Q2 2023 Seer Inc Earnings Call
Good day, and thank you for standing by.
Come to the Sierra Inc. Second quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session.
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Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your Speaker today, Carrie Mendivil Investor Relations Kerry. Please go ahead.
Yeah.
Yeah.
Thank you.
Earlier today <unk> released financial results for the quarter ended June 32023, if you have not received this news release or if you'd like to be added to the Companys distribution list. Please send an email to investor at <unk> Dot bio Rad.
Joining me today from fear is Amit <unk>, Chief Executive Officer, President and chair and David Horton Chief Financial 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 securities laws.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appears in the section entitled forward looking statements in the press release issued today.
For a more complete list and description. Please see the risk factors section of the company's quarterly report on Form 10-Q for the quarter ended June 32023, and in other filings with Securities and Exchange Commission.
Except as required by law.
Any intention or obligation to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise this call.
This call contains time sensitive information and is accurate only as a black broadcast August eight.
With that I'd like to turn the call over to Amit.
Thanks, Carrie and thank you everyone for joining us this afternoon.
We ended the second quarter with 4 million in revenue, increasing 11% year over year and in line with the prior quarter.
Based on our first half results taken together with our outlook for the remainder of the year. We now expect full year revenue to be in the range of $16 million to $18 million for 2023, representing 10% year over year growth at the midpoint of the range.
While our top line growth this year will be slower than our previous expectations.
Firmly believe in the significant underlying market opportunity for our proteomics technology.
Our technology has the potential to change the trajectory on status quo proteomics, however, changing the status of code takes time.
I continue to have full confidence in the strength of our vision and our differentiated product offering to capture the opportunity ahead of us.
Push the boundaries of what is possible.
Just 18 months after the launch of our flagship Purdue graph asset kit, we have launched our second product the project graph X T advocate.
We also recently expanded our collaboration with Thermo Fisher scientific to enable population scale studies.
The recently launched arbitrage Astral mass spectrometer in combination with the project graph XD advocate in our newly launched sphere technology access center or stack.
I have never been more bullish about our opportunities that I am today, while much work remains we are continuing to put the pieces in place to build the foundation for long term growth.
On our call. This afternoon I will walk through the near term challenges to commercial adoption that we're experiencing and the actions were taken to overcome them then I will share more detail about our new product as well as some exciting new data, we're seeing from our partners and customers, which further validates my conviction for what.
It becomes possible using the <unk> product suite.
Finally, I will turn the call over to David to provide more details on our second quarter financial results and our recent actions to further reduce our cash burn to preserve a robust balance sheet, which includes approximately $396 million in cash cash equivalents and investments.
As we have long said, we believe the ability to generate the vast amounts of procurement content leveraging our technology will open up a new frontier in proteomics discovery.
Prior to the Portio graph unbiased proteomics studies were very small and therefore underpowered versus large scale, an adequately powered studies to fuel discovery.
That said, we believe there is currently a disconnect between our differentiated and high performance products and the commercial adoption that we're experiencing.
Similar to other new disruptive technologies proceeding us our commercial progress will not always be linear.
We are developing the market.
Turning quickly and optimizing our approach to make sure efforts and focus are going to result in the highest return.
Overtime.
While we see many tail winds in this market over the coming months and years that would accelerate commerce showed adoption in the current market. We also see some temporary headwinds.
These headwinds are interrelated and we're tackling them in a way that we can most directly and quickly impact them most.
Most notably these are.
First.
The acquisition and use of mass spec instruments can be seen as a barrier to adoption for a segment of customers that are new to mass spec, namely the <unk> and the genomic tests.
Second.
There is a need for more publicly available data and publications demonstrating the biological value of decoding the complex of the perennial in and out.
Unbiased manner at scale in order to shorten our sales cycle and.
And finally.
A challenging macro environment has created additional barriers.
In terms of the availability of capital for new disruptive technology.
We're taking steps to address these temporary headwinds and to work to lower the barriers to commercial adoption.
So what are we doing.
First.
We're making changes.
To enable easier access to mass spec proteomics data.
This is especially important for biologists and genomics this.
We've always said that the addressable market for our technology will be across both proteomics and genomics market.
