Q1 2023 PhenomeX Inc Earnings Call
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Speaker 2: Hey, everyone, and welcome to the Fino-Mex First Quarter 2023 Earnings Call. Today's call is being recorded. I would now like to turn the conference over to Suzanne Hatcher, Senior Vice President, Invest Relations and Communications. Please go ahead.
Speaker 2: Thank you, operator. Good afternoon, everyone, and welcome to the CNO-MEX First Quarter 2023 earnings call reporting financial results for the quarter-ended March 31, 2023. My name is Suzanne Hatcher, Senior Vice President of Communications and Investor Relations at CNO-MEX.
Speaker 2: I'm joined today by Dr. Siddhartha Kadeja, Chief Executive Officer, Mehul Joshi, Chief Financial Officer, and Dr. Rolando Brouwer, Chief Business Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal security laws.
Speaker 2: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For more information, please refer to the risks, uncertainties, and other factors discussed in our SEC filings.
Speaker 2: Acceptors required by law, FUNOMX, displace any intention or obligation to update, revise any financial projections or forward-looking statements whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as the live broadcast May 11, 2023.
Speaker 2: As a reminder, you can find today's press release and an investor presentation on the Athenamex website under the Investor Relations section.
Speaker 2: With that, I would like to turn the call over to Siddhartha.
Speaker 3: Thanks to them and thank you everyone for joining us for our first owning call as TheNomeX.
Speaker 3: At the end of first quarter, we completed the acquisition of Isoplexus.
Speaker 3: We are positioned to be the leading provider of life sciences solutions that will have the greatest impact advancing the era of the phenome as the next revolution in biology and medicine unfolds.
Speaker 3: Our unique suite of Torrance and Services offer unprecedented resolution and speed.
Speaker 3: In fact, Phenomax sells the only single cell platform able to isolate, manipulate and characterize toize.
Speaker 3: while enabling last scale and multiplexed functional multiomics.
Speaker 3: Our mission is to empower scientists to leverage the full potential of each cell and drive the next era of functional cell biology that will advance human health.
Speaker 3: We now have an installed base of 430 platforms with placements in all top 15 pharma companies by revenue and approximately 85% of United States comprehensive cancer centers.
Speaker 3: Our products have been cited in over 225 publications and are supported by a robust intellectual property portfolio of more than 600 patents.
Speaker 3: I will begin the call today by providing updates on the tremendous integration progress we have made in just seven weeks since the closing of the isoplexus acquisition.
Speaker 3: and the tangible actions we are taking as we continue to execute on the five pillars of our strategic operating plan.
Speaker 3: I will then turn the call over to me who will discuss our first quarter results.
Speaker 3: and full year 2023 financial guidance.
Speaker 3: Starting with our first strategic pillar of building a world-class light sciences leadership team.
Speaker 3: We are continuing to bring on industry leaders with the proven track record in scaling life sciences to those companies.
Speaker 3: At the end of March, Dr. Jan Zhang joined Phenomex as Chief Commercial Officers.
Speaker 3: In this newly created position, YAN oversees our global commercial organization and helps drive strategic growth across our platform and services business.
Speaker 3: The Anne brings over 25 years of operating and management experience in the life sciences tools industry.
Speaker 3: Most recently, she served as CEO at Mission Biore.
Speaker 3: A life sciences company focused on high throughput single cell DNA and multi-omics analysis.
Speaker 3: Before Mission Bio, he answered in various commercial and business executive leadership roles at Thermo-Official Scientific, Life Technologies, Ethymetrics.
Speaker 3: New Zealand technology and molecular devices.
Speaker 3: With the addition of the end, we have a strong operational team in place with Sean McKay.
Speaker 3: Chief Robert Officer and former CEO of Isoplexes.
Speaker 3: Eric Cobb, head of Global Operations and Business Integration and former Chief Executive Officer of Berkeley Lights and Rwanda Broward, who in his role as his business officer leads
Speaker 3: research and development and business development teams. And is a formal executive from Thermofficial Scientific Excess Sciences and Dan Herr.
Speaker 3: Our goal of building out the leadership team with deep experience in life sciences to space is now complete.
Speaker 3: We look forward to building momentum in critical global markets with our technology and unlocking the new company's tremendous potential. Moving on to our second strategic pillar of prioritizing R&D return on investment through increased focus and rigor on development initiatives. When forming PNOx, one of our main objectives was to create a balanced power portfolio.
Speaker 3: with a range of price points to provide broader customer access across a larger portion of the cell biology market.
Speaker 3: To achieve this, we are focused on three key near term development objectives.
