Q1 2024 Quantum-Si Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Quantum-Si first quarter 2024 earnings call.
Operator: At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Katherine Atkinson from Quantum-Si. Katherine, please go ahead.
Ladies and gentlemen, thank you for standing by welcome to the quantum F Guy first quarter 'twenty 'twenty four earnings call.
Katherine Atkinson: At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one one on your telephone you will then hear an automated message advising you your hand as rates. Please be advised that today's conference is being recorded I would now like to turn to.
Katherine Atkinson: The conference over to Kathryn Atkinson from quantum S. Hi, Catherine. Please go ahead.
Katherine Atkinson: Good afternoon, everyone. Thank you for joining us.
Katherine Atkinson: Good afternoon, everyone. Thank you for joining us earlier today on that thought released financial results for the first quarter ended March 31st 2024.
Katherine Atkinson: Earlier today, Quantum-Si released financial results for the first quarter ended March 31st, 2024. A copy of the press release is available on the company's website. Joining me today are Jeff Hawkins, President and Chief Executive Officer, and Jeff Keyes, Chief Financial Officer.
Katherine Atkinson: The press release is available on the company's website. Joining me today are Jeff Hawkins, President and Chief Executive Officer, and Jeff <unk> Chief Financial Officer.
Katherine Atkinson: Before we begin, I would like to remind you that management will be making certain forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in our press releases. For a more complete list and description of risk factors, please see the company's filings made with the Securities and Exchange Commission.
Katherine Atkinson: Before we begin I would like to remind you that management will be making certain forward looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Katherine Atkinson: Additional information regarding these risks and uncertainties appears in the section entitled forward looking statements of our press release.
Katherine Atkinson: A more complete list and description of risk factors. Please see the company's filings made with the Securities and Exchange Commission. This conference call contains time sensitive information that is accurate only as of the live broadcast today may nine 2024, except as required by law the company disclaims any intention or obligation.
Katherine Atkinson: This conference call contains time-sensitive information that is accurate only as of the live broadcast today, May 9, 2024. Except as required by law, the company disclaims any intention or obligation to update or revise any forward-looking statement. During this call, we will also be referring to certain financial measures that are not prepared in accordance with U.S. Generally Accepted Accounting Principles, or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today. With that, I will turn the call over to Jeff Hawkins.
Jeffrey Alan Hawkins: <unk> to update or revise any forward looking statements. During this call. We will also be referring to certain financial measures that are not prepared in accordance with U S. Generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included.
Katherine Atkinson: You did in the press release filed earlier today with that I will turn the call over to Jeff Hawkins.
Jeffrey Alan Hawkins: Good afternoon, everyone, and thank you for joining us. On today's call, we will provide a business update, present our first quarter 2024 financial results, and provide an outlook for the remainder of 2024. We will then open the line for questions. As a reminder, the goal of Quantum-Si is to bring next-generation protein sequencing to every lab, everywhere.
Jeffrey Alan Hawkins: Good afternoon, everyone and thank you for joining us in today's call. We will provide a business update present, our first quarter 2024 financial results and provide an outlook for the remainder of 2024.
Jeffrey Alan Hawkins: We'll then open the line for questions.
Jeffrey Alan Hawkins: As a reminder, the goal of quantum that size to bring next generation protein sequencing to every lap everywhere.
Jeffrey Alan Hawkins: Our proprietary technology delivers deeper, unbiased proteomics insights that we believe will accelerate scientific research, enable the discovery of new biomarkers, and ultimately power the development of new therapies and diagnostic tests that will positively impact human health. With the full launch of Platinum now underway, I wanted to take this opportunity to share our corporate priorities for 2024. These priorities build upon what we accomplished in 2023 and will guide our execution throughout the year.
Jeffrey Alan Hawkins: Terry technology delivers deeper unbiased proteomics insights that we believe will accelerate scientific research enable the discovery of new Biomarkers and ultimately power the development of new therapies and diagnostic tests that will positively impact human health.
Jeffrey Alan Hawkins: Our corporate priorities for 2024 are as follows: accelerate commercial adoption, deliver on our Innovation Roadmap, and preserve financial strength. With those priorities in mind, I would now like to provide an update on our progress during the first quarter, as well as provide an updated outlook for 2024. As I discussed on our last earnings call, we were finalizing our commercial readiness to support our full commercial launch.
Jeffrey Alan Hawkins: With the full launch of platinum now underway I wanted to take this opportunity to share our corporate priorities for 2024.
Jeffrey Alan Hawkins: These priorities build upon what we accomplished in 2023 and will guide our execution throughout the year.
Jeffrey Alan Hawkins: Our corporate priorities for 2024 are as follows.
Jeffrey Alan Hawkins: To accelerate commercial adoption deliver on our innovation roadmap and preserve financial strength.
Jeffrey Alan Hawkins: With those priorities in mind I would now like to provide an update on our progress during the first quarter as well as provide an updated outlook for 2024.
Jeffrey Alan Hawkins: Our first corporate priority is to accelerate commercial adoption.
Jeffrey Alan Hawkins: As I discussed on our last earnings call, we were finalizing our commercial readiness to support our full commercial launch preparations included training of the current and new members of our direct sales force and training of our distributor network the.
Jeffrey Alan Hawkins: The preparations included training of the current and new members of our direct sales force and training of our distributor network. The preparations also included the launch and initial rollout of the Version 2 sequencing kit to customers, which we began implementing in early February. As of today, all customers have successfully migrated to the Version 2 sequencing kit.
Jeffrey Alan Hawkins: The preparations also included the launch and initial rollout of the version two sequencing kit the customers, which we began executing on in early February as of today all customers have successfully migrated to the version two sequencing kit.
Jeffrey Alan Hawkins: Based on all these items being complete, I am pleased to announce that we have moved into the full commercial launch of Platinum as of the end of March 2024. Going forward, we expect to have steady quarter-over-quarter revenue growth as we progress through the remainder of 2024. We will continue to closely monitor our commercial performance and customer success rates and leverage that data to execute on a thoughtful scale-up of our commercial infrastructure, both direct and distribution, throughout 2024.
Jeffrey Alan Hawkins: Based on all of these items being complete I am pleased to announce that we have moved into the full commercial launch of platinum as of the end of March 2024.
Jeffrey Alan Hawkins: Going forward, we expect to have steady quarter over quarter revenue growth as we progress through the remainder of 2024.
Jeffrey Alan Hawkins: We will continue to closely monitor our commercial performance and customer success rates and leverage that data to execute on a thoughtful scale up of our commercial infrastructure, both direct and distribution throughout 2024.
Jeffrey Alan Hawkins: In addition to gathering routine customer feedback, we will continue to work closely with key opinion leaders and early adopters of our technology to help define and develop future applications for our technology. As a reminder, our commercial strategy involves a mix of direct sales and distribution partners. In the U.S. market, we are currently operating with a direct sales and service model. In EMEA, our initial focus is the European market, where we will use a mix of direct and distribution approaches.
Jeffrey Alan Hawkins: In addition to gathering routine customer feedback we will continue to work closely with key opinion leaders and early adopters of our technology to help define and develop future applications for our technology.
