Q1 2024 Singular Genomics Systems Inc Earnings Call
Good afternoon, everyone and welcome to the singular Genomics systems, Inc. First quarter 2024 earnings conference call.
Operator: Good afternoon, everyone, and welcome to the Singular Genomics Systems, Inc. first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Philip Taylor.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: A question and answer session will follow the formal presentation.
Operator: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Operator: Please note this conference is being recorded.
Operator: I will now turn the conference over to your host Philip Taylor.
Philip Taylor: Thank you, Operator. Presenting today are Singular Genomics' founder, chair, and chief executive officer Drew Spaventa and the company's Chief Financial Officer, Dalen Meeter. Earlier today, Singular Genomics released financial results for the three months ended March 31st, 2024. A copy of the press release is available on the company's website. Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, Tuesday, May 14, 2024, only and will include forward-looking statements and opinion statements, including predictions, estimates, plans, expectations, and other information related to our financial and operating results, plans, and strategies.
Bruce <unk>: Thank you operator, presenting today are singular genomics founder chair and Chief Executive Officer, Bruce <unk>.
Speaker Change: And the company's Chief Financial Officer, Dave on meter earlier today, a singular genomics released financial results for the three months ended March 31, 2020 for a copy of the press release is available on the company's website.
Management: Before we begin I would like to inform you that comments and responses to your questions. During today's call reflect management's views as of today Tuesday May 14, 2024, only and will include forward looking statements and opinions statements, including predictions estimates expectations and other information related to our financial and operating results.
Philip Taylor: Actual results may differ materially from those expressed or implied by these statements as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission, including our most recent Form 10-Q and 10-K filings and Form 8-K filed with today's press release. Our SEC filings can be found on our website or on the SEC's website.
Management: <unk> plans and strategies.
Management: Actual results may differ materially from those expressed or implied by these statements as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission, including our most recent Form 10-Q and 10-K filings.
Speaker Change: In form 8-K filed with today's press release.
Speaker Change: Our SEC filings can be found on our website or on the Sec's website investors are cautioned not to place undue reliance on forward looking statements, we disclaim any obligation to update or revise these forward looking statements.
Philip Taylor: Investors are cautioned not to place undue reliance on forward-looking statements. We disclaim any obligation to update or revise these forward-looking statements. Please note that this conference call will be available for audio replay on our website at investor.singulargenomics.com in the presentations and events section. With that, I'll turn the call over to CEO Drew Spaventa.
Speaker Change: Please note that this conference call will be available for audio replay on our website at investor <unk> singular genomics dot com in the presentations and events section with that I'll turn the call over to CEO drew stood that up.
Speaker Change: Good afternoon, and welcome to singular genomics first quarter 2024 earnings call. It was another productive quarter and we look forward to updating you on the progress made across the business.
Andrew Spaventa: Good afternoon, and welcome to Singular Genomics' first quarter 2024 earnings call. It was another productive quarter, and we look forward to updating you on the progress made across the business. We will focus our call on the following areas. First, a summary of the first quarter results.
Speaker Change: We will focus our call on the following areas one a summary of the first quarter results to an update on the G Forex and our special sequencing work and three focus areas for the rest of 2024.
Andrew Spaventa: Two, an update on G4X and our spatial sequencing work. And three, focus areas for the rest of 2024. Before we get into these topics, I'd like to share some color around our shift in focus to space and our growing excitement for the G4x Spatial Sequencer. It has been a short period of time since we unveiled the G4X at AGBT in February. In that short time, we have spoken with dozens of space experts and customers.
Singular Genomics: Before we get into these topics I'd like to share some color around our shift in focus to spatial and our growing excitement in the <unk> space you'll sequencer.
Speaker Change: It has been a short period of time since we unveiled the G. Four exit AWT in February in that short time, we have spoken with many dozens of spatial experts and customers two things have become clear spatial is quickly growing in many customer segments and throughput is a major limitation the.
Andrew Spaventa: Two things have become clear. Spatial is quickly growing in many customer segments, and throughput is a major limitation. The demand profile for a solution that addresses this pain point is strong and growing. We believe G4X will be uniquely suited to address this pain point and has the potential to not just participate in, but to accelerate growth in Spatial. The setup for the business side is also encouraging, meaning that we plan to pass along cost savings and address a pain point for customers while supporting a high-margin, sustainable business.
Speaker Change: The demand profile for a solution that addresses this pinpoint is strong and growing we believe that <unk> will be uniquely suited to address this pain point and has the potential to not just participate but to accelerate growth in spatial the setup for the business side is also encouraging meaning that we plan to pass along cost savings and address.
Speaker Change: A pain point for customers, while supporting a high margin sustainable business.
Andrew Spaventa: The last piece that excites us is around our novel use of sequencing in space. The capability to directly perform sequencing in single cells will produce a novel data type and has the potential to offer a set of features and capabilities that will enable new types of research in some of the fastest growing areas that will potentially lead to better disease diagnoses, more personalized treatment, faster and more effective drug discovery and development, and an overall better understanding of biology.
Speaker Change: Last piece that excites us is around our novel use of sequencing in spatial capability to directly perform sequencing and single cells, who will produce a novel data type and has the potential to offer a set of features and capabilities that will enable new types of research and some of the fastest growing areas that will potentially lead to better disease diagnosis more person.
Speaker Change: <unk> treatment faster and more effective drug discovery and development and an overall better understanding of biology. In addition to the exciting development work to get to you for us to market. We are currently focused on supporting our G. Four customers the majority of which we expect to benefit from our move into spatial.