Speaker 3: So, to achieve this, we are focused on three key near term development objectives. Number one.
Speaker 3: discovery, bio processing, and translational and clinical research. Number two, completing the inducible producer's cell line, IPCL, selector application for our latest system in development. This beacon gene therapy system, which will be branded beacon X, is expected to deliver on parallel speed in cell line development within the AAV gene therapy space.
Speaker 3: And number three, unlocking a new market in single-cell functional multiomics for T-cells with the recent launch of the T-cells profiling workflow on Beacon and Beacon Quest for Immuno Oncology and Self-Helope.
Speaker 3: serving both academic and industrial market segments.
Speaker 3: combine the output folio.
Speaker 3: are opt of fluidics, power portfolio includes.
Speaker 3: Beacon system for antibody discovery, cell line development.
Speaker 3: single cell functional multiomics for D cell profiling and AV cell line development workflows.
Speaker 3: If you recall, we provided details of our AAV and multiomics T-cell profiling workflow in our November Investor Day.
Speaker 3: In April , Phenomex launched the single cell functional multi-omics T cell profiling workflow we believe will revolutionize immunotherapy research and development by comprehensively profiling.
Speaker 3: single-t cells to correlate polyfunctionality with cytotoxicity and recover selected cells for downstream analysis including transceptomic and genomic analysis of the same cells. The application is a great example.
Speaker 3: We believe this produces the most complete solution for this type of research on the market today, which can help researchers and drug developers in areas such as characterization of self-herapy donor materials, CAR-T selection, identifying best killers, cultural condition optimization and primary self safety as well as potency assay.
Speaker 3: all of which is based on functional multi-Omega analysis of the same cells. In addition to the beacon system,
Speaker 3: We can select a lower throughput beacon system.
Speaker 3: With a price of less than $1 million supports are objective of lowering the barrier of entry for customers to gain access to our technology.
Speaker 3: In February 2023
Speaker 3: The Beacon Select for enabling cell line development application was launched.
Speaker 3: and the beacon select for enabling the antibody discovery application is set to launch next week on May 15th at BEX conference in Boston.
Speaker 3: This system is an ideal option for wheat-sized biopharmas.
Speaker 3: CIROs and CDMOs are those who already have a beacon system but need additional capacity.
Speaker 3: Next, we can quest a lower cost platform only available for academic researchers is set to launch on May 15th.
Speaker 3: BeaconQuest enables the main applications of Beacon system, including antibody discovery, cell line development, and single cell functional multi-omic T cell profiling. We believe this new product can provide significant value in high-growth, high-performance applications.
Speaker 3: academic research segments, particularly in immuno-oncology translational cancer centers and innovative cells and gene therapy development centers.
Speaker 3: And then finally, Beacon X, a new Beacon system specifically for gene therapy manufacturing will only be available with a licensing service agreement and is currently in customer beta testing. We are further developing IPCL application that includes a unique HydroGel feature that helps differentially protect nanopens to run destructive access and in turn quickly identify high producing AV cell lines.
Speaker 3: amongst a pool of thousands of cells containing the capteits and genes of interest.
Speaker 3: This system is anticipated.
Speaker 3: We continue to dedicate ample resources to this workflows development throughout 2023. We expect AAB manufacturing to drive 2024 grossing subscription service with increasing contribution in 2025. Under our proteomics portfolio, we offer the ISO Spark and ISO Lite instrument platforms
Speaker 3: With applications to analyze single cell immune, sector-tome and bulk proteomics with the ISO code reagent sheet. A part of a near-tomput, totalized product road map.
Speaker 3: We plan to launch meteor in June in next generation chip available on the isoprox system that automates multiplex bulk proteomics in high sample throughput.
Speaker 3: are committed to our next generation platform. In early 2025, we plan to launch Phoenix.
Speaker 3: cost of the isospark and isolized instruments with the functionality of the beacon of the fluidics and supporting a wide suite of applications. With the system, the latest applications of our cell biology tools could be greatly expanded.
Speaker 3: expand our serviceable, addressable market.
Speaker 3: In the first four months of 2023, we have tested various components of this new benchtop design in an effort to de-risk our technical path towards cogs below $100,000.
Speaker 3: enabling a much more accessible price point for both academic and bio-farmal customer segments.
Speaker 3: 130 customer-facing employees, including our sales team.
Speaker 3: Filsterless engineers and technical customer support roles. Dispastly trends are ability to reach academic, bioformer and CRO companies across all geographics. The commercial and technical teams are starting to cross-claim on the combined opt of fluidic and proteomics power portfolio with an eye towards revenue recognition in the second half of 2023. As I mentioned earlier, Dr. Yen Zeng joins Phino Max as Chief Commercial Officer in March.
