolutely proving true.
First the rapidly expanding spatial biology market is driving the introduction of.
Many new powerful data analysis solutions from both industry and academia.
Our customers benefit the most if we could partner with these.
These groups to ensure compatibility with our platforms.
Second our resources are better spent enabling these partners versus building a single solution that must serves a broad range of customer needs.
And to remind you acquired platforms leveraging on instrument image processing your file compression technology.
That reduces file sizes by 30 fold from terabytes to gigabytes into a standardized file format called <unk> now.
This novel and proprietary technology enables an ease of data transfer through the standardized formats to help simplify and accelerate.
The development of third party software solutions.
At ACR, we announced the newest member of our software partner ecosystem enable medicine.
Enabled numerous realizing a cloud platform specifically optimized for <unk> datasets.
To date, they have already established the platform's robustness, having analyzed over 20000 samples.
On the enable cloud platform.
Available as a software as a solution package.
It will accelerate the ability of acquired customers to go from data to cell phenotypes insights in minutes or hours instead of days or weeks.
In addition to this partnership we are also partnering with other established industry leaders like Vizio form <unk> labs.
<unk> AI, an oracle bio.
We expect the continued growth of spatial biology will spur ongoing developments of additional software solutions.
The discovery translational and clinical markets.
In addition to the upstream discovery market.
We continue to make great progress in the downstream translational and clinical diagnostic markets.
Leveraging the P&I image or H T and our advanced biopharmaceutical solutions CLIA lab or avs.
Our partnership with Angela has already generated meaningful customer engagements with top biopharmaceutical precision medicine groups, driving and expanding our ABS pipeline.
In addition.
Our agreement with <unk> therapeutics.
To exclusively co develop and commercialize a first of its kind spatial signature companion diagnostics continues to advance.
<unk> recently announced that it anticipates initial clinical data from the phase II multi center open label trial in patients with platinum resistant ovarian endometrial and euro three other cancer during the second half of 2023.
Now to review.
We're focused on the following initiatives throughout the rest of 2023.
First <unk>.
Continued to deliver new applications and drive further workflow and speed improvements to increase the reagent pull through on the <unk> fusion and the discovery market and the piano imager Ht for the translational and clinical markets.
Second continue.
Continue to partner with leading Biopharma medical centers Crows in diagnostic leaders to drive the adoption.
The Pheno imager HD in the translational research and clinical diagnostic markets.
Finally, with the support of our new and expanded leadership team, we will drive operational efficiencies and make limited and targeted divestments going forward.
To achieve cash flow positivity in 2025.
Now with that I will now turn the call over to Johnny to discuss our financial results Johnny.
Thanks, Brian for the kind introduction and warm welcome the pleasure to be on this call today and I look forward to working alongside Brian and the team and leading a coy on the next phase of its journey.
And I want to thank Joe for what has been a seamless transition and I wish him all the best in his retirement.
As Brian highlighted total revenue for the first quarter of 2023 was $21 4 million a.
The 27% growth over the first quarter of 2022.
Our robust year over year growth reflects a strong portfolio meeting the needs of a broad customer base across multiple research verticals and revenue category.
Product revenue, including instruments reagents, and software totaled $15 $5 million for the first quarter, representing 17% growth over the prior year period.
Instrument revenue was $9 6 million for the first quarter, representing 13% growth over the prior year period.
We had another strong quarter with 58 total instruments sold of which 19 were female cyclists and 39 were from the imager portfolio.
We ended the first quarter of 2023 with a total installed base of 992 instruments, which includes 273, <unk> and 719 Imagers as Brian highlighted in April we celebrated an important milestone shipping our 1000th instrument.
A total of 149 fusion instruments have shipped since the full commercial launch at the start of 2022, and we now have a total installed base of 128 for the combined cycle, our fusion system sold either directly.
As a combined system or as an upgrade to our Standalone Pheno sigler instrument that previously utilized third party microscope.
More than a year into the launch the majority of the <unk> are being sold in combination with the fusion.
As expected, we see the combination of the Pheno Sigler and fusion driving increased reagent pull through and we expect this to continue to increase over the coming years with new product introductions, which Brian discussed as part of our product roadmap.