Andrew Spaventa: In addition to the exciting development work to get G4x to market, we are currently focused on supporting our G4 customers, the majority of which we expect to benefit from our move into space. Now, let's move into our first quarter results.
Speaker Change: Now, let's move into our first quarter results, we shipped 64 instruments during the quarter and generated <unk> 4 million in revenue.
Andrew Spaventa: We shipped six G4 instruments during the quarter and generated $0.4 million in revenue. Of these shipments, four were to academic core or medical center labs, and two were commercial labs, bringing our total G4 shipments to 30 as of March 31st. One of the most important focus areas for us during the quarter was to maintain our emphasis on supporting existing customers.
Speaker Change: Shipments forward academic core of our medical Center Labs, and two were commercial labs, bringing our told you for shipments to 30 as of March 31.
Speaker Change: One of the most important focus areas for us during the quarter was to maintain our emphasis on supporting existing customers. Many of our existing customers will likely transition to special customers over time, we continue to see improvements in system utilization and consumables pull through with the majority of systems in the field for several months now we are starting to see an uptick in usage with our highest month.
Andrew Spaventa: Many of our existing customers will likely transition to spatial customers over time. We continue to see improvements in system utilization and consumables pull through. With the majority of systems in the field for several months now, we are starting to see an uptick in usage, with our highest monthly total for consumables orders and shipments in April. Now, let's turn to G4X and our spatial sequencing work. As a reminder, G4X is designed to offer novel capabilities and unprecedented throughput for spatial profiling of tissue.
Speaker Change: They told for consumables orders and shipments in April.
Speaker Change: Now, let's turn to the <unk> and our special sequencing work as a reminder, the <unk> is designed to offer novel capabilities and unprecedented throughput for spatial profiling of tissue.
Andrew Spaventa: Its novel capabilities will include DirectSeq, which is the sequencing of RNA in situ and has the potential to open new areas of scientific discovery. In addition, G4X will offer readouts of targeted transcripts, targeted proteins, and a fluorescent H&E stain, all in the same tissue section. This combination of readout modalities will be offered at an unprecedented scale.
Speaker Change: Its novel capabilities will include direct seek which is the sequencing of RNA in situ and has the potential to open new areas of scientific discovery. In addition, the G. Four apps will offer readouts of targeted transcripts.
G. Four: And proteins and a fluorescent <unk> all in the same tissue section.
G. Four: This combination of readout modalities will be offered at an unprecedented scale with 40 square centimeters that flexible imaging area and single day turnaround times. The <unk> system is designed to enable labs to process 20 times more samples per week than existing technologies.
Andrew Spaventa: With 40 square centimeters of flexible imaging area and single day turnaround times, the G4x system is designed to enable labs to process 20 times more samples per week than existing technologies. As previously announced, we have shifted our internal work to focus more heavily on spatial sequencing and multiomics and to bring the G4x spatial sequencer to market. Our team has been heads down to implement this shift and is making excellent progress.
Speaker Change: As previously announced we shifted our internal work to focus more heavily on spatial sequencing and multi omics and to bring the G flex space Youll sequencer to market.
Our team: Our team has been heads down to implement this shift and is making excellent progress.
Andrew Spaventa: In R&D, we are advancing work on instrument and method development, expanding the types of tissue tested, and improving protocol performance for combined readout modalities. At the American Association for Cancer Research Conference in San Diego, our co-founder and CSO, Eli Glaser, hosted a talk covering some of the latest internal developments and progress with early collaborators. This included new G4x data sets that highlighted performance in human kidney, tonsil, lung, lymph node, breast, and colon SFPE samples.
Our team: In R&D, we are advancing work on instrument and method development expanding the types of tissue tested and improving protocol performance for combined readout modalities.
Andrew Spaventa: In addition, we presented data from two of our initial technology access partner projects, Dana-Farber Cancer Institute and the Broad Institute. At Dana-Farber, we worked with Dr. Catherine Wu to perform an analysis on the G4X for 35 bone marrow biopsy sections. G4X was able to provide high-quality transcript, protein, and fluorescent H&E data from bone marrow FFPE samples, typically a very difficult tissue type. In addition, the sections were processed in a single run, allowing the researchers to envisage larger-scale studies that have not previously been possible.
Our team: At the American Association for Cancer Research Conference in San Diego, Our co founder and CSO, Eli Glazer hosted a talk covering some of the latest internal developments and progress with early collaborators. This included new G. Forex datasets that highlighted performance in human kidney console lung lymph node breast and colon.
Speaker Change: S FTE samples.
Speaker Change: In addition, we presented data from two of our initial technology access partner projects, Dana Farber Cancer Institute and the Broad Institute at Dana Farber, We worked with Dr. Catherine Who's to perform an analysis on the G. Four extra 35 bone marrow biopsy sections that <unk> was able to provide high quality transcript.
The team: The team and for us in HD data from bone marrow ffbe samples typically a very difficult tissue type. In addition, the sections of our process in a single run, allowing researchers to envision larger scale studies that have not previously been possible.
Speaker Change: At the broad Institute, we worked with Dr. Paul Blaney to perform Institute sequencing of Christopher Guide RNA, plus proteins and HED imaging. This project showcase the <unk> ability to perform direct sequencing of variable regions applicable to CRISPR based gene editing screens and exciting and growing area of translational research.