While this remains the case there is some nuance behavioral differences between genomics and proteomics customers that requires us to refine our approach to drive market development adoption.
Proteomics or mass spec expert customers previously have technological barriers that limited the scale of the deep unbiased studies.
Consequently, they did not have a need to install or maintain large course of samples.
Additionally, prior to the paragraph that investments in operations involve large capital expenditures for the acquisition of the mass spectrometers and relatively small expenditures on consumables.
As a result, we're finding that the traditional mass spec technology is performing proteomics reserves readily recognize the value proposition of our prototype products suite. However on average there are slower to ramp up large scale unbiased proteomics studies since they need to secure the funding and samples to pursue large scale studies.
To remove the barrier of capital investment for the mass spec experts, we have introduced this strategic instrument placement program or Sip S. IPP.
To allow them to begin using the previous graph right away by utilizing available operating budgets.
This will help them generate the data needed to secure funding and samples to conduct larger studies.
Conversely, biologist and genomics is generally have access to biological sample are very familiar with consumable expenditures for generating all mixed data for their research and are better positioned to conduct large scale studies.
These customers are almost universally recognized the value of unbiased approach it given their experience with the discovery potential of a bias genomes, an exome relative to targeted microarray approaches.
We're finding that many of these new mass spec potential customers view, the acquisition and use of a mass spec instrument as a barrier to adoption yet the appreciate the discovery potential of the project <unk> powerful and scalable unbiased approach.
For these customers. We have now introduced this year technology access center or stack S. T AC which allows a pornograph user to run samples in their own lab and have fear run the mass spec or Alternatively provide end to end study services from sample to.
Data.
We believe that as these important customers gain access.
Two and validate and applied the biological insights provided by their part of their product suite. They will over time add mass spec technologies to their labs.
Importantly, as I mentioned at the top of the call. We have expanded our collaboration with Thermo Fisher scientific to develop an optimized proteomics and prettier genomic workflows.
As part of this program stack will provide mass spec services by primarily leveraging thermo Fisher Scientific's arbitrage Astro mass spectrometer, along with our new product growth ex the assay.
While it is still very early we're already seeing positive traction in the initial stages of our stack loads and believe that this stack will increase the velocity at which customers can access unbiased proteomics data at depth and scale and improve the rate that customers can adopt and ramp the use of the product our product suite.
This will stimulate publicly available data and publications demonstrating the power of our technology.
Second we're taking initiatives to shorten the sales cycle.
The sales cycle is generally inversely correlated with customers comfort to adopt technology.
In the absence of third party publication the sales cycle is protracted because proof of principal studies.
Are needed and it takes time to establish credibility and build relationships with new accounts, while the publication base is still growing.
For customer papers currently under peer review and where there are several additional ones that will be submitted by the end of the year.
We continue to see strong interest in the project with our product suite.
And a growing number of opportunities available to us.
As we wait for more third party publication to enter the public domain.
We are building market awareness on the part of our product suite and educating potential customers on the breakthrough nature of our technology and its unique capabilities.
We're doing this by doubling down on creating in person opportunities for customers to get to know us our kols and our technology through increasing meetings and seminars.
In addition, we're continuing to support potential customers with proof of principal studies.
Them understand and analyze these robust data sets and support our existing customers with publishing papers and the development of new studies.
We've also made recent changes to the commercial team both in terms of leadership and regional business managers.
While it's going to take some time to see the impact from these changes in aggregate I'm confident in the team and the strategy we have in place to deliver on our commercial opportunity ahead.
Finally, I missed this challenging macro environment, we're providing creative solutions for customers to obtain the pornograph product suite.
We're hearing from prospective customers that they are especially cautious purchasing a new disruptive technology, whose value proposition is not yet widely demonstrated through peer review publications.
To address this we're offering creative solutions for customers to access to biological insights from the paragraph product suite, either through accelerating the utilization through sip or accelerating the data acquisition through stack.
Through Sip, we learn an instrument to the customer for a period of time typically less than a year when coupled with an initial significant purchase of consumable kits.
This program is also aided by the fact that many potential customers.
More readily available access to funds through operating budgets rather than capital budgets.
We've already seen some good success with the Sip since its launch earlier this year.