Reagent revenue was $5 7 million for the first quarter of 2023, representing a 27% sequential growth over the fourth quarter of 2022.
In this early part of 2023, we are seeing the efforts of our focus on driving reagent reagent growth began to show encouraging results.
Our annualized pull through per instrument in 2022 was in the low $30 range for both the phenol cycle, which was predominantly paired with third party microscopes and the phenol imager HG.
The annualized first quarter reagent pull through was in the mid $30000 range as morphine <unk> paired with fusion are up and running.
We are targeting annual reagent revenue growth in the 40% range per year for the next several years as we expand our installed base realized pull through expansion across this large installed base and as ongoing product launches in our commercial strategy.
Service and other revenue totaled $5 9 million for the first quarter, an increase of 64% over the prior year period.
Services have been a substantial growth segment for us over the past several quarters for a couple of reasons labs.
<unk> services revenue continues to grow as more pharma customers utilize our services to drive higher scale studies and our companion diagnostic deal with <unk> Therapeutics continues to advance with the clinical trial underway.
Gross profit was $12 3 million in the first quarter, representing 20, 22% year on year growth and gross margin was 57, 4% an increase of an increase from 56, 8% in Q4 of 2022.
As reagents, becoming a bigger part of our revenue mix and as we leverage our manufacturing investments to date, we will continue to expand our gross margin over time.
Operating expenses for the quarter totaled $29 9 million as compared to $29 $6 million in the fourth quarter of 2022.
As Brian noted, we have now begun to leverage our cost structure to drive the business towards profitability and are planning a flattening of our operating spend throughout 2023 and into 2024.
With historical investments in business expansion efforts since the IPO, we have developed products built operating infrastructure and streamline commercial execution.
<unk> top line growth with expanding operating leverage.
Our plan for 2023 includes targeted investments in areas that will generate the highest returns as we work towards operating cash flow positivity in 2025.
We ended the quarter with approximately $60 million of cash and cash equivalents and approximately $11 million and additional debt capacity.
The first quarter of each fiscal year is typically our highest cash usage quarter as we make bonus and other similar similar annual payments.
In addition, we have invested in higher inventory levels to continue to cushion against potential supply chain issues and offer a more expansive reagent rentals.
We expect to maintain robust topline growth throughout 2023 with reduced cash burn as we recognized operating leverage and flattened opex.
Common shares outstanding and fully diluted shares, including the impact of outstanding options and Unvested restricted stock Awards are 38, $38 4 million as of March 31 2023.
To summarize we had another record quarter with $21 $4 million in revenue and 27% growth over the prior year.
We have a total installed base of 1000 instruments as of April the largest installed base and the spatial biology industry.
We reported our highest reagent revenue in <unk> history, this quarter of $5 $7 million, representing 27% sequential quarter over quarter growth driven by an expanding installed base and increasing pull through on the phenotype of our fusion.
And finally with an industry, leading volume of publication featuring acquired platforms now at 860 as of quarter end, representing a 62% year over year increase we remain confident in our ability to deliver continued growth in 2023.
Currently we are reiterating our revenue guidance range of 95% to $98 million for 2023, as we continue to see tailwind for our business and our spatial biology market.
Now I'll turn it back over to Brian for closing remarks.
Thank you Johnny.
We're pleased to report a strong quarter and announce multiple exciting new developments across the portfolio.
Thankfully for the hard work of our fellow dedicated of clients as well as for the support of our customers and shareholders.
<unk> remains very well positioned for growth and we're excited about the opportunities that lie ahead, as we deliver new spatial solutions from the discovery to the clinical markets.
At this point, we will turn the call over to the operator for questions.
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.
Draw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Our first question comes from Tim Chiang from capital One your line is now open.
Hey, thanks.
Brian .
I listened to the accurate one therapeutics called happened recently.
Do you do you guys get significant milestone payments assuming that their clinical readouts.
In phase two.
Let's assume they are positive would you guys get milestones from that.
Do we get milestones without going into too much details, but we get milestones throughout the development phases.