Andrew Spaventa: At the Broad Institute, we worked with Dr. Paul Blaney to perform in-situ sequencing of CRISPR guide RNA, plus proteins, and H&E imaging. This project showcased the G4X's ability to perform direct sequencing of variable regions applicable to CRISPR-based gene editing screens, an exciting and growing area of translational research. In addition to these initial partners, we have expanded our TAP and research collaboration work with the initiation of several new projects and partners. We are seeing strong inbound interest from leading academics, researchers, and biopharmaceuticals, with a growing list of potential TAP projects.
Broad Institute: In addition to these initial partners, we have expanded our tap and research collaboration work with the initiation of several new projects and partners. We are seeing strong inbound interest from leading academics, researchers and biopharma with a growing list of potential tap projects. We look forward to sharing more details and data on these projects in the future.
Andrew Spaventa: We look forward to sharing more details and data on these projects in the future. Meanwhile, our commercial team has been actively building a funnel of opportunities through our presence at conferences and industry gatherings, targeted KOL and institution outreach, and discussions with existing GFOR customers that are interested in upgrading to the spatial capabilities of the GFOR Act. At the recently held ABRF conference in Minneapolis, we had an opportunity to meet with current and prospective Academic Core Lab customers.
commercial team: Our commercial team has been actively building a funnel of opportunities through our presence at conferences and industry gatherings targeted care well into the institution outreach and discussions with existing G for customers that are interested in upgrading to special capabilities of the G. Forex.
commercial team: At the recently held a B RF conference in Minneapolis, we had an opportunity to meet with current and prospective academic core lab customers.
Andrew Spaventa: We hosted several talks, presenting on the latest updates on the G4 sequencing platform and our planned advances in spatial sequencing with the G4X. Feedback from existing customers during this meeting was strong, with positive testimonials shared across multiple Core Lab Director panels as they described their lab sequencing experience with the G4. We hosted a well-attended customer event, which included existing customers and collaborators and scientific leaders in multi-omics. The event provided an opportunity to develop relationships and discuss opportunities for working together to bring G4X forward to advance their research.
commercial team: We hosted several talks.
G. Forex: Presenting on the latest updates on the G. Four sequencing platform and our planned advances in spatial sequencing with the G Forex fees.
Speaker Change: Feedback from existing customers. During this meeting was strong with positive testimonials shared across multiple core lab director panels as they describe their lab sequencing experienced with the G. Four we hosted a well attended customer event, which including existing customers and collaborators and scientific leaders and multi omics.
Speaker Change: The event provided an opportunity to develop relationships and discuss opportunities for working together to bring the G for export to advance their research. We are encouraged by the feedback from early collaborators and the level of interest from potential users coming out of these conferences and customer discussions.
Andrew Spaventa: We are encouraged by the feedback from early collaborators and the level of interest from potential users coming out of these conferences and customer discussions. We are already seeing a strong pipeline of new customer opportunities for G4X across academic core and medical center labs, biopharma, and CROs. In addition, we have early traction on the funnel of near-term service projects as part of the G4X Technology Access Services Program that launched in the second quarter, with interest from dozens of institutions.
Speaker Change: We are already seeing a strong pipeline of new customer opportunities for the <unk> across the academic core and medical Center Labs Biopharma and Crows. In addition, we have early traction in the funnel of near term service projects as part of the <unk> technology access services program that launched in the second quarter with interest from dozens of.
Speaker Change: Institutions.
Speaker Change: Turning to our focus areas for the rest of 2020 for our internal focus is centered around developing the <unk> platform and optimizing the special sequencing methods and protocols initially.
Andrew Spaventa: Turning to our focus areas for the rest of 2024, our internal focus is centered around developing the G4x platform and optimizing the spatial sequencing methods and protocols. Initially available as a service will be our V1 immuno-oncology panel with 300 genes, 12 proteins, and the ability to customize content. In addition, we continue to advance our TAP projects and research collaborations on new and innovative methods such as DirectSeq for exciting areas of research like early cancer detection, immune profiling, and CRISPR editing.
Speaker Change: Initially available as a service will be our <unk> immuno oncology panel with 300 genes 12 proteins and the ability to customize content.
Speaker Change: In addition, we continue to advance our tap projects and research collaborations on new and innovative methods such as direct seek for exciting areas of research like early cancer detection immune profiling and CRISPR editing.
We: We launched the <unk> technology access services earlier in the second quarter, and we intend to expand this capability in the coming months to support the inbound project interest received to date, we expect the ramp of service projects to be an important milestone in the second half of the year, enabling technical publications, producing kayrol testimonials around the technology and value proposition.
Andrew Spaventa: We launched the G4X technology access services early in the second quarter, and we intend to expand this capability in the coming months to support the inbound project interest received to date. We expect the ramp of service projects to be an important milestone in the second half of the year, enabling technical publications, producing KOL testimonials around the technology and value proposition, and generating commercial demand for G4X instruments. Lastly, we are preparing for the G4X Early Access Program, where a select number of customers will get early access to the G4X with a G4X system or an upgrade to their existing G4.
Kayrol: Generating commercial demand for G Forex instruments.
G Forex: Lastly, we are preparing for the <unk> early access program, where a select number of customers will get early access to the <unk> with the <unk> system or an upgrade to their existing G. For the intent of early access to both learn and incorporate feedback for broader commercial launch as well as to generate interest in demand through third party operation of the G. Four acts.