Jeffrey Alan Hawkins: As a reminder, our commercial strategy involves a mix of direct sales and distribution partners in the U S market. We are currently operating with a direct sales and service model.
Jeffrey Alan Hawkins: In EMEA. Our initial focus is the European market, where we will use a mix of direct and distribution approaches.
Jeffrey Alan Hawkins: In addition, we have a distributor partner in Japan, which we expect will serve as our strategic entry point into the broader APAC market. At the end of the first quarter, our direct commercial team, which consists of sales, marketing, service, and support personnel, consisted of approximately 24 individuals based in the United States and Western Europe.
Jeffrey Alan Hawkins: In addition, we have a distributor partner in Japan, which we expect will serve as our strategic entry point into the broader APAC market.
Jeffrey Alan Hawkins: At the end of the first quarter, our direct commercial team, which consist of sales marketing service and support personnel encompassed approximately 24 individuals based in the United States and Western Europe.
Jeffrey Alan Hawkins: Customer interest in our uniquely differentiated technology has always been strong. From our initial launch in December of 2022 until now, we have observed consistent growth in our sales funnel in terms of the number of leads generated every month. As we move forward with our full launch, the focus will be conversion of these leads into instrument placements and revenue. Our current commercial team size is in line with our expectations to support the early phases of the full commercial launch, and we will be closely monitoring a variety of commercial metrics as we look to shape and grow our team and approach going forward. From a market segment perspective, our customers to date have largely been academic research laboratories. In the fourth quarter, that changed in a positive way.
Jeffrey Alan Hawkins: Customer interest in our uniquely differentiated technology has always been strong.
Jeffrey Alan Hawkins: Our initial launch in December of 2022 until now we have observed consistent growth in our sales funnel in terms of the number of leads generated every month.
Jeffrey Alan Hawkins: As we move forward with our full launch the focus will be conversion of these leads into instrument placements and revenue.
Jeffrey Alan Hawkins: Our current commercial team size is in line with our expectations to support the early phases of the full commercial launch and we will be closely monitoring a variety of commercial metrics as we look to shape and grow our team and approach going forward.
Jeffrey Alan Hawkins: From a market segment perspective, our customers to date have largely been academic research labs in the fourth quarter that changed in a positive way. We are pleased to report that we secured our first customers in both the government and pharma market segments.
Jeffrey Alan Hawkins: We are pleased to report that we secured our first customers in both the government and pharma market segments. These first two success stories underpin a broader interest we are seeing emerge in these two market segments, in addition to biotech and other commercial applications. We continue to believe academic research laboratories will remain a key customer for us going forward but are pleased to see customers in these additional market segments adopting our technology as well.
Jeffrey Alan Hawkins: These first two success stories underpin a broader interest we are seeing emerge in these two market segments. In addition to biotech and other commercial applications.
Jeffrey Alan Hawkins: We continue to believe academic research labs will remain a key customer for us going forward, but are pleased to see customers in these additional market segments adopting our technology as well.
Jeffrey Alan Hawkins: From an application standpoint, one application we are seeing increasing interest in is the barcode. For customers who need to generate and characterize large numbers of proteins, Protein barcodes can be used to streamline screening and selection of proteins with the desired characteristics.
Jeffrey Alan Hawkins: From an application standpoint, one application, we are seeing increasing interest in its barcoding.
Jeffrey Alan Hawkins: For customers, who need to generate and characterize large numbers of proteins protein barcodes can be used to streamline screening and selection of proteins with the desired characteristics.
Jeffrey Alan Hawkins: Barcoding applications could potentially span multiple market segments, including biomedical research, pharma, biotech, and industrial. For these customers, Platinum offers a simple, cost-effective, and highly specific way to screen hundreds of proteins at once. While adoption of our technology is in the early stages in pharma, biotech, and government labs, it does highlight that with growing market awareness and an ever-increasing set of capabilities, our technology addresses an unmet need we believe will be of interest to customers across a broad range of market segments and lab types.
Jeffrey Alan Hawkins: Bar coding applications could potentially spanned multiple market segments, including biomedical research pharma biotech and industrial.
Jeffrey Alan Hawkins: For these customers platinum offers a simple cost effective and highly specific way to screen hundreds of proteins at once.
Jeffrey Alan Hawkins: While adoption of our technology is in the early stages in pharma biotech and government labs.
Jeffrey Alan Hawkins: Does highlight that with growing market awareness and an ever increasing set of capabilities. Our technology addresses an unmet need we believe will be of interest to customers across the broad range of market segments and lab types.
Jeffrey Alan Hawkins: On a macro basis, we closely monitor the information and themes being shared by companies across the broader life sciences market regarding sales cycles and capital sales processes. Early evidence of our sales cycle indicates that it is approximately a three to four month process with a slightly longer sales cycle in some segments as those customers may require a hands-on evaluation of our technology before making a buying decision. In general, we expect the sales cycle trend of three to four months to continue into the future. Another theme in the broader market has been challenges securing capital budgets in general and within the market in China specifically.
Jeffrey Alan Hawkins: On a macro basis, we closely monitor the information and themes being shared by companies across the broader life sciences market regarding sales cycles and capital sales process.
Jeffrey Alan Hawkins: Early evidence of our sales cycle indicates that it is approximately a three to four month process with a slightly longer sales cycle in some segments as those customers may require a hands on evaluation of our technology before making a buying decision.
Jeffrey Alan Hawkins: In general we expect the sales cycle trend of three to four months to continue into the future.
Jeffrey Alan Hawkins: Another theme in the broader market has been challenges securing capital budgets in general and within the market in China, specifically to.
Jeffrey Alan Hawkins: To date, we have not seen these issues affect us given the price point of our platinum device and the value the technology offers versus competitive instrumentation. As a reminder, our platinum instrument has a current list price of $85,000, whereas many of the other instrument offerings in our space carry list prices ranging from $500,000 up to $1 million or more. With respect to China, we do not currently sell platinum in that market, so we are not exposed to any of the headwinds being discussed by other companies in the broader life science market.
Jeffrey Alan Hawkins: To date, we have not seen these issues affect us given the price point of our platinum device and the value of the technology offers versus competitive instrumentation as.
Jeffrey Alan Hawkins: As a reminder, our platinum instrument as a current list price of $85000, whereas many of the other instrument offerings in our space carry list prices ranging from 500000 up to $1 million or more.
Jeffrey Alan Hawkins: With respect to China, we do not currently sell platinum in that market. So we are not exposed to any of the headwinds being discussed by other companies in the broader life science market.
Jeffrey Alan Hawkins: With the full commercial launch underway, we are laser-focused on our commercial execution to ensure consistent quarter-over-quarter growth. We will closely monitor commercial success metrics and look to expand our commercial footprint in a fiscally responsible way, while ensuring all our customers receive the highest level of service and support. As we have said before, our goal is not simply to place instruments; it is to secure customers who will utilize our technology to advance their research for years to come.
Jeffrey Alan Hawkins: With the full commercial launch underway, we are laser focused on our commercial execution to ensure consistent quarter over quarter growth.
Jeffrey Alan Hawkins: We will closely monitor commercial success metrics and look to expand our commercial footprint in a fiscally responsible way, while ensuring all our customers receive the highest level of service and support.