And throughout the enrollment and clinical trial participation phases.
As well as the readout on those so it's a fairly typical Tim companion diagnostic agreement, but short answer is yes.
And maybe just a follow up to that.
There's a lot of precision medicine biotech companies out there yes.
What what what do you think you need to do to get more of these types of.
Deals where you can leverage your.
Sure.
Youre diagnostic capabilities on the clinical side, yes.
Yes, and maybe.
That's a great question Timna I appreciate it maybe for the benefit of those that don't have the background, maybe just back up a little bit so we announced.
The partnership with Acro Bon last summer.
Following their R&D submission of their DNA damage repair compound their phase III trial.
Of the compound in license from Lilly in that trial that that <unk> also included.
The <unk> assay.
Was run on our platform.
And it's being being run out of our CLIA lab.
So the things that we need to accomplish to your question directly Tim.
To secure more of these as really as we've spoken of Pryor is really to continue.
I would say shots on goal its opportunities and more and more clinical trials.
More and more clinical trials within our existing customer base and across multiple partners to increase their probability.
Like we have with acro Vaughan, where it become central to the actual clinical trial.
And while we don't call out all of these details specifically as a separate line item.
And they give you just look at our services line over the last five quarters or so that's.
Thats, a pretty solid indication of us growing that business, but trying to be selective about it as well, Tim and I was there.
The milestones for us to continue to March along the CLIA lab was certainly an important milestone. This first companion diagnostic deal is very important milestone because it gives our pharma partners with.
The confidence and belief that we can handle the full submission process and end up having an improved system on market and then finally, it's more recently it's in January their partnership.
With adjuvant that provides our pharma partners.
The ability to have a full set of clinical grade workflow.
Partner between Us and <unk> agile and they know how to develop.
Ron clinical studies and commercially deploy our clinical trials. So there's a lot that goes into it Tim.
Jim but it really is just a sort of a slow steady grind to broaden the menu.
And number of opportunities we have within our clinical trial partner base.
Okay, Great no that's very helpful. Brian .
Best of luck.
These types of partnerships this year.
Thank you.
Okay.
Yes.
Thank you one moment at that prepare the Q for our next question.
Our next question comes from Nathan <unk> of Stephens, Inc. Your line is now open.
Hey, guys. Thanks for taking the questions sorry, if I missed this I'm jumping between a few calls here, but did you guys discuss revenue and growth by geography during the quarter and if not could you provide some color there.
Yes, it's a good question, we did not it was fairly balanced across all territories.
And across all product lines, there was no real outliers.
Last year. There was there were some puts and takes across multiple categories that it wasn't relegated to us but for US. It was it was fairly balanced across all categories.
And is starting to come back a little bit on the reagent side not fully there, but all in all there was there was no sort of real outliers Lisa.
Okay got it thanks that's helpful.
And then one more here on on performance I think when you guys were talking about the.
Pull through per instrument, you called out a range in the mid 40 <unk> over the next couple of years.
Has that changed from any prior expectations or maybe any additional color there I know that new.
New platform owners tend to have lower pull through initially so has has your expectations changed around instrument placements has it gone up.
Any additional detail there would be helpful.
No no changes.
Instrument expectations or longer term pull through expectations.
We are we are beginning to realize as Johnny alluded to in his talk track.
We're starting to see the movement of that pull through.
On the on the Phoenix Eichler with many of those.
First half <unk> refuse and installs getting to full production, so kind of going from the low <unk> to mid <unk> and I think Mason will continue particularly on the <unk> will continue to see this sort of steady decline.
Pull through the overall reagent revenue.
$5 7 million for this quarter was a pretty pretty good step up from the $4 five in Q4 last year, So now releasing and expectations and I think all of that everything we're doing on the product side is going to help drive that as I alluded to in my opening comments.
Perfect. Okay, and then one more maybe high level question.
I think historically you guys have talked about.
Somewhat of a bifurcation in the special market or discovery market protein labs, where you guys have historically focused and then some genomic labs, where competitors tend to play but you have also pointed to this trend of multi omics and the expectation that the market is moving in that direction, so with that in mind.