Andrew Spaventa: The intent of early access is to both learn and incorporate feedback for a broader commercial launch, as well as to generate interest and demand through third-party operation of G4X. Now, I'll turn the call over to Dalen to go through the details of our first quarter financial results.
unknown: Now I'll turn the call over to <unk> to go through the details of our first quarter financial results.
Dalen Meeter: Thank you, Drew. Revenue for the first quarter of 2024 was approximately $0.4 million, predominantly made up of $0.2 million from revenue recognized on one capital purchase instrument placement during the quarter and consumable sales of $0.2 million. We expect revenue from the other five instrument shipments to be generated over time as our customers purchase consumables for these instruments. Gross profit was negative $0.4 million in the first quarter of 2024, compared to $0.1 million in the first quarter of 2023.
Joe: Thank you Joe revenue for the first quarter of 2024 was approximately $4 million predominantly made up of $2 million from revenue recognized on one capital purchase instrument placements during the quarter and consumables sales of <unk> $2 million.
Joe Revenue: We expect revenue from the other five instrument shipments to be generated over time as our customers purchase consumables for these instruments.
Joe: Gross profit was negative $4 million in the first quarter of 2024 compared to <unk> $1 million in the first quarter of 2023.
Dalen Meeter: Gross margin was negative due to initial discounts on capital purchases, our use of the reagent rental and other non-capital purchase models, and higher costs associated with the support of system placement. Operating expenses in the first quarter of 2024 were $26.4 million compared to $25.4 million in the first quarter of 2023. These totals included non-cash stock-based compensation expense of $2.9 million in Q1 2024 and $3.1 million in Q1 2023. The year-over-year increase was primarily driven by severance costs incurred in the first quarter.
Joe Revenue: Gross margin was negative due to initial discounts on capital purchases or use of the reagent rental and other non capital purchase models and higher costs associated with the support of system placements.
Joe: Operating expenses in the first quarter of 2024 totaled $26 $4 million compared to $25 4 million in the first quarter of 2023.
Speaker Change: These totals included noncash stock based compensation expense of $2 9 million in Q1, 2024, and $3 1 million in Q1 2023.
Speaker Change: The year over year increase was primarily driven by severance costs incurred in the first quarter.
Dalen Meeter: The net loss in the first quarter of 2024 was $25 million, or $0.34 per share, compared to $23.6 million, or $0.33 per share, in the first quarter of 2023. The weighted average share count for the first quarter of 2024 used to calculate the net loss per share was approximately $73.9 million. And cash, cash equivalents, and short-term investments, excluding restricted cash, totaled $150.7 million. Cash burn for the first quarter was approximately $23.2 million, which was sequentially higher than the previous quarter, driven by the timing of certain compensation and benefits payments, severance payments, and other working capital items. We expect our cash burn in the second quarter to be lower sequentially as we start to realize a full quarter impact from the cost savings measures we implemented in March. Back to you, Drew.
Joe: Net loss in the first quarter of 2024 was $25 million or <unk> 34 per share compared to $23 6 million or <unk> 33 per share in the first quarter of 2023.
Joe: The weighted average share count for the first quarter of 2024 used to calculate net loss per share was approximately $73 9 million.
Speaker Change: Ending cash cash equivalents and short term investments, excluding restricted cash totaled $157 million cash.
Speaker Change: Cash burn for the first quarter was approximately $23 $2 million, which was sequentially higher than the previous quarter, driven by the timing of certain compensation and benefits payments severance payments and other working capital items, we expect our cash burn in the second quarter to be lower sequentially as we start to realize a full quarter impact from the cost savings measures we implemented.
Speaker Change: Centered in March <unk>.
Speaker Change: To you drew.
Taylor: Thanks Taylor.
Andrew Spaventa: In closing, I'd like to reiterate our conviction in the G4X opportunity. Singular is uniquely positioned to leverage our sequencing technology in Spatial to offer a compelling solution in G4X that addresses unmet needs in an exciting and growing market. We have a strong understanding of our capabilities and are confident in our ability to deliver this impactful product. While there is still work to be done to realize this opportunity, we believe we have the right team and sufficient runway to see this product to market. Now, let's open it up for questions, Operator.
Taylor: In closing I'd like to reiterate our conviction in the <unk> opportunity.
Taylor: <unk> is uniquely positioned to leverage our sequencing technology and special to offer a compelling solution. The <unk> that addresses unmet needs in an exciting and growing market. We have a strong understanding of our capabilities and are confident in our ability to deliver this impactful product. While there is still work to be done to realize this opportunity. We believe we have the right team and.
Speaker Change: Sufficient runway to see this product to market.
Operator: Now, let's open it up for questions operator.
Operator: Thank you the floor is now open for questions. If you wish to join the queue to ask a question. At this time you May press Star one on your telephone keypad since we do ask if listing on speaker phone today that you pick up your handset while asking your question to provide optimal sound quality once again that'll be star one.
Operator: Thank you. The floor is now open for questions. If you wish to join the queue to ask a question at this time, you may press star one on your telephone keypad. We do ask, if you are listening on speakerphone today, that you pick up your handset while asking your question to provide optimal sound quality. Once again, that'll be star one on your telephone keypad at this time. If you wish to join the queue to ask a question, please hold a moment while we pull for questions. And the first question today is coming from Matt Sykes from Goldman Sachs. Matt, your line is live. Please go ahead.
Operator: On your telephone keypad at this time, if you wish to join the queue to ask a question. Please hold a moment, while we poll for questions.