Speaker 3: We also welcome Peter Silvester as a new member of the Board last month.
Speaker 3: Peter brings more than 25 years of experience in the life sciences tools industry, most recently serving as Senior Vice President and President of Life Sciences Solutions at Thermoficial Scientific. Peter's wealth of knowledge, especially his experience in global markets,
Speaker 3: and commercial operations will be invaluable to our efforts to strengthen our commercial strategy under Yan's leadership.
Speaker 3: Yan has hit the ground running and she is quickly instilling rigor and discipline in our commercial execution by focusing on market segmentation, accelerating regional expansion, driving market education through KOL engagement and publications.
Speaker 3: In addition, working with Rolando Brauer, our commercial team is already leveraging our expansive intellectual property portfolio of more than 600 patents for out licensing and partnerships opportunities. We continue to focus our commercial efforts towards the
Speaker 3: Beacon Power Portfolio with Beacon Select in Antibody Discovery and Cell Line Development Business as I just described, and driving adoption and standard setting for the potent ASA in the cell therapy market using the Iso-PARC instrument.
Speaker 3: With the Beacon Quest and Single Cell Functional Multi-Omic T-Cell Profiling Workflow, we will focus on expanding our reach into immuno-oncology, as well as the innovative cell and gene therapy development segments of the academic market.
Speaker 3: leveraging the current relationships from the ISO Blacksess team as well as the product install base of proteomics portfolio where customers have expressed a strong and met need in comprehensively characterizing patient samples and cell-based products. Integrating functional analysis.
Speaker 3: and transcripting as well as genomic analyses of the same cells and then finally exporting these cells of interest. For our regional expansive strategy, we will initially focus on Asia Pacific, including Japan, Taiwan, Singapore and Korea.
Speaker 3: We have already begun this work by strengthening our leadership in the APAC region with the addition of Tomoya Aoyama as regional leader. Aoyama-san brings seasoned leadership with more than 25 years of experience.
Speaker 3: in Asia, in management roles as multinational, public, life sciences companies.
Speaker 3: as multinational, public, life sciences companies. In late April ,
Speaker 3: 2023, we establish our legal entity in Japan.
Speaker 3: and developed a go-to-market strategy and hired a strong team with robust tenure in life sciences industry.
Speaker 3: By Q3 2023, we expect to have a demonstration lab at Kyoto University.
Speaker 3: Turning to KOLs and publications at the recent AACR conference.
Speaker 3: Phenome X technologies were highlighted in 14 abstracts and 9 papers.
Speaker 3: Notably, one abstract feature combined data from our new multi-omic T cell profiling workflow and ISO light instrument by Dr. Anthony Samora of the Medical College of Wisconsin.
Speaker 3: In short, using both our opto-fluidic and proteomic product lines, Dr. Zamora explored the underlying biological properties of CAR T cells and discussed how combining single-cell polyfunctionality and their functional healing properties can potentially cause cancer.
Speaker 3: lead to the creation of more effective therapeutics. In addition, several new studies using phenomex technologies.
Speaker 3: have been published in key journals over the past month, including Nature Communications, Journal of Immunotherapy of Cancer, and Science Translational Medicine.
Speaker 3: This new customer data, in addition to the other publications using Phenome X technologies, can be found on our website. We believe one of the largest commercial opportunities is the service agreements for AAV cell line development for gene therapy.
Speaker 3: We are actively building a robust funnel and engaging with various types of customers. While the progress in this area is dependent on our client's timeline, we have made significant progress subsequent to our initial work with Thermo Fisher Scientific.
Speaker 3: Right now, workflow testing is currently underway with other commercial clients in addition to seeking out academic collaborations.
Speaker 3: Finally, as part of our strategy, we will leverage our portfolio of more than 600 patents to develop a strong out licensing program.
Speaker 3: In Q1, we licensed a portion of our non-core IP to a company outside of Cell Biology Field.
Speaker 3: Turning to our fourth strategic pillar.
Speaker 3: of generating positive operating cash flow in the fourth quarter of 2024.
Speaker 3: At Genomex, we are focused on building a profitable and sustainable business rather than pursuing growth at any cost. We continue to make progress against this goal with our updated market-driven pro-hot portfolio and pricing strategy.
Speaker 3: as well as discipline, expense, and cash management. When we announced our intent to acquire isoplexes in Q4 2022, we committed to delivering approximately $70 million in cost-saving synergies. Our accelerated actions to reduce operating expenses are expected to yield $70 million.