When you think about the protein versus genomics labs, how do you think about which type of lab is it's going to more rapidly adopt multi omics solutions as these roll out or.
Even use the analyte that that they historically werent broadly using in their research, whether it's RNA or protein.
That's a great great question, and I'm going to rephrase it made sense to make sure I am answering it correctly, which is we've talked about proteomics and genomics customers, where do we think multi omics is going to resonate the most.
Rephrase it simply is that is that what you're asking.
That's alright I actually.
I actually think it's going to be.
More in the Phoenix accurate fusion customer base, because what they are looking at are theyre looking at proteins as a really rich scaffold within which to understand sell center at cell cell interactions as well as the key protein markers like the PD, one PD ones checkpoints and they're layering in RNA as an added tool.
To look at secreted molecules <unk> cytokines as an added question. So I think that kind of multi on a customer is where youre classic.
Protein player is going to is going to.
It's going to resonate the most I think over time, I think youre going to see the genomics customers.
We continue to focus more and more on.
On genomics space open ended exploratory discovery questions and that's the power of the transcript.
So hopefully that answers your question I think with that multi omics.
Perfect.
Thanks, guys. Thanks, Matt.
Thank you one moment I thought repair our next question.
Our next question comes from Julia Clinton of Jpmorgan. Your line is now open.
Hi, good afternoon guys.
I wanted to ask on the <unk>.
Revenue this quarter could you give us a little more color on whether this is mainly driven by ACA wrong scaling their studies or new Biopharma customers and then also two related follow ups on that is are you seeing any changes in customer preference between service versus instrument just in light of the macro environment.
Ryan and then could you talk about the Biopharma pipeline health and whats your latest outlook for the service business given the Scott. Thank you.
Yeah. So the the growth in services is sort of a balanced contribution.
The questions Julien a balanced contribution.
Over the last five quarters or so from both of those sources that is both the Acura Myles.
Milestones.
And realizing revenue recognizing that as well as the growth in ABS now there is a component of that that also includes warranties and those that those those sort of growth linearly with our installed base.
And that's a component of that it's probably a minority values.
And your second part of your question are we seeing preferences for services versus buying instrumentation, there's nothing Julia I would point to that would signify that would signify a.
A massive shift within how we go to the market with one very important Astral, which is we are seeing a lot more activity within our <unk> and core labs.
So not services by our courtyard, because the services that we're doing with ABS and <unk> those are very targeted and thats, a pretty rich pipeline of targeted.
Translational clinical studies, but more generally Julia I do think youre seeing in the external markets people shifting.
Enable medicine is one of those <unk> that also has software.
Core lab's at many of our academic institutions, you're seeing these cores.
<unk> be a very a really central component of not only how products go to market. The first wave of adoption. That's one of the reasons why we think it's so important on the discovery side to focus on that throughput that sample per unit time.
Because then these these core labs can actually have a business. If it's a sample every three to four days, they're going to have to charge a markup of thousands and thousands of dollars per sample. That's why throughput is so important on the discovery side and then on the translational side is equally important to make sure that we have panels that are ready to go in our pre automated.
So that <unk> can go out and market a full solution and not have to bill panels anymore. So the service portion of the business that we're serving versus providing I actually do think there is a trend.
Towards that as very important customer base.
And then the Biopharma pipeline.
I think theres two ways to talk about it as we look at our our top pull through accounts.
Over the last few quarters for both the Venus ocular fusion as well as the Ht Biopharma are becoming an increasing percentage of those really high performing accounts. So we're really seeing our platform's takeoff in biopharma as a product sale, but also our biopharma business in terms of ABS that I already spoke to that is that is pretty robust but again.
It's very targeted so hopefully that answers your question Julien.
Alright, Thank you very much thank you.
Thank you one moment is that repair next question.
Our next question comes from Mark Massaro of <unk>. Your line is now open.
Okay, maybe in Alcoa, Mike Thanks for taking the question Hey, Brian .
Because you have data update us on what the attachment rate for the group.
Fusion is for new.
<unk> loves the existing installed base.
I think it was hovering around 80% last quarter and a net.
So you're thinking that as standalone.