Jeffrey Alan Hawkins: As we have said before our goal is not simply to place instruments. It is to secure customers, who will utilize our technology to advance their research for years to come.
Jeffrey Alan Hawkins: As this process evolves, we will be nimble and adjust our approach to maximize revenue growth while ensuring customer success. Our second priority is to deliver on our innovation roadmap. In February, we launched our Version 2 sequencing kit, which includes the introduction of a new amino acid recognizer, high reproducibility across runs, and an approximately three-fold reduction in cost per amino acid. I am pleased to report that we have successfully transitioned all our existing customers to the Version 2 kit.
Jeffrey Alan Hawkins: As this process evolves, we will be nimble and adjust our approach to maximize our revenue growth, while ensuring customer success.
Jeffrey Alan Hawkins: Our second priority is to deliver on our innovation roadmap.
Jeffrey Alan Hawkins: In February we launched our version two sequencing kit, which includes the introduction of a new immunoassay Recognizer high reproducibility across runs and an approximately three fold reduction in cost per immuno acid.
Jeffrey Alan Hawkins: I am pleased to report that we have successfully transitioned all our existing customers to the version two kit.
Jeffrey Alan Hawkins: Overall, the customer feedback for the version 2 kit has been very positive. Last week, we announced the release of a new version of our Platinum Analysis software. This new version of software offers customers an average of a 55% increase in the number of peptide alignments, a 9% increase in the precision of identifying unknown proteins present in a sample, and a 70% reduction in primary analysis time from 85 minutes to 25 minutes.
Jeffrey Alan Hawkins: Overall, the customer feedback for the version two kit has been very positive.
Jeffrey Alan Hawkins: Last week, we announced the release of a new version of our platinum analysis software.
Jeffrey Alan Hawkins: This new version of software offers customers an average of 55% increase in the number of peptide alignments.
Jeffrey Alan Hawkins: 9% increase in the precision of identifying unknown proteins present in a sample and a 70% reduction in primary analysis time from 85 minutes to 25 minutes.
Jeffrey Alan Hawkins: As part of the analysis software launch, we also shared some details about our proprietary kinetic model and kinetic database, made up today of nearly 2 million parameters. The ability to continuously train the kinetic model on generated sequencing data represents a significant opportunity to unlock even deeper insights from our next-generation protein sequencing technology, further building upon the improvements we expect to continue to make to the sequencing chemistry.
Jeffrey Alan Hawkins: As part of the analysis software launch we also shared some details about our proprietary kinetic model and kinetic database made up today of nearly $2 million parameters.
Jeffrey Alan Hawkins: The ability to continuously trained the kinetic model on generated sequencing data represents a significant opportunity to unlock even deeper insights from our next generation protein sequencing technology further building upon the improvements we expect to continue to make to the sequencing chemistry.
Jeffrey Alan Hawkins: Turning now to our version 3 kit, our product development team is fully engaged in this program, and we expect to deliver this updated kit to our customers by the end of Q3 2024, as previously communicated. It is still too early to discuss full details of this latest kit update, but current development results are promising, and we are expecting a very meaningful performance improvement over the Version 2 kit. The level of innovation happening every day across our R&D teams is exciting to get to see.
Jeffrey Alan Hawkins: Turning now to our version three kit our product development team is fully engaged in this program and we expect to deliver this updated kit to our customers by the end of Q3 2024 as previously communicated.
Jeffrey Alan Hawkins: It is still too early to discuss full details of this latest update but current development results are promising and we are expecting a very meaningful performance improvement over the version two kit.
Jeffrey Alan Hawkins: The level of innovation happening every day across our R&D team is exciting to get to see equally.
Jeffrey Alan Hawkins: Equally important to our long-term success is the significant strides we have made in terms of project planning and execution. Delivering products our customers can use every day is the goal of our innovation pipeline, whether that be a new sequencing kit, new software, or a new instrument. Looking back at the Version 2 kit project and, more recently, the Version 3 kit project, it is impressive to see our R&D team build plans and execute them in such close alignment with the targets set out at the start of the program.
Jeffrey Alan Hawkins: Equally important to our long term success is the significant strides we have made in terms of project planning and execution.
Jeffrey Alan Hawkins: Delivering products our customers can use every day is the goal of our innovation pipeline, whether that would be a new sequencing kit new software or new instrument.
Jeffrey Alan Hawkins: Looking back at the version two kit project and now more recently the version three <unk> project. It is impressive to see our R&D team build plans and execute them in such close alignment with the target set out at the start of the programs.
Jeffrey Alan Hawkins: It is this level of planning and execution rigor that is critical to reliably delivering a continuous flow of new products to customers. I'm confident we have that foundation in place, and I'm personally grateful for the work our R&D teams are doing every day to advance the field of proteomics with next-generation protein sequences. Finally, we attended the U.S. Human Proteome Organization Conference in March, where a Quantum-Si customer gave an oral presentation regarding their use of platinum for PTM detection, and a second customer presented a poster describing their use of platinum to develop alternative library prep applications for next-generation protein sequences.
Jeffrey Alan Hawkins: It is this level of planning and execution rigor that is critical to reliably delivering on a continuous flow of new products to customers.
Jeffrey Alan Hawkins: I am confident we have that foundation in place and I'm personally grateful for the work our R&D teams are doing everyday to advance the field of proteomics with next generation protein sequencing.
Jeffrey Alan Hawkins: Finally, we attended the U S. Human Proteome organization conference in March where a quantum ESI customer gave an oral presentation regarding their use of platinum for TTM detection and a second customer presented a poster describing their use of platinum to develop alternative library prep applications for next generation protein sequencing.
Jeffrey Alan Hawkins: Furthermore, in late February, Dr. Chris Mason presented a webinar about using next-generation protein sequencing to characterize extremophiles, a historically difficult and understudied set of organisms that naturally exist in nature and are of interest in various industrial applications.
Jeffrey Alan Hawkins: Furthermore, in late February Dr. Chris Mason presented a webinar about using next generation protein sequencing to characterize extrema files historically difficult an understudy set of organisms that naturally exist in nature and are of interest and various industrial applications. We.
Jeffrey Alan Hawkins: We expect that customers will continue to present their work at industry conferences throughout 2024, further increasing awareness of the benefits of platinum. Our third priority is to preserve financial strength. As we state on each of our calls, we remain committed to continuously improving our fiscal discipline. Now that we have the first quarter of activity completed, the results are becoming clear. We have reduced our overall spend year-over-year while improving our ability to deliver new products to the market, all while funding our commercial operations ramp-up.
Jeffrey Alan Hawkins: We expect that customers will continue to present their work at industry conferences throughout 2020 for further increasing awareness of the benefits of platinum.
Jeffrey Alan Hawkins: Our third priority is to preserve financial strength.
Jeffrey Alan Hawkins: As we stated on each of our calls we remain committed to continuously improving our fiscal discipline.
Jeffrey Alan Hawkins: Now that we have the first quarter of activity completed the results are becoming clearer we have reduced our overall spend year over year, while improving our ability to deliver new products to the market all while funding our commercial operations ramp up.