Speaker 3: on a run rate basis by the end of Q2 2023.
Speaker 3: Our integration teams have worked diligently by reducing general and administrative cost.
Speaker 3: From eliminating duplicative expenses associated with maintaining the infrastructure needed by public companies, prioritizing high value R&D initiatives.
Speaker 3: streamlining marketing resources and sales operations, and ensuring manufacturing, supply chain, logistics, and operations synergies.
Speaker 3: Exceeding in Q4, 2023, our realized cost synergy on a run rate basis are expected to be between 80 to 90 million dollars ahead of our initially stated goals.
Speaker 3: Finally, I would like to give an update on our fifth strategic pillar of accelerating our paths to properly go through mergers and acquisitions.
Speaker 3: As I discussed at the beginning of our call we announced the closing of combination of Berkeley lights and ISO Plexus to create phenomax.
Speaker 3: Seven weeks post close, we have largely completed our integration and executed our cost energy initiatives.
Speaker 3: and in the intermediate term we are laser focused.
Speaker 3: on commercial and product roadmap execution of the combined entity.
Speaker 3: In the long run, we remain committed to our objective of pursuing synergistic merger and acquisition options that either expand our total addressable market or provide leverage for our SG&A and research and development experience structure.
Speaker 3: When we think of synergistic mergers and acquisitions options that expand our total addressable market, this may include
Speaker 3: Complimentary technology techniques that expand Phenomax offerings. expansion of service offerings to existing and new customers.
Speaker 3: technology licensing opportunities, and opportunistic mergers and acquisitions with market dislocations.
Speaker 3: Overall, I am pleased by our progress during my four quarters of a ten year this CEO and as we work to transform Phenom X. With our attractive platform we believe that our opportunities for consolidating other single-side technologies into our portfolio with the vision of becoming a broad cell biology company.
Speaker 3: The next wave of biology and medicine is the era of Phenome. And Phenome-X will power labs across that frontier.
Speaker 3: We have great opportunities ahead of us and a rigorous planning place to create value for our customers and our shareholders. Now, I'd like to turn the call over to Mehul.
Speaker 4: Thank you, Siddhartha. Revenue in the first quarter was $18.5 million, which included $10.3 million of revenue from our opto fluidics business from Berkeley Lights and $1 million of revenue contribution from our proteomics business from Isoplexis in the eight business days.
Speaker 4: following the close of the acquisition on March 21, 2023.
Speaker 4: Partnership, license, and other revenue was $7.2 million. Perform a revenue in Q1, 2023, for the combined companies was $20.2 million.
Speaker 4: followed by APAC at 17% and EMEA at 7%. Platform revenue was $6.1 million in the first quarter 2023.
Speaker 4: This consisted of $5.6 million of revenue from our optow fluid ex-business and $500,000 from our proteomics business. Our install base grew by eight platforms during the first quarter of 2023, consisting of four.
Speaker 4: However, macroeconomic factors are impacting the timing of instrument placements and further elongating cell cycles.
Speaker 4: These results were driven by a few large customers working through their bulk purchases from second half of 2022 before our price increases.
Speaker 4: We remain focused on expanding the install base to drive predictable recurring revenue.
Speaker 4: Partnership, license and other revenue was $7.2 million in the first quarter, driven by outlicensing a portion of our non-core IP to a company outside of the cell biology field. Somewhere in the Good but because of this, we don't have a lot of queue time behind here. We had to make sure we were protected. We've already had mind- reversing theield and handling Lic Harvard grew compared to
Speaker 4: With our large IP portfolio, we plan to be opportunistic to license our technology in non-core applications within the life sciences market.
Speaker 4: Gross profit for the first quarter of 2023 was $13.4 million compared to $13.8 million in the prior year. Gross margin for the first quarter of 2023 was 73%.
Speaker 4: Operating expenses in the first quarter of 2023 were $36.3 million, inclusive of $4.4 million stock-based compensation. This includes expenses related to the acquisition of isoplexus of $3.5 million. $3.5 million.
Speaker 4: and restructuring costs of $1.3 million. As disclosed in our 8K on May 5, 2023, we further reduced the headcount of Phenomex and have taken significant action to achieve our cost energy targets. Net loss for the first quarter of 2023.
Speaker 4: was $23.4 million compared to a loss of $21.4 million for the prior year period.
Speaker 4: All net loss numbers are inclusive of stock-based compensation and restructuring expenses. We are fully committed to rigorously manage our operating expenses and cash flow to achieve optimal cost efficiency. We ended the quarter with total cash of $121.7 million, which includes cash and cash equivalent of $51.6 million.