We will be in the minority.
Your numbers are correct and so are your assumptions and Johnny can correct me, but yeah. Our attachment rate is above 80%, we think it's going to stay there.
And there is still a.
There is still a great opportunity for us to continue to upgrade existing fee in a cycle of the customers that are using third party scopes and as we rollout more and more product improvements to the phenotype of the fusion, it's going to be coming so it's going to become sort of a growing attraction for those venous anchor customers to then upgrade to the fusion.
Did that answer your question Vivian.
Thanks, Tom.
<unk>.
Just get a follow up any preliminary thoughts on how the field upgrades for the fusion to Plano are progressing.
Any initial feedback you've been receiving on the to your point now.
In terms of be increasing those.
Those start next month so.
Yes, so there's a lot of excitement and interest in anticipations for those so those will be rolling out next month and the pace of those.
It's sort of customer dependent.
In terms of are they mid project they have to wait.
So I don't think we're giving exact guidance on.
How many quarters, it's going to take but we expect that there'll be a lot of excitement for that upgrade because of the improvements not just on the hardware side.
The multi slide carrier, but theres also some significant improvements on the software side in terms of workflow usability.
Okay.
Thanks for taking the question. Thank you.
Okay.
Thank you one moment as I prepare for the next question.
Our next question comes from Karl Medicine.
Canaccord Genuity your line is now open.
Hey, guys. Thanks for taking my questions Congrats.
Congrats on the quarter and thanks for providing the second phase three strategic objectives.
Objectives, those are actually pretty helpful. I think they are important components here that you kind of walk through the roadmap and so forth, but on the cash flow positivity by 285, just to walk through some stuff there.
So really like how do you get there I think I heard you guys talking about I think John you went into some detail R&D efficiency is limited and targeted spending maybe you could just expand on a little bit I mean, it was good to hear that that stuff and then maybe you would be assumptions just P&L wise, so flattening opex topline growth things like that.
And importantly, if you guys could just talk through you are contemplating any additional financing because based on the burn here I mean, it kind of seems possible for that and just sort of appreciate that thanks.
Yes, I'll take this one certainly hey, Kyle Thank you so <unk>.
Maybe it's helpful to kind of give building blocks right. We think about as you mentioned, we exited the quarter 60 million unchanged with $11 million in change as additional debt capacity, so starting the quarter with $70 million.
And capacity and then we look at what we're going to do for this year as we flat flat in Opex as we drive our revenue growth.
We've talked externally about sort of the 30% growth was up was our goal for the coming years and as we look at gross margin improvement when you put those building blocks together and you truly flattened opex and have targeted investment and careful diligence on all your spend you really start to drive cash.
And the year with a cash number that allows you to move into 'twenty four with the momentum to get to cash flow positivity operating cash flow positivity in 25, it's really with those building blocks is sort of how we get there.
Make targeted investments and we'll continue to fund the growth in sales and marketing, we built a tremendous sales force and great products, which will drive that revenue growth.
We will have we have the ability to really focus on costs within cost of goods as we've grown the company in the last two years since IPO.
Focus naturally is on growing that revenue and now we really have the ability to take cost out from a cost of goods perspective, driving that margin up and then we have a good base of Opex that we don't expect to grow we'll be able to flatten that opex and when you put those components together you get to them. The cash number we think we need to hit and the cash that we have on hand to meet our near term goals.
Yeah.
I mean that was great.
Did you want to just clarify the financing potential order okay.
Yes.
Right now we've got the cash on hand, we needed to execute against our near and our near term goals.
Okay. Okay, no that was great. Thanks, Johnny.
Just moving on to <unk>.
The industry that the company really so you had a great quarter like I said the other special companies focus on transcript amongst did as well. The raised guidance are you seeing anything interesting in the funding environment or overall budget allocations given the number of all these capital equipment options right now.
Then specifically just kind of curious if youre seeing labs purchased a box with a focus on analyte or maybe some other metric in other words.
Are you kind of like sort of on your own with special proteomics.
So let me take that last part first the dynamics that we've spoken about about.
Ah broadly growing spatial biology market, but still in terms of buying behavior.