Reducing these barriers to adoption will also help us accelerate the generation of use cases and datasets to exemplify the power of the <unk> product suite and unbiased proteomics at scale.
These presentations and peer reviewed publications will thereby provide proof to other potential customers of the value of our solution and its unique ability to provide insights at scale.
As I mentioned at the top of the call. We made two important announcements at the American Society for mass spectrometry conference in early June .
First.
The launch of the paragraph XD assay kit.
And second Sir.
Launch of this stack and expansion of our collaboration with Thermo Fisher scientific.
The protium <unk> XD assay workflow allows customers to design large scale unbiased proteomics studies with an unprecedented combination of site scope.
<unk> and scale.
The prototype XD assay uniquely provides high resolution insight into the proteome at the peptide level, enabling access to the diversity of species and sample types more than doubling sample throughput without compromising performance all with less than.
One hour of mass spec time further enabling studies to scale to power discovery.
The project graph XD assay kit mixed the proteome, even more accessible for both proteomics and genomics researchers as they deepen their biological insights and characterize genomic variance with function of proteomics information.
And a single operator can access hundreds of samples per week. This is incredibly exciting since there is a vast amount of proteomics content yet to be discovered with enormous untapped potential to make an impact on our understanding of health and disease.
At ASML Thermo Fisher scientific highlighted the exceptional performance of the orbit Chubb Astral mass spectrometer and combination of the part of our XD for deep unbiased proteomics at an unprecedented scale and speed.
The combination of the fully automated workflow of the paragraph XD and the arbitrage Astral produces over 6000 protein IV and over 54000 peptide ivs poor plasma sample with a 1% fast discovery right.
The demonstration of this unprecedented depth scale and speed has paved the way for multiple discussions regarding population scale unbiased proteomics studies, which were impossible to contemplate prior to Purdue graph XP.
As prospective customers more readily access studies, we believe the unparalleled value of the depth and breadth of this unbiased content will be demonstrated and the flywheel will begin to accelerate.
The level of information we have today in the proteomics space is just at the tip of the iceberg.
Third to what we think will be possible 10, five or even two years from now.
We're beginning to see signs of these customer studies starting to accelerate the.
The number of customer driven studies, we saw in the first half of this year has doubled from what we saw in the same period last year.
Importantly.
We're seeing some incredible insights, including the impact of the expanded capabilities with the paragraph XD and early customer data.
In June we held the Kols panel meeting where investors had the opportunity to hear from for researchers representing different customer types and applications under use under paragraph.
These customers include Steve car of the broad Institute of MIP, and Harvard Josh Coon of University of Wisconsin, Phillip <unk> of <unk> and Chris Nathan.
Wild Cornell medical.
This event showcased strong enthusiasm for the power of unbiased per deal mix and what the Pornograph products suite and XT assay kit will uniquely enable which was not possible before.
Dr. Chris Mason, who is a professor of physiology biophysics.
Computational genomics and neuroscience at Weill Cornell Medicine has utilized the combination of the paragraph XD and arbitrage astral and as longitudinal plasma samples of seven astronauts pre flight and post slides and identified over 7500 proteins in his study.
In an unbiased way.
This forms the basis for the identification of new Biomarkers that are up and down regulated during space flight.
These results demonstrate the step function change in performance of the combination of their paragraph SPN the arbitrage astral for unbiased proteomics.
Dr Mesa and plans to publish these results as part of the broader multi omics study of the impact of space flight on astronauts physiology.
In June another preprint was published in bio archive by researchers at Auburn University that showcases the power of the program to our product suite beyond plasma or buy a fluid samples that was exemplified in our applications lab.
This paper shows how the Pornograph product suite enables deeper genomic analysis of highly complex tissue such as skeletal muscle.
Tissue type has a wide dynamic range of protein expression levels similar to plasma and has been previously difficult to access.
This paper provides yet another example of the flexibility and the power of the paragraph product suite to analyse novel sample types and provide differentiated insights.
And we're confident than ever in the long term opportunity ahead of us that said until we have more third party data in the public domain, we have some temporary headwinds impacting our commercial adoption, which are amplified by a challenging macro environment.