Jeffrey Alan Hawkins: Jeff will go into more details on this, but we believe these results are excellent and show how focused we are on utilizing our capital in the most effective way. We are confident that we are appropriately balancing the need to preserve capital with our goal to maximize commercial adoption of platinum and deliver a steady cadence of new products to customers. Delivering on these two goals represents a significant strategic advantage that will be the foundation of our growth for years to come. I will now turn the call over to Jeff Keyes to review our financial results. Jeff.
Jeffry R. Keyes: Jeff will go into more details on this but we believe these results are excellent and it shows how focused we are and utilizing our capital in the most effective way.
Jeffry R. Keyes: We are confident that we are appropriately balancing the need to preserve capital with our goal to maximize commercial adoption of platinum and deliver a steady cadence of new products to customers delivering on these two goals represents a significant strategic advantage that will be the foundation of our growth for years to come.
Jeffry R. Keyes: Jeff, now let's discuss the details of our first quarter 2024 financial results. Revenue in the first quarter of 2024 was $457,000, which consisted of revenue from our platinum instrument, consumable kits, and related services. Gross profit was $269,000, and gross margin was 59%.
Jeffry R. Keyes: I will now turn the call over to Jeff <unk> to review our financial results Jeff.
Jeffry R. Keyes: Thank you Jeff.
Jeffry R. Keyes: Let's discuss the details of our first quarter 2020 for our financial results.
Speaker Change: Revenue in the first quarter of 2024 was 457000.
Jeffry R. Keyes: Which consisted of revenue from our platinum instrument consumable kits and related services.
Jeffry R. Keyes: Gross profit was 269000 in gross margin was 59%.
Jeffry R. Keyes: As I have stated before, our gross margin percentage will be somewhat variable in the near future as we work through our initial stages of commercialization and will also be impacted by the timing and mix of instruments versus consumable sales. Our margin will also be impacted in the near term by acquisition costs and any accounting adjustments to underlying inventory that dates back to the pre-commercial stage of Quantum-Si. As we are still working through these items, we have not provided margin percentage guidance for 2024.
Jeffry R. Keyes: As I have stated before our gross margin percentage will be somewhat variable in the near future as we work through our initial stages of commercialization and will also be impacted by the timing and mix of instruments versus consumable sales.
Jeffry R. Keyes: Our margin will also be impacted in the near term by acquisition cost and any accounting adjustments to underlying inventory that dates back to the pre commercial stage of quantum of the Si.
Jeffry R. Keyes: As we are still working through these items, we have not provided a margin percentage guidance for 2024, but what I can say is the margin mix for the first quarter of 2024 includes approximately a 10% benefit for inventory utilized in the first quarter that were carried at lower or no value that dates back to prior to our niche.
Jeffry R. Keyes: But what I can say is the margin mix for the first quarter of 2024 includes approximately a 10% benefit for inventory utilized in the first quarter that was carried at a lower or no value that dates back to prior to our initial commercialization. We expect more of these variances that will work through into our margin over the course of the year, both positive and negative, and I will point them out as these things evolve.
Jeffry R. Keyes: <unk> commercialization.
Jeffry R. Keyes: We expect more of these variances that will work through into our margin over the course of the year, both positive and negative and I will point them out as these things evolve.
Jeffry R. Keyes: Gap total operating expenses in the first quarter of 2024 were $23.6 million, compared to $29.3 million in the first quarter of 2023. Adjusted operating expenses were $21.9 million for the first quarter of 2024 compared to $24.6 million for the first quarter of 2023. As we alluded to in our press release today, the year-over-year reduction in operating expenses was the result of several initiatives we put in place in 2023 to maximize our capital efficiency, including our R&D realignment efforts, while at the same time delivering a steady cadence of R&D enhancements to our customers.
Jeffry R. Keyes: GAAP total operating expenses in the first quarter of 2024, or $23 6 million compared to $29 3 million in the first quarter of 2023.
Jeffry R. Keyes: Adjusted operating expenses were $21 9 million for the first quarter of 2024 compared to $24 6 million for the first quarter of 2023 as.
Jeffry R. Keyes: As we alluded to in our press release today the year over year reduction in operating expenses was the result of several initiatives we put in place in 2023 to maximize our capital efficiency, including our R&D realignment efforts, while at the same time, delivering a steady cadence of R&D enhancements to our customers.
Jeffry R. Keyes: Specifically this has resulted in lower spend in R&D by $6 1 million and effectively swapping G&A dollars to finding commercial operations, increasing overall SG&A by only $350000.
Jeffry R. Keyes: Specifically, this has resulted in lower spending on R&D by $6.1 million and effectively swapping G&A dollars to fund commercial operations, increasing overall SG&A by only $350,000. The net loss for the first quarter of 2024 was $19.5 million compared to $23.6 million in the first quarter of 2023, a decrease of $4.1 million. The decrease in net loss is primarily related to the operating expense reduction previously discussed, partially offset by changes in dividend income and unrealized gains on marketable securities.
Jeffry R. Keyes: Net loss for the first quarter of 2024 was $19 5 million compared to $23 6 million in the first quarter of 2023, a decrease of $4 1 million the.
Jeffry R. Keyes: The decrease in net loss was primarily related to the operating expense reduction previously discussed partially offset by changes in dividend income and unrealized gains on marketable securities.
Jeffry R. Keyes: Adjusted EBITDA for the first quarter of 2024 was negative $20.5 million compared to negative $23.7 million in the first quarter of 2023, an improvement of $3.2 million. This improvement was primarily related to the aforementioned reduction in operating expenses, primarily in R&D-related costs. Near the end of 2023, we made some structural changes to our investment holdings to maximize yield while minimizing risk. These changes, along with the impact of rate increases, produced dividend and interest income of $3.6 million in the first quarter of 2024, compared to $2.2 million in the first quarter of 2023, an increase of $1.4 million.
Jeffry R. Keyes: Adjusted EBITDA for the first quarter of 2024 was negative $20 5 million compared to negative $23 7 million in the first quarter of 2023, an improvement of $3 2 million. This improvement was primarily related to the aforementioned reduction in operating expenses.
Jeffry R. Keyes: Marilee in R&D related costs.
Jeffry R. Keyes: Near the end of 2023, we made some structural changes to our investment holdings makeup to maximize yields while minimizing risks. These changes along with the impact of rate increases produced dividend and interest income of $3 6 million in the first quarter of 2024 compared to $2 2 million in the first quarter.
Jeffry R. Keyes: 2023, an increase of $1 4 million.
Jeffry R. Keyes: As of March 31, 2024, we had $235.4 million in cash and cash equivalents and investments in marketable securities. We are also reaffirming our 2024 financial guidance, which includes revenues to range between $3.7 and $4.2 million, adjusted operating expenses to be less than $103 million, and net cash usage less than $100 million. Finally, we still expect that our existing cash and cash equivalents and investments in marketable securities will provide runway into 2020. Now, I will turn the call over to the operator to open the line for questions.
Jeffry R. Keyes: As of March 31, 2024, we had $235 4 million in cash and cash equivalents and investments in marketable securities.
Jeffry R. Keyes: We are also reaffirming our 2024 financial guidance, which includes revenues to range between three seven and $4 2 million adjusted operating expenses to be less than $103 million and net cash usage less than $100 million.
Jeffry R. Keyes: Finally, we still expect that our existing cash and cash equivalents and investments in marketable securities will provide runway into 2026.