Operator: And the first question today is coming from Mac Sykes from Goldman Sachs. Matt. Your line is live. Please go ahead.
Matthew Carlisle Sykes: Hi, good afternoon, thanks for taking my questions.
Matthew Carlisle Sykes: Hi, good afternoon. Thanks for taking my questions. Maybe, Drew, just to start, you. I think in the press release you mentioned you need to add some capabilities to GFORX in order for it to be ready for the 2025 launch. What areas are you focused on for GFORX to add to those capabilities? What do you need to do prior to launch, you believe, outside of getting feedback from customers in the Early Access Program? Just wondering what other kinds of features you're looking at.
Matthew Carlisle Sykes: Maybe through just the start.
Matthew Carlisle Sykes: You I think in the press release, you mentioned you need to add.
Matthew Carlisle Sykes: Some capabilities in <unk> in order for it to be ready for 2025 launch what areas are you focused on Rajeev <unk> to add to those capabilities. What do you need to do prior to launch do you believe outside and getting feedback from customers in the early access program. Just wondering what are the kind of features youre looking at.
Matthew Carlisle Sykes: Hey, Matt Thanks for the question really appreciate it.
Andrew Spaventa: Hey, Matt. Thanks for the for the question. So where we are right now, we're running services, starting to solicit, you know, early services, and running TAP projects as a service. And currently, the, you know, the services are 150 genes; we have, you know, a dozen or so proteins in the fluorescent H&E, and then we also have a few DirectSeq service projects we're working on. In order to get what we're doing right now as a service, and then the one piece of expansion that we're doing right now, we're offering 150 genes.
Matthew Carlisle Sykes: So where we are right now we're running services.
Matt: Starting to solicit early services and running tap projects as a service.
Matt: And currently the services of 150 genes.
Matt: A dozen or so proteins in the <unk> and <unk> and then we also have a few direct seek service projects we're working on.
Speaker Change: In order to get what we're doing right now as a service.
Speaker Change: Into a product, where we can get it and sell the box and.
Speaker Change: And the kits, there's just a fair amount of your traditional product development work, where you are essentially hardening and optimizing everything.
Speaker Change: Some of it has to do with the bioinformatics pipeline.
Speaker Change: Some of it has to do with testing kind of the revised software as you recall the exact same box, it's different kits and then theres work around understanding and hardening and getting the protocols dialed in across different tissue types and then the one piece of expansion that we're doing right. Now we are offering 150 genes, we're moving that to 300 genes very quickly.
Andrew Spaventa: We're moving that to 300 genes very quickly. And that's the, you know, specification for the Q1 product. So it's going from 150 to 300. So, you know, the short answer to your question is really, you know, productizing it and getting it to a point where we can ship kits and have a very predictable user experience.
Speaker Change: And thats the spec for the Q1 products. So it's getting to from 150 to 300 so.
Speaker Change: The short answer to your question is really.
Speaker Change: Prototyping, it and getting it to a point, where we can ship kits and have a very predictable user experience.
Speaker Change: Got it. Thanks, that's very helpful. And then just how are you balancing you've got 30.
Matthew Carlisle Sykes: Got it. Thanks. That's very helpful.
Speaker Change: G Force.
Speaker Change: Shift today and so I'm.
Speaker Change: I'm, assuming a good portion of that are up and running.
Speaker Change: How are you balancing the support services needed for the existing installed base, while at the same time, you're ramping up <unk> and that's our primary focus, but you still need to support those customers and those take resources those customers could become <unk> customers in the future. So how do you think about expanding the resources on supporting the <unk> curve.
Matthew Carlisle Sykes: And then just how are you balancing – you've got 30 G4s shipped today, and so I'm assuming a good portion of that are up and running. How are you balancing the support services needed for the existing install base while, at the same time, you're ramping up G4X, and that's your primary focus, but you still need to support those customers, and that takes resources? Those customers could become G4X customers in the future. So, how do you think about spending the resources on supporting the G4s currently in the market versus sort of your cash burn targets and what you want to achieve with the G4X launch?
Speaker Change: The market versus sort of your cash burn targets and what you want to achieve for G for X launch.
Andrew Spaventa: It's another good question. You know, fortunately, having just 30 systems out there that are all in the U.S. from a support standpoint, geographically, is manageable. The other thing is the current 30 systems; they're running really well at this point. We've done a series of upgrades. You know, obviously, we've had some time now to harden the systems, but the uptime across the network for the last few months has been really strong in the mid-90%.
Speaker Change: Yes, its another good question.
Speaker Change: Fortunately, having just 30 systems out there that are all in the U S.
Speaker Change: From a support standpoint.
Speaker Change: Graphically as manageable.
Speaker Change: The other thing is the current 30 systems, there, they're running really well at this point, we've done a series of upgrades.
Speaker Change: Obviously, we've had a.
Speaker Change: Some time now to harden the systems, but the uptime across the network for the last few months has been really strong in the mid 90%.
Speaker Change: So we're not seeing nearly the level of field service calls that we once were and were able to support them pretty minimally from Fas FSC standpoint now.
Andrew Spaventa: So we're not seeing nearly the level of field service calls that we once were, and we're able to support them pretty minimally from an FAS and FSE standpoint now. They're kind of all up and running and working pretty well. That being said, we do know and understand that every resource is critical. So maintaining those FSEs and that support infrastructure is pretty important so that we keep the current customers happy, but we also start to train them for expanded skill sets to support the spatial kits that are coming.
Speaker Change: All up and running and working pretty well.