We're confident that the actions, we're taking will begin to accelerate the pace of data acquisition and customer publications.
As we continue these market development efforts, we have taken action to reduce our head count to streamline our organization across our business areas.
While it is never easy to say goodbye to valued members of our team the right sizing of the organization will better match, our cash burn with a revenue.
With these changes we are preserving our ability to execute against our commercial opportunities while pushing the boundaries of what's possible in proteomics.
I want to thank all of our employees for their dedication and hard work every single day to help realize our vision of unlocking the power of the proteome.
I truly believe that we have the technology the team and the strategy to bring the next phase in <unk> two labs globally with that I will now turn the call over to David.
Thanks Hamid total revenue for the second quarter of 2023 was $4 million representing.
Representing an increase of 11% compared to $3 6 million.
In the second quarter of 2022 the.
The increase in second quarter revenue was primarily driven by increased consumable kit sales related to the program product suite service and grant and other revenue offset by lower instrument revenue, which is partially a function of the rollout of our sip whereby we loan an instrument to a customer is coupled with an upfront purchase of consumable kits prana.
Related revenue for the second quarter of 2023 was $3 million, including related party revenue of $1 4 million and consisted of sales of Spi 100 instruments consumable kits and platform of evaluations.
Service revenue was $467000 in the second quarter of 2023 and was primarily derived from the completion of our customer service project as.
As I mentioned, we also announced the launch of stack, where we will run mass spec for our customers and in some cases provide a full workflow solution for customers, who would like to access our technology.
Grant and other revenue was $538000 in the second quarter of 2023 largely related to our SBR grant from the NIH, Our NIH grant expired in the second quarter and we do not expect material grant revenue for the balance of 2023.
Total gross profit was $2 3 million for the second quarter of 2023, representing a gross margin of 57% compared to $1 $6 million in the second quarter of 2022, representing a gross margin of 44%.
Gross profit was driven by greater product revenue from higher margin consumable kits service and grant and other revenue as we ramp commercial adoption. We continue to expect variability in our overall gross margin on a quarter by quarter basis, as a proportion of instrument and consumable sales will fluctuate between any given quarter.
Total operating expenses for the second quarter of 2023 were $30 2 million.
<unk> $9 8 million of stock based compensation, an increase of 21% compared to $25 million, including $8 $4 million of stock based compensation in the second quarter of 2022.
Research and development expenses for the second quarter of 2023 were $14 1 million.
An increase of 30% compared to $10 9 million in the second quarter of 2022.
The increase in R&D expenses was primarily due to an increase in product development efforts related to the progressive product suite, including employee compensation costs and other related expenses due to growth in R&D personnel and expenses associated with our facility professional services and depreciation of equipment.
Selling general and administrative expenses for the second quarter of 2023, $16 1 million, an increase of 13% compared to $14 2 million.
In the second quarter of 2022.
The increase in SG&A expense was primarily driven by greater employee compensation expenses and stock based compensation.
Net loss for the second quarter of 2023 was $23 4 million.
Compared to $22 8 million in the second quarter of 2022.
We ended the quarter with approximately $396 million in cash cash equivalents and investments.
Turning to our outlook for the year as Hamid mentioned at the beginning of our call. We now expect revenue to be in the range of $16 million to $18 million for 2023, representing year over year growth of 10% at the midpoint of the range.
We are committed to maintaining our strong financial position and are continuing to take a very disciplined approach with our spend.
Given that our revenue ramp is developing more slowly than anticipated we feel it is necessary to reduce our operating expenses in order to align our cash burn with a revised revenue expectations.
As I meet Sharon we have implemented a reduction in force of approximately 12% of our workforce. We estimate that we will incur approximately $600000 of costs, consisting primarily of cash severance payments, which we expect to recognize in the third quarter of 2023.
We have also taken measures to reduce our non personnel operating expenses for the second half of 2023 to further reduce our expenses and cash burn.
As a result of these actions we estimate that our 2023 free cash flow burn will be less than our free cash flow burn in 2022.
It is always difficult to make these changes we feel this is a necessary step for us to position the organization for success over the long term.
At this point I would like to turn the call back to me for closing comments.