Jeffry R. Keyes: Now I will turn the call over to the operator to open the line for questions.
Operator: Thank you. At this time, we will conduct the 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. To withdraw your question, please press star one one again. Please stand by while we compile the question and answer list. Our first question comes from Swayampakula Ramakanth with HCW. Please go ahead with your question.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Operator: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the question and answer roster.
Swayampakula Ramakanth: Our first question comes from Shawn Colo room mascot with CW. Please go ahead with your question.
Swayampakula Ramakanth: Thank you. This is R.K. from History Wainwright.
Speaker Change: Thank you this is all care com.
Swayampakula Ramakanth: Ed.
Swayampakula Ramakanth: Good afternoon, Jeff and Jeff. I hope you folks are doing well. It looks like it was a great quarter, a lot of progress on all fronts, which is excellent to hear. So starting off from the top line, you know, in terms of the commercial launch, I know you said you did the full launch only in the late quarter. But I'm just trying to understand how you are seeing the launch progress since then, since the end of March to now.
R.K.: Good afternoon, Jeff and Jeff.
Speaker Change: Folks are doing great.
Swayampakula Ramakanth: <unk>.
Swayampakula Ramakanth: It looks like he does a great corner a lot of a lot of progress on those.
Swayampakula Ramakanth: All fronts, which is excellent.
Swayampakula Ramakanth: And, you know, it's also good to see that you're holding to your pullier guidance on the revenue side. So, if you can kind of give us a little bit of color as to what gives you the confidence that you would reach that guidance level.
Swayampakula Ramakanth: Through here.
Swayampakula Ramakanth: So starting off on the top line.
Swayampakula Ramakanth: In terms of.
Swayampakula Ramakanth: Yes, the commercial launch.
Swayampakula Ramakanth: <unk>.
Swayampakula Ramakanth: No you said.
Swayampakula Ramakanth: You did a full launch on the online late.
Swayampakula Ramakanth: Great quarter.
Swayampakula Ramakanth:
Swayampakula Ramakanth: But I'm just trying to understand how are you seeing.
Swayampakula Ramakanth: The launch progress.
Swayampakula Ramakanth: Then since the end of March to now.
Swayampakula Ramakanth: It's also good to see that you're holding.
Swayampakula Ramakanth: To your.
Swayampakula Ramakanth: Full year guidance on the revenue side.
Swayampakula Ramakanth: Kind of give us a little bit of color as to what.
Swayampakula Ramakanth: Do you see the confidence that you would reach that.
Swayampakula Ramakanth: That guidance level.
Jeffrey Alan Hawkins: Yeah, thanks for that question, RK. You know, I think the first part of that is, you are correct. The full commercial launch started, you know, right at the tail end of March 2024. So, we're in the early innings of that. You know, as we talked about on our last call and mentioned here today, we had a series of new sales reps and distribution partners that were trained in the first quarter.
Speaker Change: Yes, thanks for that question RK.
Jeffrey Alan Hawkins: I think the first the first part part of that is.
Jeffrey Alan Hawkins: You are correct. The full commercial launch started right at the tail end of March 2024, So we're in the early innings of that.
Jeffrey Alan Hawkins: As we had talked about on our last call and mentioned here today, we had a series of new sale.
Jeffrey Alan Hawkins: So, those folks are, you know, coming up to speed. We're satisfied with the rate of that coming up to speed. But given many of them are in their first sort of three or four months with the company, you know, we do view Q2 as sort of a more modest step up from Q1 in terms of revenue. And then, you know, really with those folks fully in and executing, you know, the back half of the year, then able to accelerate more.
Jeffrey Alan Hawkins: Sales reps and distribution partners that were trained in the first quarter. So those folks are coming up to speed, where we're satisfied with the rate of that coming up to speed, but given many of them are in their first sort of three or four months with the company. We do view Q2 as sort of a more modest step.
Jeffrey Alan Hawkins: Up from Q1 in terms of the revenue and then really with those folks fully in and executing the back half of the year, then able to accelerate more and in total.
Jeffrey Alan Hawkins: And in total, you know, that sort of general shape of the curve gives us confidence we'll be where we need to be in terms of delivering on our revenue guidance of 3.7 to 4.2 million. The other thing I'd add, RK, that's relevant to that, is that we will look at options to sort of scale up the commercial team as we go throughout the year. And we'll do that more based on some of those early signs we see here throughout Q2 and into Q3, at the beginning of this full commercial launch.
Jeffrey Alan Hawkins: <unk> sort of general shape of the curve gives us confidence, we'll be where we need to be in terms of delivering on our revenue guidance of $3, 7% to $4 2 million and the other thing I'd add RK.
Jeffrey Alan Hawkins: Relevant to that.
Jeffrey Alan Hawkins: We will look at options to.
Jeffrey Alan Hawkins: Sort of scale up the commercial team as we go throughout the year and we will do that more based on some of those early signs we see here throughout Q2 and into Q3 in the at the beginning of this full commercial launch.
Jeffrey Alan Hawkins: Perfect.
Jeffrey Alan Hawkins: And then.
Jeffrey Alan Hawkins: Just in terms of that.
Jeffrey Alan Hawkins: The.
Jeffrey Alan Hawkins: Segments, where you are selling.
Jeffrey Alan Hawkins: In the press release and also in the numbers.
Jeffrey Alan Hawkins: Prepared remarks, you talked about.
Jeffrey Alan Hawkins: Following them.
Jeffrey Alan Hawkins: Government and the industry being.
Jeffrey Alan Hawkins: Also the A&D, Australia or selling.
Jeffrey Alan Hawkins: So when you think government are we talking about government labs.
Jeffrey Alan Hawkins: Or is it.
Jeffrey Alan Hawkins: Good.
Jeffrey Alan Hawkins: Some sort of a regulatory into institutions that we're talking about I'm, just trying to get a feel for it and how easy was it to penetrate that.
Jeffrey Alan Hawkins: That segment in itself and in terms of pharmaceutical industry.
Jeffrey Alan Hawkins: <unk>.
Jeffrey Alan Hawkins: It is this is this something of a one off because I know you are putting in a lot of focus on the academic labs.
RK: So I'm just trying to understand how should we think about this.
Jeffrey Alan Hawkins: Should we wait to get.
Jeffrey Alan Hawkins: Overly excited.
Jeffrey Alan Hawkins: Yeah, I mean, it's probably.
Jeffrey Alan Hawkins: Yes, you guys into trouble.
Speaker Change: Yes, it's probably too early to get overly excited.
Jeffrey Alan Hawkins: We certainly are optimistic about the long term potential in these segments. So I think if I unpack your question into a couple parts. So when we say government accounts, what we mean by that are our labs that are being run.
Jeffrey Alan Hawkins: By government entities, we don't mean regulatory agencies, so that could be that could be various branches of the military it could be national labs, it could be other facilities like that but they are.
Jeffrey Alan Hawkins: They fit into that mold of.
Jeffrey Alan Hawkins: Government funded and a government run.
Jeffrey Alan Hawkins: Entity to answer your question on how hard is it to <unk>.
Jeffrey Alan Hawkins: <unk> I think the way.
Jeffrey Alan Hawkins: I would characterize it.