Speaker Change: That being said you know.
Speaker Change: We do know and understand that every resource is critical.
Speaker Change: About half of the existing customers and maybe even more we think bulk transition of G. Forex.
Speaker Change: So maintaining those fsc's and that support infrastructure is pretty important so that we keep the current customers happy, but we also start to train them for kind of expanded.
Speaker Change: No.
Speaker Change: Skill sets to support the spatial kits that are coming.
Andrew Spaventa: So we've thought a lot about it. We're trying to stay as lean as we possibly can. This is one area where there isn't a huge number of headcount to support the existing instruments given the stability of the network at this point, and it's also very in line with upgrades of existing customers and expanding the capability in G4X.
Speaker Change: No.
Speaker Change: We've thought a lot about it we're trying to stay as lean as we possibly can.
Speaker Change: This is one area, where it's not a huge number of head count to support the existing instruments given the stability of the network at this point and it's also very.
Speaker Change: In line with upgrades of existing customers and expanding the capabilities and G. Forex.
Speaker Change: Got it and if I can squeeze one more in for your daily just I know you mentioned the burn in the quarter was $23. Two you expect it to be lower in Q2 because of the cost savings will start kicking in.
Dalen Meeter: And if I could squeeze one more in for you, Dalen. I know you mentioned the burn in the quarter of 23.2. You expect it to be lower in Q2 because the cost savings will start kicking in. How should we be thinking about cash burn over the course of the full year of 24 and sort of the cadence of that as we move through the year? Yeah, hi, Matt.
Speaker Change: Can you be thinking about cash burn in the course of the full year 2004, and sort of the cadence of that as we move through the year.
Matt: Yeah, Hi, Matt.
Dalen Meeter: Yeah, you're right that the burn in Q1 was a little bit higher as we paid out some of the year-end accruals, as well as some of the severance associated with the reduction that we previously talked about that was implemented in March. The savings that we talked about on the last call, you know, we expected those to, you know, kind of ramp through the course of the year with the bulk of the headcount savings, you know, kind of being realized in March forward. I would expect Q2 operating expenses to be, you know, lower sequentially, probably in the range of kind of 10 to 15%. And then, you know, start to reduce a little bit in the second half from there as well. But that's, that's kind of how we're looking at the rest of the year from an expense perspective.
Matt: Yes, Youre right. The burn in Q1, it was a little bit higher as we paid out some of the year end accruals.
Matt: As well as some of the severance associated with the reduction that we.
Matt: We previously talked about that was implemented in March.
Matt: The savings that we talked about on the last call. We expected those to kind of ramp through the course of the year with the bulk of the head count savings being realized March.
Matt: Forward.
Matt: I would expect Q2 operating expenses to be.
Matt: Sequentially, probably in the range of 10% to 15% and then.
Matt: Start to reduce a little bit in the second half from there as well, but that's that's kind of how we're looking at the rest of the year from an expense perspective.
Matt: Got it thanks very much.
Operator: Thanks very much.
Matt: Thank you. Your next question is coming from Dan Brennan from TD Cowen Dan. Your line is live. Please go ahead.
Daniel Gregory Brennan: Thank you. Your next question is coming from Dan Brennan from TD Cowen. Dan, your line is live. Please go ahead.
Matt: Great. Thank you thanks for the questions guys.
Andrew Spaventa: Great, thank you. Thanks for the questions, guys. Maybe just the first one, can you just update us on kind of the funnel, you know, the TAP program? Just give us a sense, you know, say from the last time you updated us in the quarter to today, maybe how that changed.
Matt: Maybe just first of all can you just update us on.
Daniel Gregory Brennan: The funnel the tap program, just give us a sense.
Daniel Gregory Brennan: Say from the last time, you updated us at the quarter to today, maybe how that changed.
Daniel Gregory Brennan: Yeah happy to Dan Thanks.
Andrew Spaventa: Yeah, happy to Dan. Thanks for the question. So there are two funnels that we're kind of starting to track. One is the services funnel. There's quite a deep funnel for the services. We divide them into three different segments. There's the academic and core segment, there's a biopharma segment, and then there's a CRO segment. You know, the funnel's deep enough that I don't even have a specific number for you.
Daniel Gregory Brennan: Thanks for the question. So there is two two funnels that we're we're kind of starting to track one of the services funnel.
Dan: Theres quite a deep funnel on the services, we divide them into three different segments.
Daniel Gregory Brennan: There is the academic and core segment Theres, a biopharma segment, and then Theres a CRO segment.
Speaker Change: With this funnel is deep enough, where I don't even have a specific number for you I don't remember what we said last time I don't know $25 27 projects somewhere in there, but we're into a point where each one of those verticals in the funnel is pretty deep and we're trying to prioritize this service projects based on.
Andrew Spaventa: I remember what we said last time, I don't know, 25, 27 projects, somewhere in there, but we're at a point where each one of those verticals in the funnel is pretty deep, and we're trying to prioritize the service projects based on, you know, minimizing customization. So, you know, we offer a standard panel, very soon it'll be a 300-gene immuno-oncology panel with 12 proteins. We're trying to find as many service projects that fit within that panel without customization.
Speaker Change: Minimizing customization. So we offer a standard very soon it will be a 300 gene immuno oncology panel with 12 proteins. We're trying to find as many service projects that fit within that panel without customization and there is there is again, a really deep kind of.