Thanks, David while this quarter was challenging as we navigate temporary headwinds and manage through the current environment, we're taking a systematic steps to lower the barriers to commercial adoption of our technology.
As I said earlier the path to commercializing new innovative technology is not always linear.
I firmly believe that as our publication base grows we will see increasing adoption of our technology in the meantime, we are focused on positioning ourselves for future success and I look forward to updating you on our progress with that we will now open it up for questions.
Okay.
Thank you.
Bye Bye bill, while we compile the Q&A roster.
Yeah.
Yeah.
Okay.
The first question comes from the line of Jay Haas Savant of Morgan Stanley . Please.
Please go ahead.
Hey, guys good evening and thanks for the time here.
Maybe.
David to start with the guidance, Scott, you're roughly about $7 million at the midpoint can you just help us.
Build a bridge from the old guide to the New Guide I know you highlighted.
Some of them.
Access to mass spec and budgets et cetera, but any sort of additional color that you can share on that and then David if you could.
Could just elaborate on your assumptions for product gnomic and services and the new outlook that would be great.
Yeah.
Thank you Jess.
Look as we have previously said, we had expected revenue to be more weighted towards the second half of the year, we've been saying that since the beginning of the year.
We would expect that the velocity of conversion of opportunities.
Sales to pick up and we're just not seeing it.
And if the velocity doesn't pick up than we expected revenue to be.
And the range that we just updated today.
Okay.
At this point given what we're seeing we just don't want to be forecasting.
And in terms of what we're not seeing.
And what we're seeing is slower than expected movements for the three reasons that I highlighted in the prepared remarks.
I still do see a path.
Two more momentum if things start to ramp up and if they do then.
And then we will update you, but I think given our visibility I think it was prudent.
Two lower guidance to what we stated.
I know if you want to add more color yeah, I would just say this just following up on your on your questions around <unk>.
And the services component.
I think we think prognostics.
Stay pretty consistent as they have been.
They will ebb and flow a little bit so it will kind of be plus or minus around what they what they have been doing.
Given that they've got.
A larger study underway.
In terms of the services piece we are.
We are having some assumptions around around an increase in service with our stack.
But it's not a it's not a.
I would say.
A huge contributor but it is certainly we certainly expect it to be to continue to grow over the course of the second half of the year.
Got it okay.
On China, specifically I mean can you just sort of give us some color on on the ground conditions there.
Clearly I mean that was cited as a major region in terms of the weakness a lot of other life science companies that have experienced this quarter and into the back half. So just curious as to what youre seeing on the ground.
Yes.
Hey, Josh.
We're just not seeing China bounce back.
The way we are expected we are just not seeing much.
Much activity at all.
I mean.
It was a factor.
In that context.
And I don't really have visibility to when things are going to change, but I don't expect that to change meaningfully over the next couple of quarters.
Got it okay.
Then final one for me on the Protium <unk> XT launch.
Any any early feedback that you can share, particularly sort of evidence of customers interested in purchasing the portal graphs prettier graph in combo with the Australia and for those users have gotten their hands on boats over what timeframe do you expect sort of sample size.
Experiments to go higher over here.
Hey, Josh.
Let me break that question up into two I'll tackle the first half I'll give David the last part of it.
The feedback on the XD has been.
Just really great.
We were seeing.
Depth and speed of coverage of unbiased proteomic with accuracy and precision.
We're simply just not possible. So this was not an incremental improvement to our possible before.
We're just generating data that was not possible before the XT.
Now as possible after the XD.
Performance of the equity and the Astral is what got highlighted at the Fms.
By our colleagues thermo and the performance is just.
Exceptional I mean to get to a depth of 6000 proteins.
54000, plus peptides and by the way since then we've seen customers generate data that even exceeds that.
Chris maintenance study with the astronaut got to 7500 proteins.
And his study that was just just under 40 samples with those seven astronauts.
So the data is phenomenal by the way it paves the road.
I'm cautiously optimistic, but I really think what's needed.
Really some kind of change the velocity is just publications from customers, Let me hazard David for the second half of your question.
Yes around the sample sets.
<unk> point I do think given the throughput there now and given some of the excitement we're seeing around.
What the combination of the X gene Nashville can produce that people are talking about some of those larger studies.
Which is great to see again.