Jeffrey Alan Hawkins: K is similar to pharma and biotech we talked in the very early days of our controlled launch that academic what's going to be the primary focus because that's where you had some of the kols and those real innovators, who would adopt technology and really work with you to see what it was <unk>.
Jeffrey Alan Hawkins: <unk> and how they can apply it but at that same time, we were beginning that process of building relationships and momentum in these other segments.
Jeffrey Alan Hawkins: At the end of the day, they just take a bit longer to get that initial traction we mentioned a little bit in our remarks that some customer segments.
Jeffrey Alan Hawkins: Want to do a hands on evaluation I would say that that.
Jeffrey Alan Hawkins: Reasonably common.
Jeffrey Alan Hawkins: Pharma biotech segment, so while it's a bit of a longer sales cycle than say an academic lab.
Jeffrey Alan Hawkins: We're definitely pleased to have gotten these first two and we don't believe.
Jeffrey Alan Hawkins: This is a one off this is not going to be sort of the only pharma customer that we have but I think there is a time scale to penetrate and then there'll be a time scale also to those customers ramping up to apply the technology in more areas over time, So I think it's sort of a two stage adoption.
Jeffrey Alan Hawkins: Get in the door and get the first instruments sold and then work with them to scale the number of applications. They run, but we're we're feeling.
Jeffrey Alan Hawkins: Very good about where we are I think we've really learned what matters and what they are interested in doing and we're now trying to replicate that success in other accounts and continuing to build the momentum and diversify our sort of our segment reach.
Jeffrey Alan Hawkins: Perfect. One last question from me. At the presentations at the, I believe it's the Human Proteome Conference, what was the kind of feedback, not only from what was being presented there but also in terms of getting additional leads and people getting excited, and, you know, your phone's going off the hook?
Jeffrey Alan Hawkins: One last question from me.
Jeffrey Alan Hawkins: On the.
Jeffrey Alan Hawkins: On the presentations.
Jeffrey Alan Hawkins: I believe its human Proteome conference.
Jeffrey Alan Hawkins: Sure.
Jeffrey Alan Hawkins: What was the kind of feedback.
Jeffrey Alan Hawkins: Moderately from from what is being present in there, but also in terms of.
Jeffrey Alan Hawkins: Adding additional leads and people getting excited in your your funds going off the hook.
Jeffrey Alan Hawkins: Yeah, it's a good question. I think, you know, the feedback consistently is positive. I think, obviously, when customers begin talking about the technology, there's always an added benefit of, you know, peers who are peer-to-peer, right? The customer talking about their experience resonates with another customer. So I think that's a net positive.
Jeffrey Alan Hawkins: Yeah. It's a good question I think the feedback.
Jeffrey Alan Hawkins: Consistently is positive I think obviously when customers begin talking about the technology. There is always an added benefit of peers, who are peers peer to peer right the customer talking about their experience resonates with another customer.
Jeffrey Alan Hawkins: So I think Thats, a net net positive we're still.
Jeffrey Alan Hawkins: So early in our commercial phase as a company, we're not a big multi-billion dollar entity that has been in business for decades where you just have a natural name brand recognition. So I think trade shows for us, those conferences, the presentations, webinars that our customers present on, all of these sort of marketing activities or events are still very high value for us. We get to meet a lot of people face-to-face; we're able to generate leads and find people who are interested in learning more, perhaps demoing the technology.
Jeffrey Alan Hawkins: So early in our commercial phase as a company where we're not.
Jeffrey Alan Hawkins: Big multibillion dollar entity that has been in business for decades, where you just have a natural name brand recognition. So I think trade shows for us those conferences presentations webinars that that our customers present on all of these sort of marketing activities of our events are still very high value.
Jeffrey Alan Hawkins: For us we get we get to meet a lot of people in face to face we're able to generate.
Jeffrey Alan Hawkins: <unk> and find people who are interested in learning more perhaps demo ing the technology, So I think for the foreseeable future.
Jeffrey Alan Hawkins: So I think for the foreseeable future, trade shows, webinars, these various tools that we're sharing with you that we do will continue to be very fruitful in terms of our ability to meet new people, find new opportunities, and pursue those toward placements and utilization.
Jeffrey Alan Hawkins: Trade shows Webinars. These various tools that we're sharing with you that we're doing will continue to be.
Jeffrey Alan Hawkins: Very fruitful in terms of our ability to meet new people find new opportunities and pursue those towards placements and utilization.
Swayampakula Ramakanth: Perfect. Thank you very much for taking all my questions. Thank you.
Swayampakula Ramakanth: Perfect. Thank you very much for taking all my questions. Thank.
Operator: Standby for our next question. Our next question comes from Kyle Mikson with Concordia Genuity. Kyle, go ahead with your question.
Speaker Change: Thank you.
Kyle Alexander Mikson: <unk> by far our next question.
Operator: Yeah.
Kyle Alexander Mikson: Our next question comes from Tayo Nixon with Concordia Genuity tile go ahead with your question.
Kyle Alexander Mikson: Hey guys, thanks for the questions. Congratulations on the quarter.
Kyle Alexander Mikson: Yeah, Hey, guys. Thanks for the question.
Kyle Alexander Mikson: Congrats on the quarter. So for Jeff can you kind of walk through maybe parse out the components of product revenue.
Kyle Alexander Mikson: So Jeff, can you kind of walk through or maybe like parse out the components of product revenue? At this point, it's been a year or so since the soft launch was initiated. Maybe you have some sense of instruments and consumable mix and pull through, things like that. And then, if you could, I mean, the service revenue really increased a ton. I mean, it's possible you went through that already, but could you just talk about some of the dynamics here that we're seeing with certain product level segments and stuff, and services? Thanks.
Kyle Alexander Mikson: At this point, it's been a year or so since that the soft launch was was commenced maybe you have some sense of.
Kyle Alexander Mikson: <unk> and consumable consumable mix and pull through things like that and then if you could I mean, the service revenue really interested Todd I mean, it's possible you went through that already but could you just talk about some of the dynamics that we're seeing with the certain product segments and stuff and services. Thanks.
Jeffrey Alan Hawkins: Yeah, I'll start and talk a little bit about the services, and then perhaps, Jeff, you can pick it up and talk about sort of overall revenue and the mix to the extent we break that out. I think on the services front, Kyle, there's a mix of a couple of different things in there. Obviously, we placed some instruments throughout 2023, and some of those instruments are now coming off of their initial warranty and moving into service contracts.
Jeffrey Alan Hawkins: Yeah, I'll start and talk a little bit about the services and then perhaps Jeff you can pick it up and talk about sort of overall revenue in the mix to the extent, we break that out I think on the services front.
Jeffrey Alan Hawkins: Kyle its a mix of.
Jeffrey Alan Hawkins: A couple of different things in there you know obviously, we placed some instruments throughout 2023 and some of those.
Jeffrey Alan Hawkins: So, that is one sort of source of service revenue that comes through. The other source of service revenue is some of our customers are electing to sort of engage us in more of an advanced training to really come in and train a large number of operators across their laboratory and give them sort of deeper hands-on training and interactions, and maybe they can do on their own by setting the machine up. So, there's a cost associated with that advanced training.