Speaker 4: restricted cash of $70.1 million. Now I'd like to discuss our full year 2023 revenue and operating expense guidance.
Speaker 4: Considering macroeconomic headwinds, significant slowdown in decision-making cycles for large capital purchases.
Speaker 4: and our ongoing commercial integration efforts, we expect full year 2023 revenue to be in the range of $75 to $85 million.
Speaker 4: We expect our gross margin to be approximately 65%.
Speaker 4: In addition, we plan to reduce our operating expenses from approximately $235 million in 2022 on a pro forma basis.
excluding transaction and restructuring expenses.
to approximately $120 million in 2024.
This will represent a reduction of almost 50% over two years.
Finally, as I reflect on my nine months at CENOMEX, we have taken significant action to improve operating cash flow by increasing revenue and lowering operational costs. Our new commercial leadership, geographic expansion and product roadmap are expected to drive revenue growth alongside the significant cost synergies that are lowering operating expenses as a result of the recent merger. We are also evaluating financing options to strengthen our balance sheet. As we execute against these initiatives over the next several quarters,
are 10Q as of March 31, 2023, outline factors that raise substantial doubt about the company's ability to continue as a going concern within one year after the issuance of these financial statements.
With that, we will now open it up to questions. Operator. Thank you. If you would like to ask a question on the phone lines today, you may press star one on your telephone keypad. To remove yourself from the queue, it is star one again.
We'll take our first question from Keha Savant with Morgan Stanley .
Hey, good afternoon guys. This is Edmund, on for Tejasalon. Thanks for providing the update here today. I appreciate the color on your APAC expansion efforts and initiatives. Specifically looking at China, I guess during the quarter we've heard a bit from both the end of our...
in China and what the expectations are for the rest of the year.
for the rest of the year.
this location from in geopolitical sense from people trying to be with the dependents on China, where it comes to larger pharma companies and people who are outsourcing to China in general. All of that has resulted into a particular challenge for our business because it does have
I think this can constraint. It's a $2 million device, biopharmate and the stress everybody is conserving capital. And as a result, our business has been specifically constrained. The second part of our business is the proteomics platform. It had similar challenges, but it's of course a significantly lower cost point than we believe that.
you know the business is going to recover as the year goes on. But I wanted to provide you with the full context of our overall mix and balance from our point of view. I think you know we have seen the commentary from many other life sciences tools companies having sort of a mixed bag of results, but you know we are selling something to a
in outsourcing client base, which does create a specific constraint for us.
Thank you for that color. And then I guess looking at your upcoming Quest launch, you guys will start focusing more on the academic end market. Can you highlight some of the strategies that you guys have in place and particularly how you plan on leveraging ISO's current academic footprint? And on the back of that, with all the platform updates provided today, do you have any updated views on the future of the Lightning platform? Great, yeah. So I'm ready to come back to you Stplace, St Ultimate, talk to you next time. Okay.
Let me start with the first question and then I will get to the lightning question. The first question is how are you going to use the Quest and the Isoplex's original footprint? That is a great question. There are many reasons why we did this combination.
and Berkeley Life traditionally was stronger in biopharma because of the two applications that we were most successful with were in the antibody discovery and cell line development which are bioprocessing related activities. So given that the footprint is already there in a much larger install base when with existing relationship with academia, in fact what we heard over and over again as we did our diligence and as isoplexis was conducting their business, we heard from the clients of theirs that it would be nice to have an ability to do what isoplexis tool does which is to able to do the characterization of multiple analytes in the same sample.
However, it will also be great to see if we can actually preserve those cells of interest, i.e. there are many clients who want to do both types of experiments, and that allows us to go to a ready customer base to address that with the need, and we have decided to lower the barrier of cost and launch beacon quest to be able to do that.
While we are also preparing the company as you saw in the comments we made for the next invasion of that crown which allows us to use the lower cocks footprint of the isoplexus platform and put all of our octopluidic strength into that platform.
and allowing us to actually capture that marker more robustly going forward. So hopefully that answers your first question with that. Given that most of our efforts are focused on making that next edition of that form, technically we are not delonging lighting, but it is not something we are focusing on because we believe that our...
introducing Beacon Quest will solve the barrier or cost problem for customers vis-a-vis Lightning for sure and a lot more functionality. We will be opening Beacon Quest up with all applications possible including our most recently launched T-cell workflow and there wouldn't be any need for Lightning per se but if there are customers who prefer that platform
that color and one final one from me, maybe for Mehu. I'm not sure if I missed this if you talked about 24 revenue on the call today, but I think at the time of the deal you guys pointed to the 24 combined revenue of $100 million. At the mid point of your guide, that implies about an 88% year-over-year growth for 24. That's still the right way to think about it.