Customer type.
I think.
I suspect that our colleagues at <unk> and <unk>, we think similarly that.
It's not really a head to head with a call yet we're still in a market segment, where we're really not running into those customers.
Their field force very much at all.
I think those dynamics may start to change towards the latter part of this year as perhaps both of our portfolios pivot to include the other analyte.
But I would harken back to <unk> question on how we think about.
That market opportunity for us so even even a slight amount of some moderate success in genomics market for us would be I think significant upside for us in terms of the funding environment Kyle.
We're not really seeing any anything dramatic to the negative.
I would say similar trends to what we talked about in Q1 in terms of diligence around capital purchases.
Some reagent pull through resurgence in China, but not not quite back.
Yes.
Okay awesome.
And that first part there I mean I haven't I have received some.
Questions about that in the past so there is some some yes.
Maybe I'm misunderstanding of some of the stuff out there. So that's all good maybe just a quick one I wanted to hop off after that.
Any inbound interest or order funnel commentary for the discovery panels right now on the RNA side is we'd love to hear that.
First time doing the kind of Standalone RNA, yes.
Yes.
The first launch of the discovery panels at least that wasn't clear Kyle.
Is protein this is immune cell profiling panel launched at ACR, So a huge amount of interest at ACR.
Or for that component and when you combine it with a lot of the other content.
Really along with fusion two point out really central to driving up the plex, but what I would also add taking some liberties with your question.
Those discovery panels run on the cyclic right with the fusion.
By their name is signature panels are really biomarker signatures.
Those are designed to run on the H T.
We had a number of those launched in Q1 and there was a lot of inbound interest.
By our CRO and Biopharma customers because the content there is so central and core.
To Io in oncology and checkpoint inhibitors.
Activated til status et cetera.
So those are really those are of great interest as well as signature panels on the Ht and remembering that.
For us in terms of topline will really help our pull through on the Ht because historically, we've only sold the detection of <unk> and component of that asset.
About 30 cents on the dollar by selling these signature panels with that ready made content for Biopharma Ciara partners now, we're getting sort of that realizing the full value because we're putting those panels together and getting the antibodies. So I. Appreciate you letting me take some liberties with the question hopefully that was was clarifying.
Yeah, very thoughtful Brian appreciate it thanks guys.
Okay.
Thank you one moment as they prepare the next question.
Our next question comes from David Westenburg from Piper Sandler Your line is now open.
Hey, guys. Thank you for taking the question. So I just wanted to ask about the RNA scope.
Biotech any deal I believe it should be this quarter.
It's dependent if im not mistaken on fusion two point release can you talk about maybe how much.
Jim Correct me, if I'm wrong, and then can you talk about the time elapsed between fusion two point now and the launch of the RNA scope as a reminder.
Yes, so the arm so the 2.0 hardware and software upgrade David has all of the necessary components to run the RNA scope.
So as we roll that out in the field.
And in a likely get pulled to do so by those groups interested in RNA scope is fully enabled with that upgrade.
Got it so it would be.
Exact same time it'd be concurrently.
Okay.
Okay perfect perfect. Thank you very much.
Gotcha, and then I wanted to pivot to something else I think I saw.
A partnership or a new customer and Fulton thats picking up here Youre assay now we cover them and profitability or running assays are building assays that are profitable is very central to the way. They operate so can you talk about either.
Specifically or how a diagnostics company customer can really use your platform here to build new profitable.
Thank you, yes, so I won't talk about them specifically although.
That is one of the great stories that I've ever learn if that is the business and how it how it kind of grew in.
And what they've done there so an incredible job by that team, but I'll speak more generally.
So if all gen and companies like those because what we're seeing.
David is we're seeing a.
A really accelerated recognition.
And the true.
Service opportunities CRO opportunity in translational and clinical need for multiplexing period.
We call it spatial biology, but the reality is in a CRO setting this is multiplexing.
And Theyre doing multiplexing on our platform.
Cause it's fluorescence.
And they're doing it with florescence because that allows them scientifically and I apologize for going in the weeds to look at Biomarkers that co located on a single cell.
That capability.