Jeffrey Alan Hawkins: Instruments are now coming off of their initial warranty and moving into service contracts. So that is one sort of source of service revenue that comes through the other source of service revenue as some of our customers are electing to sort of engage us in more of an advanced training to really come in and train them.
Jeffrey Alan Hawkins: Large number of operators across their laboratory and give them sort of deeper hands on training and interactions.
Jeffrey Alan Hawkins: It's not a significantly large number, but when multiple customers sort of choose to take on that advanced training, it can certainly add to that services line. So, sort of those advanced trainings and service contracts are the two primary drivers there on the services line. Jeff, Kyle, how about you go into the rest of it?
Speaker Change: Maybe they can get on their own by setting the machine up so there's a there's a cost associated with that advanced training it's not.
Speaker Change: Not a significantly large number but when multiple customers.
Speaker Change: Choose to take on that advanced training. It can certainly add to that services line, so sort of those advanced trainings and.
Speaker Change: Service contracts are the two primary.
Jeffrey Alan Hawkins: Drivers there on the services line Jeff.
Jeffry R. Keyes: Yeah, Kyle, on mix, we don't break that out in our financials, but what I can say is that it's primarily driven by instruments. As you would expect in the early commercial days for the company, we're focused on instrument placements and also pull-through, for sure, but it's really about instrument placements and getting those out in the field. So our general mix is a high percentage on instrument placements. And then on pull-through from a kid's standpoint, we're still watching that as we go through the commercialization phase.
Speaker Change: How about you go into the rest of it.
Jeffry R. Keyes: Next we don't we don't break that out in our financials, but what I can say is that it's primarily driven by instruments. As you would expect any early commercial base for the company. We're focused on instrument placements and also pull through for sure, but it's really about instrument placements and getting those out in the field. So our general mixes.
Jeffry R. Keyes: Percentage on instrument placements and then on pull through from a hedge standpoint, we're still watching that as we go through the commercialization phase that we have.
Jeffry R. Keyes: I mean, we have an evolution of what we think that the consumable pull-through will be long-term, and there's going to be a little difference between the academic labs and the commercial customers, biopharma and pharma, that we're going to watch closely as we go through this ramp process. And then we can potentially provide more information in the future.
Jeffry R. Keyes: We have an evolution of what we think that the consumable pull through will be long term and there's going to be a little difference between the academic labs.
Jeffry R. Keyes: The commercial customers Biopharma and pharma that we're going to watch closely as we go through this ramp process and then we can provide potentially more information in the future.
Kyle Alexander Mikson: Okay. Okay. That was great, guys. Thanks so much.
Jeffry R. Keyes: Okay. Okay that was great guys. Thanks, so much and then going back to you Jeff Hawkins.
Kyle Alexander Mikson: All these version version kits I guess three is coming up pretty soon.
Jeffrey Alan Hawkins: And then going back to you, Jeff Hawkins, all these versions, these new version kits, I guess version 3 is coming out pretty soon. When we think about which kits or consumables are ready for prime Time, was version 2 considered to be the legitimate first product for the company? And then these incremental versions or iterations upon that? Or when do we see an inflection in terms of what a customer can really do with platinum and in terms of capabilities and sort of just robustness of what you can do with sequencing peptides?
Jeffrey Alan Hawkins: When we think about like which kits or consumables or kind of ready for prime time was the version two sort of like.
Jeffrey Alan Hawkins: You consider that to be like the.
Jeffrey Alan Hawkins: It's sort of like first product for the company then.
Jeffrey Alan Hawkins: These incremental versions are iterations upon that are like when do we see like an inflection in terms of what the customer can really do with platinum and in terms of capabilities and sort of just robustness of what you're going to do with sequencing peptides.
Jeffrey Alan Hawkins: Sure. Yeah, so I would tell you that the version two kit really did represent a pretty significant increase in terms of both output, sort of how much sequencing information a customer could get from their sample, but also a very meaningful improvement in the reproducibility of those sequencing results, right? The ability to put a sample in and run it across multiple chips or multiple days and get a very reproducible set of results.
Jeffrey Alan Hawkins: Sure Yeah. So I would I would tell you that the version two kit really did represent a pretty significant increase in terms of both the output sort of how much sequencing information a customer could get from their sample, but also a very meaningful improvement in the reproducibility.
Jeffrey Alan Hawkins: 80 of those sequencing results right the ability to put a sample in.
Jeffrey Alan Hawkins: And run it across multiple chips or multiple days and get a very reproducible set of results. So I think that version two kit was that first big sort of step up in improvement over the initial version one kit.
Jeffrey Alan Hawkins: So I think that version two was that first big sort of step up in improvement over the initial version one kit. I think the way I would think about version three is I wouldn't view it as, you know, incremental in terms of, you know, it's going to be a very modest improvement. I still think we are in a stage of our innovation where we're really seeing, you know, great inflection points in terms of the technology evolution, output, coverage, and our performance, broader sample type compatibilities, various things improving each time we rev it.
Jeffrey Alan Hawkins: I think the way I would think about version three is I wouldn't view it as.
Jeffrey Alan Hawkins: Incremental in terms of its going to be a very modest improvement I still think we are in a stage of our innovation that we're really seeing great.
Jeffrey Alan Hawkins: Great inflection points in terms of the technology evolution.
Jeffrey Alan Hawkins: What the coverage.
Jeffrey Alan Hawkins: Our performance broader sample type compatibility various things improving each time, we rebate. So I think in general when we version of the kit Kyle.
Jeffrey Alan Hawkins: So I think in general, when we version the Kit, Kyle, we're versioning it when we think the totality of the improvements made is a very meaningful increase in performance such that customers will be able to do things they haven't been doing before. And then, you know, on a future version 4 Kit, it would be something similar. We don't really intend at this point to do very small sort of iterative changes that, you know, might be seen as like a 2.5 or something. So really think of these changes, V2 to V3 and so on, as really unlocking more and more capabilities and application space for customers.
Jeffrey Alan Hawkins: Our version of <unk>, when we think the totality of the improvements made is a very meaningful.
Jeffrey Alan Hawkins: Increase in performance such that customers will be able to do things they haven't been doing before and each and then on a future version for Kate It would be something similar we don't really intend at this point to do.
Jeffrey Alan Hawkins: Small sort of iterative changes that might be seen as like a two 5% or something so really think of these changes the two to three and so on is.
Jeffrey Alan Hawkins: Really unlocking more and more capabilities and application space for customers.
Kyle Alexander Mikson: Okay, yeah, that's perfect. Let me ask another one before I hop off.
Speaker Change: Okay, Yeah that was perfect. Let me ask another one before I hop off on the platinum analysis software that was interesting launch.
Jeffrey Alan Hawkins: On the Platinum Analysis software, that was an interesting launch. You know, Jeff, and just given, you know, your background experience, curious, like, where that kind of stands in the world of, like, the software ecosystem, when you think about, you know, life science tools research in the research world, like, you think about the Dragon or the BaseSpace, things like that, secondary analysis, tertiary analysis, you know, how, given, like, you're dealing with proteomic information, which is, like, super complex, you know, just coming from, like, mass spec, I mean, that's definitely pretty complicated.
Jeffrey Alan Hawkins: Jeff.
Jeffrey Alan Hawkins: Given.