It will take time to secure the funding secured the cohorts, but there is realization now that this is possible and people can go do these types of this type of work and studies.
Got it I appreciate the time guys. Thanks.
Thanks, Josh.
One moment for your next question.
Okay.
The next question comes from the line of Derek Good line of Bank of America. Please go ahead.
Hi, good afternoon.
Hey, Derik.
So.
I'm.
Just curious about what's your split right now between pharma and <unk>.
Academic and government in.
I assume youre still very heavily weighted towards the government segment, but then I have a follow up question on that.
Yes Derrick.
It stayed pretty consistent as we've said, it's if you look at our total opportunity set kind of what's in the pipeline. It is a 50 50 split if you look at who's kind of moving funding faster and actually.
Writing checks and purchasing it's actually the Biopharma commercial folks.
<unk>, they just have access to budgets and things that can move around more.
More quickly now that said, we implemented our strategic instrument placement program, our Sip program that.
Essentially if you commit upfront to some consumable purchase.
We'll place the instrument loan the instrument to them and.
And so that has helped with some academic folks who may have.
The operating budgets that they can spend but not necessarily the capital budgets this year.
And then just again overlaying the macro is immediate talked about.
We see it in both commercial and academic that just the decision making for a novel technology again without a lot of publications has just been elongated so.
We're kind of planning that dynamic so again, the sip and the stack programs are meant to kind of mitigate some of that but again, we still in terms of who's who has purchased it still tilted towards the commercial side.
Got it.
As part of the academic and government hesitation. Besides publications just that they are worried about budgets for next year, obviously, there's a lot of moving parts going on with NIH and people worried about that how much. It is just people not wanting to commit to new programs.
Yes.
Certainly that's a factor derik in terms of it just it kind of weighs on people is there is there looking at that decision, especially from a capital purchase perspective to go out and purchase a new instrument that said, we do have some some.
Government entities that have purchased and are planning to purchase and so again the money is there. It's just the the caution with which people in the time it takes them to kind of reach the decision point, we see is elongated as Jimmy talked about the velocity is.
Just not again picking up the way, we'd like to see it pick up.
But but but the interest is there and it's just it's a matter of kind of grinding through things, but certainly it's weighing on factors that people are worried about or worried about budgets and especially in this uncertain environment on the macro side.
What do you look at the stack and the Zip programs.
How should we think about those in terms of just margin impact versus an outright sale. How are you structuring those programs. So I.
I would assume the services just because.
You actually have to have people running it.
But running the assays, it's going to be able to get more expenses can you just talk about are those.
Cost more cost effective less cost effective just how youre thinking about it versus outright sale.
Derek Let me let me let me just make a clarification on the stack and then I'll hand, it to David for the <unk>.
Balance of your question.
The reason for the stack the key reason why we decided to stack.
What's to accelerate.
Customers are getting access to data. So there is a flood of data as it becomes available.
So when you fill the top of the funnel then that's going to trickle down to more and more papers going public so that was the motivation no.
The stack is also.
Designed to really appeal to our customer base.
Historically does not have either access to mass back or familiarity with them aspect or comfort with the mass that kind of data.
The business model remains the same which is.
We like to sell the protium <unk> instrument, because our business model, 100% as a distributed business model of selling instruments and associated consumables in the form of our acetate. So customer would buy an instrument may buy the consumable and then once they.
Do that center peptides to fear and we'll run the mass spec and then provide the data back to them. So that's the.
By the way, we now have those customers already that are purchased that we are committed to running mass spec for that in addition to that the customers may choose to do end to end solutions in terms of our service, but again the goal being.
That we just see a gap in the market and kind of getting customers access to the protium graff data so that they see the power of the insight that comes with that so let me now hand over to David Thats been a comment to you about the margins and how you think about that.
Yes, so on the stacked Eric again, you are right. It is service and Mead said Theres two two forms that customers can can.
Use the stack either I've got my instrument and I, just I want to run.
I want you to run the mass spec for me because I'm a biologists are genome assist.
I'm not that familiar with mass spec and I just want my data. So that's really what we're trying to provide for those folks and you're exactly right.