To do clinical grade multiplexing for markers like PD, one and PD, one and <unk> four and <unk>, they're all co locates you need to have the technology that they can ferret out those signals.
And so what our customer what our CRO customers like <unk> and others are seeing as youre seeing demand from pharma.
And theyre seeing an opportunity to sell services for multiplex based immuno fluorescence and munis to chemistry.
And Thats exactly what we want.
That's why we built the panels, that's why we keep improving the HD system. That's why we did ABS our CLIA lab. So you would have clinical grade protocols.
We can then share with all of these groups.
So we have consistency of performance. So this is and I really appreciate you asking the question. David This is a really really powerful dynamic where we're seeing <unk> beginning to promote multiplexing on our platform as a solution and that's that's the kind of flywheel effect.
We hope for planned for with the Ht with the signature panels with the ABS methodologies everything I just went through.
Thank you very much Brian Miller chat with you offline and hours couple of hours.
Negative.
Thank you one moment as I prepare the next question.
Our next question comes from <unk> of Morgan Stanley . Your line is now open.
Yes.
Hey, guys. This is edwin thank you for taking my questions today.
Hey, just wanted to double check on something with the fusion two pointed out rollout you guys said that <unk> will meet the multi carrier slide requirements. Upon the software upgrade would there be another catalyst later on this year to unlock the full throughput of that or is that going to be available immediately just like the irony scope.
So yes, so the two low is multi slide.
It's got all the components to enable RNA scope.
And then there is some there is some software upgrades and data post processing agreement that is there is a rule that says.
The biggest largest step function for this year.
On the platform side, but what I would what I would add admin is that.
Additive and a driver over time is the launch of more and more of these discovery panels.
Yes.
What those do is they make it really easy for you to stitch together groups of 10 to 20 of these are these are in modules immune profiling modules immune activation modules lymphocyte profiling modules is fix these things together and very quickly build a 60 70 plex.
Versus you might've been averaging a 30 <unk> before so the modules and the software partners.
Help I hope convince our customers to <unk>.
Take that multi slide carrier and get full utilization of it.
So it's sort of a flywheel effect if that makes sense Edmond.
Understood and then in regards to discovery panels, having RNA capabilities by the second half of 'twenty will that simply be with the RNA scope I think if I'm not mistaken that's around like a handful of flex.
But.
What about Europe .
And total 100 Plex panel is that going to be second half of this year as well over that project.
I appreciate the question so the current the current.
Guidance that we've given is to Plano has everything needed to enable the RNA scope and that that's about up to a 12 plex that theyre high plex.
<unk> 12 Flex and then it is our own internal RNA, that's higher plex.
Then ultimately multi I'll make that we've talked about the second half.
Firstly.
Okay, Yeah. Thank you.
Yes.
And then one final question on me in terms of the enabled medicine partnership.
Can you remind us how this differs from new collaborations you currently have.
Vizio farm path AI and Oracle is this should we just view this as another downstream analysis tool in the toolbox for researchers.
In short, yes, we are trying to give we're trying to give a an array of offerings.
That suit the needs the different needs of each customer and I will come back to Vizio farm I'm, sorry enable medicine, but.
There are solutions like <unk>.
And that's really where that's free and you can plug in and you can do our scripts.
So that's a that's a freeware oracle bio is a group that for example, Ken.
Ken can do really powerful.
Bespoke based biomarker discovery and analysis.
AI has both a lab, but also strong AI capabilities, where they can take large scale cohort studies and find the signatures themselves and then groups like Vizio farm in into Collabs.
Huge install base that they've been in market for a long time real industry leaders in both do very well in Biopharma.
Enable medicine enable Madison is a cloud based solution.
That was really <unk>.
Built in initially to serve our discovery market segment.
That are doing real high Plex studies and as we noted in the in the opening comments they've already analyzed over 20000 samples on that platform. So it's been robustly tested and theyre going to roll this out as a software as a service package, enabling our <unk> fusion customers to try it out initially and a very affordable manner.
It's a very scaled cloud based solution.
And then also as a company.
Illustrative of the fact that you've done 20000 samples.