Jeffrey Alan Hawkins: My background experience, just curious like where is that kind of stands in the world.
Jeffrey Alan Hawkins: Software ecosystem, when you think about.
Jeffrey Alan Hawkins: Life Sciences research.
Jeffrey Alan Hawkins: Search World, you think about the dragon or the base space things like that secondary analysis tertiary analysis.
Jeffrey Alan Hawkins: Given you're dealing with proteomics information, which is like Super complex.
Jeffrey Alan Hawkins: Just calling for like mass spec I mean, thats definitely pretty complicated.
Jeffrey Alan Hawkins: You know, what's the future of the, like, why? I guess I have two questions. Why was this such a bottleneck or, like, an unmet need for customers for the software? And then, number two, like, what's the future of, you know, kind of monetizing data from the platform over time?
Jeffrey Alan Hawkins: What's like the future I.
Jeffrey Alan Hawkins: I guess two questions why was this such a bottleneck or luck unmet need for customers like the software and then number two like what's the future of <unk>.
Jeffrey Alan Hawkins: Monetizing data from the platform over time.
Jeffrey Alan Hawkins: Sure, yeah, good question. So, you know, I think, obviously, in the proteomic space, software or analysis of data has always been a very challenging thing. I think if you go into a large proteomics core lab that's running mass spec, they'll often have some number of bioinformatics staff or data science type of staff that have created custom pipelines or analysis tools that make it easier for them to analyze data as it comes off of the mass spec.
Jeffrey Alan Hawkins: Sure Yeah. Good question, So I think obviously in the proteomics space.
Jeffrey Alan Hawkins: Software or analysis of data has always been.
Jeffrey Alan Hawkins: A very challenging thing I think if you go into <unk>.
Jeffrey Alan Hawkins: Large proteomics core lab, that's running mass spec.
Jeffrey Alan Hawkins: Often have some number of bioinformatics staff or data science type of staff that has created.
Jeffrey Alan Hawkins: Custom pipelines or analysis tools that make it easier for them to analyze data as it comes off of the mass spec.
Jeffrey Alan Hawkins: That's great when you're in the types of institutions that have those resources and capabilities, but thats not.
Jeffrey Alan Hawkins: That's great when you're in the types of institutions that have those resources and capabilities, but that's not the majority of research labs in the world. There are only a small number of labs that have that level of sophistication.
Jeffrey Alan Hawkins: The majority of research labs in the World right.
Jeffrey Alan Hawkins: <unk> number of labs that have that level of sophistication. So I think automating of data analysis was always sort of a core tenet of the strategy to ensure that over time, we could.
Jeffrey Alan Hawkins: So I think automating data analysis was always sort of a core tenet of the strategy to ensure that over time we could, you know, distribute this technology as broadly as possible. Now, flipping more to the question of sort of what the future is, I think that that software launch... Kyle, the way I would think about it is that there is the core analysis software, right? There's this, as we talked about, there's a kinetic model and a kinetic database that underpins sort of the general detection and calling of amino acids and, you know, alignment of peptides and then ultimately protein and, you know, identification if that's the type of work you're doing.
Jeffrey Alan Hawkins: Distribute this technology as broadly as possible now flipping more to the question of sort of what is the future I think that that software launch.
Jeffrey Alan Hawkins: The way I would think about it is there is the core analysis software right. There as we talked about there is a kinetic model and a kinetic.
Jeffrey Alan Hawkins: Debase that underpins sort of the general.
Jeffrey Alan Hawkins: Detection and calling of amino acids alignment of peptides and then ultimately protein.
Jeffrey Alan Hawkins: You know, some of these are going to just be improvements we make to keep making those databases more and more accurate and more and more capable. I'm seeing real-world sequencing data as a very powerful sort of source of data to be able to fine-tune those. But then other aspects are more about purpose-built tools, and I think that's maybe where the analogy starts to align a little bit closer with, you know, some of the analogs you're giving from the DNA world, like Dragon or base space.
Jeffrey Alan Hawkins: Identification if that's the type of work Youre doing so some of these are going to just be improvements, we make to keep making those databases more and more act.
Jeffrey Alan Hawkins: Accurate more and more capable <unk> seen real world sequencing data is very powerful.
Jeffrey Alan Hawkins: Sort of source of data to be able to fine tune those but then other aspects are more about purpose built tools and I think thats, maybe where the analogy starts to <unk>.
Jeffrey Alan Hawkins: Our line a little bit closer with some of the analogs you're giving.
Jeffrey Alan Hawkins: From the DNA World Dragon or or a base space I think you'll see us sort of think about the problem in a similar way and that there will be core tools that exist that get used on every run and will seek to continue to improve those tools and make them more accurate and make them able to detect events we haven't been.
Jeffrey Alan Hawkins: I think you'll see us sort of think about the problem in a similar way, in that there will be core tools that exist that get used on every run, and we'll seek to continue to improve those tools and make them more accurate and make them able to detect, you know, events we haven't been able to sort of detect before. But I think you'll also see us think about sort of customized workflows that maybe help do a very specific type of analysis the customer is looking to do in a very purpose-built way and perhaps be very, you know, very tuned and tailored for that rather than using a more generic or general software tool.
Jeffrey Alan Hawkins: Able to sort of detect before but I think youll also see us think about sort of customized workflows that may be help do a very specific type of analysis to customers looking to do in a very purpose built way and perhaps the very very tuned in tailored for that rather than using a more the more generic generic or general.
Jeffrey Alan Hawkins: So I think you'll see us do a little bit of both. It's a tremendous opportunity to expand the technology capability and application space and improve the customer's ability to really apply the tech, and it can be done on its own cycle, sort of almost independent of the cycles we are operating here to make new sequencing kits, you know, like the version 3 kit.
Jeffrey Alan Hawkins: Software tool, so I think youll see us do a little bit of both it's a tremendous opportunity to expand the technology capability and application space and improve the customer's ability to really apply the tech and it and it can be done on its own cycle sort of almost independent of the cycles. We are operating here to make new sequencing kits.
Jeffrey Alan Hawkins: Like the version three kit.
Kyle Alexander Mikson: Okay. All right. That was great, Jeff. Thanks so much. I appreciate it.
Kyle Alexander Mikson: Okay, all right, that was great, Jeff. Thanks so much, I appreciate it. You're welcome.
Speaker Change: Okay, all right that's great Jeff. Thanks, so much appreciate it.
Speaker Change: Youre welcome.
Operator: This concludes our question and answer period. If you would now, I would now like to turn it back over to Jeff Hawkins for closing remarks.
Speaker Change: This concludes our question and answer period.
Operator: Now I would now like to turn it back over to Jeff Hawkins for closing remarks.
Jeffrey Alan Hawkins: Thank you, everyone, for attending today. We believe the progress we've made during the first quarter was outstanding. We are excited to be executing on our full commercial launch, and we remain on track for our version 3 sequencing kit delivery by the end of Q3. Thank you.
Jeffrey Alan Hawkins: Thank you everyone for attending today, we believe the progress we've made during the first quarter was outstanding we are excited to be executing on our full commercial launch and we remain on track for our version three sequencing kit delivery by the end of Q3 2024, we look forward to providing an update on our next call. Thank you.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Operator: Okay.
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