It's not as good as our consumable margins, but it's better than our instrument margins. So it kind of fits in between the instrument margins and the consumable margins as you would expect.
In terms of the Sip.
Those deals are actually since the way those are structured as again, an upfront consumable purchase and then we'll loan the instrument and so again from just a pure revenue standpoint, and a margin standpoint, that's pure consumable revenue, which is obviously great revenue, but the absolute dollars are obviously lower.
Sure.
In most cases, because usually you would have an initial consumable purchase.
Along with an instrument purchase as well.
So the customers do have the option to purchase the instrument over time.
But again just from a pure margin perspective. The Sip deals are are essentially consumable deals if you will.
Thank you.
Thanks, Eric.
One moment for your next question.
The next question comes from the line of Dan Brennan of TV Caroline Dan. Please go ahead.
Hey, good afternoon. This is Kyle on for Dan Thanks for taking the questions.
I had a quick one on the instrument placement model here so.
Is this being offered directly to every prospective customer for cardio graph now or are you still being a little bit.
Selective in who.
Who ultimately gets us model.
Yes, Karl Thanks for the question we are being.
Strategic about it which is.
Why we call it the strategic instrument placement program and incentives as we really want customers who.
Have projects and have things lined up where they really want access.
And in.
Also want to publish right again coming back to the overarching objective of what we're trying to do is just get more data out there.
So people can can publish and validate what we what we're excited about with the technology.
So it's really about placing these placing these instruments with some key accounts and again.
Making sure that they are going to tick.
Generate the consumable pull through over time, such that at a point in time.
But they will go ahead and purchase the instrument. So we hope that it becomes almost a deferred purchase in a sense that they will we'll purchase some over time, but it's certainly going into it there is no expectation of that we certainly are expecting that they will.
Drive the consumable pull through so we are being being thoughtful about who we do we provide this too.
Got it and then is there anything baked into the guide on increased customer traction with new publications in the back half of this year is that sort of.
Pushed out in the 'twenty four perhaps.
Hi.
We have.
Visibility to four customer manuscripts that are currently under review.
And probably another handful that are scheduled to be submitted.
<unk>.
The key thing to keep in mind is that.
It just takes time for these papers to go through the period of your process and by the way.
Almost always an inverse correlation between the quality of the journal and the speed of review, where if you wanted to publish in a really really.
High quality journal, it usually takes longer and lower closed journals is easier to get it in faster.
And so the visibility that I have.
Two to the papers that are under review at least three or four of them.
<unk>.
Sort of what I would consider the very very top kind of journals.
And again these are customer papers, we sit there we try to support them.
But ultimately they are the ones that are going through a review process and we just.
As.
Expected parents.
Waiting for this for the childhood to come.
But I'm optimistic that we're going to begin to see these papers and again the data is great. The studies a great. These are great journals.
Once customer publication comps.
There is going to be.
Hopefully.
Significant.
Tailwind towards the adoption for us.
Got it thank you.
One moment.
Question.
Yeah.
Your last question comes from the line of Rachel then.
J P. Morgan Rachel Please go ahead.
Hello.
On the call.
Alright.
Good luck guys.
Thank you for taking my question.
I just wanted to follow up on alternative.
Lisa.
And stock option. Thank you goodbye.
I think uptake.
With this capital participants how would you say the ratio.
Okay.
Yes, we're seeing.
These were just announced.
The <unk> was just announced.
Yes.
June so these are the early days and I think.
Early.
Say months and we just have to see what happens over the course of the coming months, but we're seeing good traction in terms of customers.
Requesting information and engaging with our with our sales and support folks, but I think too early for me to make a call on that.
Let me see if David give you more color on the Sip we are seeing good traction there.
And I think it speaks to two.
The positive nature, which people view view the option for them.
And so.
Again, I think we a good portion of our placements.
Over the first half.
Have taken advantage of that and so I think that's that's.
Think speaks to the to that it's resonating with folks while they secure the capital funding.
To purchase the instrument outright it allows them to kind of get started and get moving with some of their studies that they'd like to do so I think the Sip has gotten good traction and we're continuing to be optimistic about it.
Yeah.
Thank you.
This does conclude today's conference call you may now disconnect.
Yes.
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Yeah.
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Yes.
Great.
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