Andrew Spaventa: And there's, again, a really deep kind of, you know, group of people in each one of those that are to a point where they've actually submitted a project request form. We're scoping the project, we're looking at tissue type, panel design, and all those types of things. But separately, we still have a funnel for the G4X.
Speaker Change: Group of people in each one of those to a point, where they've actually submitted a project request form.
Speaker Change: We're scoping the project, we're looking at tissue type panel design and all those types of things separately, we still have a final for the G. Forex.
Andrew Spaventa: It was the G4, now it's the G4X funnel, and we're largely prioritizing that funnel with early access customers that have an appetite to kind of work through the early placement and operation of the system with us. And we have, you know, well over a dozen people that are interested in early access. And we're going to choose them, you know, based on, again, the criteria of, you know, the volume of samples expected, and how much customization will or won't be needed.
G. Forex: It was the G four announced the G four X funnel and we're largely.
G four: Prioritizing that funnel with early access.
Speaker Change: Customers that have an appetite to kind of work through the.
Speaker Change: The early placement and operation of the system with us and we have well over a dozen people that are interested in the early access and we're going to choose.
Speaker Change: Based on.
Speaker Change: The criteria of.
Speaker Change: Volume of samples expected.
Speaker Change: But how much customization will or won't be needed.
Andrew Spaventa: And then there's also, you know, likely a number of existing customers that want an upgrade at early access. And that's an easy way for us to wade into early access since there's already an existing relationship and familiarity with the customer in the system. So, a lot of tracking and a lot of work to be done, but very encouraging.
Speaker Change: And then there's also likely.
Speaker Change: A number of existing customers that want an upgrade in early access and Thats, an easy way for us to wait into early access centers already have an existing relationship and familiarity with the customer in the system. So.
Speaker Change: A lot of tracking and a lot of work to be done, but very encouraging.
Speaker Change: And.
Joe Revenue: Thanks, Joe So.
Daniel Gregory Brennan: And thanks, too. What you discussed with Matt in terms of some of the progress you guys need to make commercially to be prepared. Like, is it still, can you just remind us specifically when you guys would look to be launched commercially, just kind of when in 2025 would that occur?
Joe Revenue: You mean.
Joe Revenue: What you discussed with Matt in terms of some of the progress you guys need to make commercially to be prepared.
Joe Revenue: Is it still can you just remind us specifically like when you guys would work.
Joe Revenue: To be launching commercially is that just kind of went in 'twenty five would that occur.
Andrew Spaventa: Yeah, so the way we're thinking about it right now, early access will be revenue-producing units. There will be more support, and we'll kind of set expectations with those customers appropriately. And depending on how those first few units go, in Q4 this year, towards the end of Q4, it'll probably be a learning for us on how quickly we can pull off the more broader commercialization, which would happen kind of in and around Q2 of next year.
Matt: Yeah. So so the way we're thinking about it right now early access will be revenue producing units.
Joe Revenue: There'll be more support.
Joe Revenue: Set expectations with those customers appropriately and depending on how those first few units go in Q4 this year towards the end of Q4, it'll probably be.
Speaker Change: A learning for us.
Speaker Change: How quickly we can pull a more broader commercialization right now we're planning more broadly.
Speaker Change: Yes, commercialization, what happened kind of in and around Q2 of next year, but if the demand continues to pull and people want to take an early access version of the of the box we may be able to essentially extend early access and do quite a bit more maybe earlier in the year and a lot of that learning is going to happen over the next.
Andrew Spaventa: But if demand continues to pull in and people want to, you know, take an early access version of the box, we may be able to, you know, essentially extend early access and do quite a bit more, maybe earlier in the year. And a lot of that learning is going to happen over the next six to nine months as we, you know, start to get services up and running, and we get these few early access placements up.
Speaker Change: Six to nine months as we start to get service is up and running and we get these few early access placements up so it will largely be customer driven I think what's very unique about this is that pulled a little bit different we're not providing something thats.
Andrew Spaventa: So it will largely be customer-driven. I think what's very unique about this is that the pull is a little bit different. We're not providing something that's, you know, an alternative sequencer where there's an incremental benefit. We're providing something here that, in the eyes of the customer, is pretty unique and valuable given the kind of lack of high-throughput spatial offerings right now. And it's very clear to us that there is a lot of demand for space.
Speaker Change: Yeah.
Speaker Change: An alternative sequencer, where theres incremental benefit we're providing something here that I think in the eyes of the customers is pretty unique and valuable given given kind of the lack of high throughput spatial offerings right now and it's very clear to us that there is a lot of demand and special people want to run more samples and I think that's going to translate to kind of.
Andrew Spaventa: People want to run more samples, and I think that's going to translate to, you know, kind of a stronger willingness to take something that's a little bit earlier. Where that lands, we'll have to, you know, gauge it as we go.
Speaker Change: A stronger willingness to take something a little bit earlier, but where that lands, we'll have to gauge it as we go.
Speaker Change: And then maybe just maybe a couple of quick ones any sense on when you would have or customers or when do you think you would have the first publications out in the market either on a standalone or kind of maybe comparing and contrasting the performance.
Daniel Gregory Brennan: And then maybe just, maybe a couple of quick ones. Any sense of when you'd have customers or, you know, when you think you'd have the first publications out in the market, either standalone or kind of, you know, maybe comparing his interest in the performance of your, you know, G4X versus some of the other players?
Speaker Change: The <unk> cut versus some of the other players.
Andrew Spaventa: Yeah, I think we want to get to our commercial panel, and like I said, we're still in the process of getting from our 150 to 300 gene panel.