Well, I think we guided that we would be at $150 million in revenue on a run rate basis exiting Q4 of 2024 as we break even from a cash flow point of view. And that was kind of the guidance we provided, you know, beyond around 2024.
Got it. Thank you for the time today.
Thank you. As a reminder, everyone, please limit yourself to one question. If you have additional questions, please re-enter the queue. We'll take our next question from Julia Chen with JP Morgan Chase.
reminder everyone please limit yourself to one question. If you have additional questions please re-enter the queue. We'll take our next question from Julia Chen with JPMorgan Chase.
So, thank you for taking the question. This is Martin Zetterman on Virginia.
I was just curious in terms of customer feedback for the console act, is there anything you can share with us, and then in terms of margins, what does the margin profile look like, and you have a target to profile for the console act?
And then I know it's still early, but maybe you could provide some color on the pull through expectation. Thank you. Yeah, it's a great question. So we can select, as you know, we just launched it not that long ago in Q1, and we can select cell line development.
is in the hands of our commercial teams and they are making a lot of engagement with the specifically for cell line development application. There is a industrial application as you know. And the question the customers are asking is that through total tradeoff they have to do on total cost of ownership and we are evaluating and further refining our
price point. So what I could tell you is that the price point for the box itself is going to be lower as we communicated already. And that will result into an erosion of the margin. I think that's what's reflected in our 2020 full year forecast. Even though our Q1 margins were substantially higher than that, we are accounting for that erosion in the margin going forward.
And then, after you completed the merger, are there any changes to a capital element? You might have cut off for a second if you want to repeat your question.
Ah, sorry, sure. I said now that you completed the merger, has there been any changes to your capital allocation framework post merger and what are the main priorities going forward?
Absolutely. Look, I think we have, as you know, we have, for the size of our company, we have a very large transaction be completed. And as you see from this discussion from today, we have made absolutely a very, very strong progress.
on bringing the two companies together in all aspects of the integration, but most importantly, the team has had made significantly large and quick decisions on...
cost-energy targets, which we had said, 20, 23 of 35 million and 20, 24 of 70 million in fact, we have completed all the work to reflect the 20, 23 Q2 numbers to reflect the 70 plus million dollars of synergies. And so we had done with that part of the heavy lift, if you will.
However, our immediate focus is on now the combined product roadmap, which there's a lot of exciting things we are working on, and commercial activity as you can tell, these two companies coming together brings a larger commercial footprint together. However,
Each of the companies was focused on selling a very different segment.
This excites our sales people because we have more things to sell as a combined team, but we still have work to do to train those sales people into each other's portfolio. A lot of work is going on in that area, but it is not all complete. Our immediate, near-term capital allocation strategy will be to keep our head down and focus and execute on this transaction.
while making sure that we have been opportunistic as the market evolves over the next few quarters.
making sure that we are being opportunistic as the market evolves over the next few quarters. Thank you.
As a reminder, everyone, please limit yourself to one question. If you have additional questions, you may reenter the queue. We'll take our next question from Dan Arias with STPL. Hey, guys. This is actually Evan on for Dan. I wanted to follow up first on really just the last part of your prepared remarks, talking about the substantial doubt about your ability to be a going concern. Based on what you guys have been saying, becoming profitable by the end of next year.
of cash and cash equivalent sites. So what's driving the like what's the reason behind you having to put that statement in your 10-Q and you know is that something that is just kind of driven by the SEC or is that something that we should be thinking about because just the idea that you guys will be profitable by the end of the year and the next year.
classification that you mentioned are explained very comprehensively in our 10Q, but also we've all laid out what management's plan is to enable the company to be a going concern. So I would urge you to read the footnotes and the disclosures.
in the queue and then I'd love to follow up with you if you have further questions after that. When do you guys plan on publishing that?
I'd love to follow up with you if you have further questions after that. Is that when do you guys plan on publishing that? Monday.
Monday okay and I don't know you guys mind if I ask one more question go ahead all right cool um so I just wanted to talk about dig into the guide a little bit so I mean you guys have guided to one Q of zero partnership revenue obviously you guys sold some IP
year. And actually it's pretty surprising. I mean you guys did a million dollars or revenue from isoplexus and basically like a week and a half. So I'm just trying to understand like when we think about this guy is 75, I think it was a 75 to 85 million, can you kind of parsed out between.
you know, legacy, Berkeley lights, and then ISO Plexus, and then within the Berkeley lights part, how are you guys thinking about partnership, Brad? You just to get understanding of like, here's the base business of Beacon, Flash, our new products. How that should look for 23 versus kind of the other parts. Thank you.