Have a real robust services lab, using our platforms as well.
So again, it's really about a continuum of offerings.
That meet the different needs of academia and.
And industry alike.
Got it that's super helpful and just one final one for me.
Of your competitors have mentioned offering onboard primary and secondary analysis to their instrument and you've also mentioned, adding that as you age.
<unk> instruments as well is that something we should consider down the road as well.
You will do for your kindness.
<unk>.
Yes.
So in short we've already we've done a lot of that already I, just I think theres. Some theres some components to structure out and Youre right I think it's a standard that needs to take place. So there is a compression approach.
There is a compression that allows this to happen in a compute friendly manner.
First when you compress that.
Data format than the onboard the cost of that onboard compute.
It doesn't have to be exorbitant.
And then once you have that onboard compute like we have with the HT you can do a lot of that post processing real time.
Whether or not we roll that into the pheno secular fusion, it's not as pressing a need.
That post processing.
The reason why it's so valuable on the H T is because you're basically remove that post processing. So the time from sample to answer for a clinical study you take a big chunk out you take a big chunk of that so that's really about consistency and time to answer.
Got it thank you for the time today. Thank.
Thank you everyone.
One moment at that preparing next question.
Our next question comes from Lucas Baranowski of UBS. Your line is now open.
Hi, guys. This is Lucas on for Jonathan Sadler, Barry here at UBS.
A lot of my questions have been asked already but I guess going back to the our female code signature panel Zaffino code discovery panels.
Each of those two do you expect to drive more pull through in 2023.
That's a really good question Lucas I don't like having to choose between my children.
I don't think I don't think any one of those is an outlier. The only thing I would add is that it's perhaps more about scheduling schedule.
So the Phoenix signature panels, we launched three of the four in.
And three of the four panels here in the first quarter, but the nature of the use of those is pharma will try those on a pilot study analyzed and then scale. So it's a sort of a bimodal adoption.
The discovery panels are going to come out over time, and those are going to be more organic as they roll in so while the adoption curves curves look different sort of a gradual growth versus this bimodal pop.
And the discovery versus the signature respectively, I think their contributions are going to be.
Are going to be fairly equivalent in terms of additive added topline revenue.
Thanks, That's really helpful. And then I guess more generally looking at total revenue can you talk a little bit about the pacing for the year end.
The biggest puts and takes we should be thinking about as we kind of forecast for the next few quarters.
Yes, I mean, I think as you look at our performance in it.
Look it's worth sort of Q4 to Q1.
So the allocation of revenue across the categories.
I think that's a decent starting point I think what we expect.
Over the coming quarters is that reason growth.
<unk>.
To continue to go up a little bit more so we think our I think our Q4 contribution of reagents to the total will likely be more than Q1 for example in terms of the absolute dollars. So.
I think thats I think that will be the loose guidance that we would give and we can certainly dig in a little bit more on the on the specific models as a follow up.
He wanted to add anything to that.
I think naturally we certainly expect with the number of placements in the field as all are alive and continue to drive pull through.
It's a relatively step through the year to get to that that Q4.
Exiting revenue.
Okay. Thank you very much that's all I had thank you Lucas.
Thank you for your questions.
At this time I would now like to turn it back to Brian <unk> for closing remarks, well listen thanks, a lot I don't I don't have a lot to add I think we covered a lot of the content I just want to thank everybody for their time to support their questions and.
Again, we're really encouraged by our strong performance in this Q1 of this year consistent with prior quarters and we're going to continue this maintained consistent high growth performance.
And we're really excited to capitalize off of all of our product opportunities from instruments reagents services again across a broad continuum of market segments.
Think thats again, what's unique and powerful about Korea as we have we have diversity of revenue not just across product types and geographies, but also across market segments.
And if that market segment and being successful across all all three of those from discovery of the translation of a clinical that gives US strong foundation not just for growth this year, but going forward into the future.
So with that I appreciate everybody's time and.
We look forward to talking again soon.
Thank you. Thank you for today's participation in today's conference. This does conclude the program you may now disconnect.
Alright, I'll jump onto our first call back alright, Thank you Gerald.
Okay.
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