Speaker Change: Yes, I think we want to get to our commercial panel.
Speaker Change: And like I said, we're still in the process of getting from our 152.
Speaker Change: 300 gene panel I think we will have that up and running as a service probably by the end of this quarter into Q3.
Andrew Spaventa: I think we'll have that up and running as a service probably by the end of this quarter or beginning of Q3. And, you know, a lot of the service projects that we're engaging with, we expect those to result in publications as they're, you know, a lot of them are academics. So I think we'll start to see publications later this year on the platform. And again, the intent would be to get those publications and really start to work with people once we get the 300 gene panel up and running, which is pretty imminent.
Speaker Change: A lot of the service projects that we're engaging with we expect those to result in publications as there are lot of them are academics. So I think we'll start to see publications later this year on the platform and again.
unknown: The intent would be to get that those publications and really start to work with with people. Once we get the 300 gene panel up and running which is which is pretty pretty imminent.
unknown: And maybe last one just on.
Daniel Gregory Brennan: And maybe last one, just on, you know, Illumina has made overtures about, you know, looking to enter space in some way, shape, or form, unclear kind of when and how that would occur, but just can you just remind us maybe, you know, what it is about the G4 chemistry that allows you to kind of have this kind of performance and just, you know, how do you think about the ability for this platform to remain differentiated as potential new Yeah, I think, you know.
Speaker Change #102: Alumina has.
Speaker Change: <unk> made overtures about looking to enter space or in some way shape or form unclear kind of wondering how that would occur but just.
Alumina: Can you remind us maybe what it is about the GE for chemistry that allows you to kind of.
Alumina: To have this kind of performance and.
Speaker Change #100: How do you think about the ability for this platform to remain differentiated as potential new entrants come in.
Speaker Change #101: Yes, I think.
Andrew Spaventa: Yeah, I think, you know, people want, you know, one thing, but it can't really be reduced to that. The reason we're able to run and offer, you know, kind of the scale and speed on spatial really comes down to the foundation of spatial work and applying sequencing as a readout for spatial. And that work started back in 2019, originally on the PX. And there are quite a few things that go into it.
Speaker Change: It's people want one thing it can't really be reduced to that the reason were.
Alumina: We're able to run off.
Speaker Change #103: Offer kind of the scale and speed on spatial really.
Speaker Change: Comes down to the foundation of special work and apply and sequencing as a readout for spatial.
unknown: And that work started back in 2019, originally on the PX and Theres quite a few things that go into it a few of the things that I think we refer to it as for us.
Andrew Spaventa: A few of the things that I think were fortuitous for us have really enabled us to offer what we know will be very unique. One of those things is the nature of our chemistry.
Speaker Change #104: Have really enabled us to offer what we what we know will be very unique one of those things is the nature of our chemistry.
Speaker Change: <unk> chemistry.
Speaker Change: Very low concentration it works very well in tissue, it's not very sticky its very fast and we've developed it over the last now going on five years.
Speaker Change: To work really well in tissue, it's been optimized to do that that's part of the work that's been done and on the instrument side. We design an instrument that has speed and flexibility and theres a lot of innovation behind the instrument being able to offer a really large imaging area across four flow cells.
Andrew Spaventa: You know, it's SPS chemistry, it's very low concentration, it works very well in tissue, it's not very sticky, and it's very fast. And we've developed it over the last, you know, going on five years to work really well in tissue; it's been optimized to do that. That's part of the work that's been done. And on the instrument side, you know, we designed an instrument that has speed and flexibility. And there's a lot of innovation behind the instrument, being able to, you know, offer a really large imaging area across four flow cells, being able to image in four colors, being able to also image in a z stack, and doing so very fast, that all works really well with the chemistry in a spatial context.
Speaker Change: Being able to image and for colors.
Andrew Spaventa: Being able to also imaging Z stack and doing so at very fast that all works really well with the chemistry in a spatial context and those those those does multiple things and really just working on key method development applying SBS chemistry to spatial.
Andrew Spaventa: And, you know, those, those, those, multiple things and really just working on key method development, applying SPS chemistry to space, you know, all those things together have allowed us to offer something that's unique. It's not just one thing. I, you know, there are deep barriers, there's also a tremendous amount of IP that we filed on the use and application of sequencing as a modality in space. So I think I think we feel pretty good about the product profile from a technology standpoint and an IP standpoint. And not that there won't be others that move in at that point in time, but it's it's a pretty unique offering at this point, we feel confident in.
Andrew Spaventa: All those things together have allowed us to offer something that's unique it's not one thing.
Speaker Change: There's deep barriers Theres also a tremendous amount of IP that we filed on the use and application of sequencing as a modality and spatial.
Andrew Spaventa: So I think I think we feel pretty good about.
Andrew Spaventa: The product profile from.
Andrew Spaventa: Technology standpoint, and an IP standpoint, and not that there won't be others that move in at that point in time, but it's a pretty unique offering at this point, we feel confident.
Andrew Spaventa: Great. Thanks, Joe.
Andrew Spaventa: Thank you.
Operator: This does conclude today's question and answer session as well as today's conference call and webcast. We do thank you for your participation. You may disconnect at this time. And once again, thank you for your participation.
Andrew Spaventa: This does conclude today's question and answer session as well as today's conference call and webcast we.
Operator: We do thank you for your participation you may disconnect at this time and have a wonderful day and once again. Thank you for your participation.