That is a great question. Let me start by reminding you that when we did the transaction announcement and subsequent to that we also had various different discussions with investors in which we have always maintained that we will provide the guidance at the end of Q2 or sometime in July or August timeframe.
And what we were able to do was to do a much faster integration. And we were able to put a range into our own internal forecast around both of those businesses. And we thought it's best for us to actually provide a guidance based on what we see right now, so people can fully appreciate what the business is.
opportunity is, but when we provided the guidance, we took a few things into consideration. One, the macroeconomic headwinds that we are experiencing and everybody in life sciences industries experiencing specifically as a biopharma segment. The second thing is the slowdown in decision-making cycles for very large capital purchases.
We have been experiencing this now for last two or three quarters. It's not that people aren't buying things they're committed. What they committed in Q3, they bought in Q4 and what they committed in Q4, they bought it in Q1. And so we understand this lengthening of the last capital purchases.
continuing to happen and we took that into account as we looked at our forecasts. And the third thing is ongoing commercial integration effort that we are doing, which of course is a significant strength in the mid to long term in the company, but in the short term it is going to provide some disruption as we cross train people and change their geographic territories to focus on specific areas that they need to focus on going forward. All of that.
gave us a range that puts and takes on the range, and we're not gonna go into details today about each of our portfolio to see sort of where we have strengths and where we have weaknesses because in both cases we are both. We have provided a range that we can be comfortable providing to you today.
As we move forward and have one full quarter of commercial execution in our belt, we will be able to provide a lot more detail of the investor debut plan in August .
as we had committed. I just, we just thought that it's much better for us to have a forecast in front of you right now, and then we can provide more color on how you can model the business going forward. But this is the best we can do today, given we are still very early on integration.
as we had committed. We just thought that it's much better for us to have a forecast in front of you right now and then we can provide more color on how you can model the business going forward. But this is the best we can do today given we are still very early integration. All right super helpful thank you.
We'll take our next question from Steven Ma with TD Cowen. Great thanks for taking the questions. So given the lower price point is the Phoenix intended to replace the isospark and isolite and then secondly what gives you the confidence to get the Phoenix cogs down is that...
has been to figure out a way to lower the cost of goods sold for our technology, especially the capital part of our technology. So we have been searching for every single component that could be reduced in a cost structure. And I'm going to give you a little bit more detail.
So you can understand sort of what has been completed and what is the work that still remains to be done. If you recall the Berkeley Light Beacon platform, and I'm going to going forward call it Phenome X Opto-fluidic platform. Actually was developed 8 to 10 years ago.
the components that are used in that were sourced that many years ago. And as a result, if you look at open the box, there is a lot of empty space in that box. It was designed for a specific application and launched in that 8 to 10 year old supply chain.
Since that time, the opto fluidic R&D team has been extremely active in lowering the cost of good souls for various reasons. Number one, lightning was their first attempt at lowering the cost structure of various different components. And if you look at the footprint of lightning,
it is actually much lower footprint than it is for the Beacon platform. And with Isoplexus transaction, we got access to a much more friendlier, if you will, a platform in terms of the box design, the software design, the user interface, and everything that goes with making a life sciences tool, a benchtop device that is intuitive to use by customers, and we got a lot of strength from that. Yet, both technologies were actually microfluidics-based technologies, so the internal components and the guts.
are not identical but similar. For the last four months, beginning in December when we signed the deal till now, our teams have been intently figuring out and de-risking component by component what could go in that new device. I wouldn't say that everything is completed.
modularized compared to what we are at today, but the technical de-risk from a cost reduction perspective, I would say is 90% complete right now.
Hopefully this gives you a bit of a color around why we are doing what we are doing. Again, I remind you of the fact that the box itself is the main cost and there are some components in the box that are driving a majority of our cost. We believe those components cost could be reduced. We also acquired with isoplex a significant manufacturing capacity.
which allows us to manufacture these things within our own shop and that allows us to lower the cost even further compared to the supply chain cost that go into making of the box.
these things within our own shop and that allows us to lower the cost even further compared to the supply chain cost that go into making up the box.
shop and that allows us to lower the cost even further compared to the supply chain costs that go into making up the box. Okay great thanks that's all for me.
We'll take our next question from Mark Massaro with BTIG. Hey guys, this is Vivian for Mark. Thanks for taking the question. So I think we just heard from a few companies about longer sales cycles and lower capital budgets in the saungy therapy space.
Could you just remind us maybe the mix between your customer base in terms of the smaller to mid-sized biopharma versus larger players? Thanks. Thank you so much.
Vivian, that's a great question. Again, if you recall, both companies are relatively new in terms of legacy companies and the products. And as a result, most of the early transactions were done with either the large biopharma, which are the companies with the...
the strongest need, desire to want to invest in the new technology, as well as have the cash available to do so, and the strongest academic centers, which had the funding available to go after this innovative technology. Having said that, our next level of job just got harder because that...
continue to have challenge in large capital purchases. And that is what we reflect in our forecast.
to have challenge in large capital purchases, and that is what we reflect in our forecast.
Hey guys, how's it going? Thanks for taking my questions. First, on the placements in the quarter, what was the mix of the, I think you said, four OptiPelutix placements? Were they all CapEx? Were they all for the flagship beacon? Maybe any subscriptions or maybe even beacon select placements. Just any color on that would be great. Yeah, how are you doing?
There were, of the four, you know, beacon placements, three were, you know, capital purchases, and then one was a reagent rental unit. Got it. Thanks. And then, you know, just kind of want to, you know, looking forward on the workflow side, on the back of the new T cell profiling one, you know, have you, and I apologize if I've missed this, but.
Have you disclosed any further areas where you plan to develop future workflows and to complement the five areas that you have right now? I think everything we've disclosed in this call is our current plan. I don't know what to imply by anything else. You can see our plate is full with all the different things that we are doing right now. For the workflow specific, you know you just did the...
T-cell profiling workflow and development, right? So I guess maybe if I missed that earlier, I was just wondering if you had a roadmap just on that specifically. Yeah, let me invite Rolando Brouwer, who is gonna provide the first complete description of T-cell profiling workflow, and then how it's evolving, and what type of customers. It's a quite diverse type of customer's own interest in that workflow.
and then retrieve selected cells for further analysis, including mRNA and DNA sequencing. And that...
one sentence description of the workflow attracts very different type of customers. For example, in the context of cell therapy, our platform could be used to profile P cells prior to car engineering and after engineering to functionally study
what proteomics, transcriptomics, or genomics features can predict clinical success. But it's also a workflow that has a place in basic research, in translational research, and so the combination of the launch of this workflow together with our combination with isoplexes can quest to penetrate the...
Hey, good afternoon.
Just quickly on the guidance, I appreciate you are going to break down sort of the ops of proteomics, but can you, is there any other additional IP sales or licensing contemplated for the balance of the year or with a recipe, what you think of as core revenue? And then I have a follow-up. Yeah, maybe just to provide you with sort of the...
arrangements, not necessarily the kind that you saw in Q1, but as you recall, most of our business is now pure play life sciences, tools business, you know, instruments and recurring revenues. But we do have previously completed work for clients in the services that we have performed. We are ongoing providing.
and more and more work that is required and looking at making sure that there is growth margins available in performing those services going forward. So you might see some more partnerships licensing and other revenue as well. But we're not going to provide specific details. I think as we look at the balance.
We feel very confident about the guidance that we're providing. And then, Mehul, just in terms of the Q4-24 positive operating cash flow, you sort of gave us the revenue run rate and gave us the off-ex.
items that we provided. In terms of the Q4-24 positive operating cash flow, you gave us the revenue run rate and you gave us the OPEX run rate.
I think it would sort of imply gross margin improving from the levels you're suggesting in Q3. So. You know, what's contemplated in terms of the cadence of this year, given the step down and then the components of.
of the rest of that operating cash flow with the conflict of the gross margin. Yeah, I don't think we're ready to guide our gross margins six quarters out yet. Obviously, as you know, it'll be driven by the product mix and the geography mix that we're selling.
But we have indicated as we exit Q4, we'll be on a run rate to achieve 150 million in revenue and be cash flow break even. I've kind of given you the OPEX piece, you have the revenue piece, and so I think you could model for gross margin.
Just to provide a little bit of more context around that comment as well, look we are integrating the operations of these two companies and making sure that all the new operations footprint is able to provide that gross margin lift that we would need to have in the Q4 2024 timeframe.
This is why we are not going to provide sort of detailed comments in our integration plan. We believe that all of our plans imply that we will be able to get to that cash flow breakeven in the Q4 or 2024. And as you can tell from our operating expense reductions.
that we brought that threshold at which we can become cash flow neutral or positive I should say to a much lower number than what we have had in our PNL before. Okay, thank you.
Thank you. This does conclude today's presentation. Thank you for your participation and you may now disconnect.