Q2 2024 Seer Inc Earnings Call
and assisting our customers to generate novel data while reducing our operating cash burn to preserve our strong balance sheet with approximately $344 million in cash, cash equivalents, and investments.
Omid Farokhzad: and Kesh Burn to preserve our strong balance sheet with approximately $344 million in cash, cash equivalents, and investment, starting with enhancing access. During the second quarter, we significantly expanded our sales and marketing team, including the addition of multiple new regional business managers. While these new team members are ramping up, we're already seeing their contributions and an uptick in New Customer Interest and Lead Generation. We're excited about the talented individuals that have come on board to capture the large opportunity in proteomics ahead.
starting with enhancing access.
During the second quarter, we significantly expanded our sales and marketing team, including the addition of multiple new regional business managers.
While these new team members are ramping up, we're already seeing their contributions and upticks in new customer interest and lead generation.
We're excited about the talented individuals that have come on board to capture the large opportunity in proteomics ahead.
Omid Farokhzad: We continue to serve our customers through the Seer Technology Access Center, or STAC, which allows for the photograph user to run samples in their own lab and have Seer run the mask pack, or alternatively, provide end to end study services from sample to data.
Speaker Change: We continue to serve our customers through the Seer Technology Access Center, or STAC.
Speaker Change: which allows for the Proteograph user to run samples in their own lab and have Seer run the mass spec, or alternatively, provide end-to-end study services from sample to data.
Omid Farokhzad: We continue to see strong demand for STAC, which is an important accelerator in the accessibility of unbiased proteomics data, given elongated sales cycles for CAPEX, resulting from a conservative funding environment. Increased accessibility to the protograph will continue to catalyze the generation of third-party data and publications, further highlighting the transformative potential of our technology and facilitating adoption. In line with this focus on generating data to catalyze broader adoption, we continue to prioritize running large sample cohorts for key collaborators, providing staff services at a lower price point.
Speaker Change: We continue to see strong demand for STAC, which is an important accelerator in the accessibility of unbiased proteomics data, given elongated sales cycles for CAPEX resulting from a conservative funding environment.
Speaker Change: Increased accessibility to the protograph will continue to catalyze the generation of third-party data and publications, further highlighting the transformative potential of our technology and facilitating adoption.
Speaker Change: In line with this focus on generating data to catalyze broader adoption, we continued to prioritize running large sample cohorts for key collaborators, providing stacked services at lower price points.
Omid Farokhzad: We expect these customers will present and publish their studies shortly to reinforce the differentiated value proposition of the Praurogra product suite and serve as key references to drive continued adoption of our technology. On our last early call, we announced that given the success we have seen with the stack in the U.S., we were planning to expand into Europe with the launch of the stack Lab in Germany.
Speaker Change: We expect these customers will present and publish their studies shortly, further reinforcing the differentiated value proposition of the Proteograph product suite, and serve as key reference to drive continued adoption of our technology.
Speaker Change: On our last earning call, we announced that given the success we have seen with STAC in the U.S., we were planning to expand into Europe with the launch of a STAC lab in Germany. I'm excited to share that the lab was opened in June and is now operational.
Omid Farokhzad: I'm excited to share that the lab was opened in June and is now operational. This expansion will give researchers in Europe the ability to unlock biological insights through comprehensive, deep, unbiased proteomics research. We look forward to continuing to address a major unmet need for researchers across the region. We expect a subset of our stack customers in the U.S. and Europe will choose to bring our platform in house, depending on the utilization volume, or use preferences, once they get to see the value of biological insights generated by the photograph. Some customers may prefer to continue working with Stacks or one of our global centers of excellence in a support capacity.
Speaker Change: This expansion will give researchers in Europe the ability to unlock biological insights through comprehensive, deep, unbiased proteomics research. We look forward to continuing to address a major unmet need for researchers across the region.
Speaker Change: We expect a subset of our stack customers in the U.S. and Europe will choose to bring our platform in-house depending on their utilization volume or use preferences once they get to see the value of biological insights generated on the protograph.
Speaker Change: Some customers may prefer to continue working with Stacks or one of our global centers of excellence in a service capacity.
Omid Farokhzad: We have also seen customers who have the proteograph in-house use our stack or work with our COE as they manage their own internal resources during periods of surge. Our goal is simply to provide the most cost-effective, highest-quality data for our customers, and we imagine this happening through a combination of the stack or direct purchase of the proteograph. In addition, the Strategic Instrument Placement Program, or SIPP, has been an important catalyst for adoption, as we have previously seen multiple prior SIPP customers purchase instruments.
Speaker Change: We have also seen customers who have the protograph in-house use our stack or work with our COE as they manage their own internal resources during periods of surge.
Speaker Change: Our goal is simply to provide the most cost-effective highest quality data for our customers and we imagine this happening through a combination of stack or direct purchase of the photographs.
Speaker Change: In addition, the Strategic Instrument Placement Program, or SIPP, has been an important catalyst for adoption as we have previously seen multiple prior SIPP customers purchase instruments.
Omid Farokhzad: In April, we launched our 2024 Seer Insight grant program aimed to support innovative and collaborative researchers who require access to comprehensive unbiased proteomics insights to advance scientific discovery. We saw great interest in the program and more than doubled our goal for a number of applications. We gave awards to six recipients to support their studies leveraging our cutting-edge technology and expertise from sample preparation to data analysis. These included awards to support 4 pilot studies of 40 samples each and 2 proof-of-concept studies of 160 samples.
Speaker Change: In April , we launched our 2024 Seer Insights Grant Program aimed to support innovative and collaborative researchers who require access to comprehensive, unbiased proteomics insights to advance scientific discovery.
Speaker Change: We saw great interest in the program and more than doubled our goal for a number of applicants.
Speaker Change: We gave awards to six recipients to support their studies leveraging our cutting-edge technology and expertise from sample preparation to data analysis.
Speaker Change: These included awards to support four pilot studies of 40 samples each and two proof-of-concept studies of 160 samples each.
Omid Farokhzad: These researchers are part of leading academic and government labs in the U.S. and Canada, and we look forward to facilitating novel insights across the oncology, cardiometabolic, and neurology fields. We see these three therapeutic areas as key areas of growth for the Pertigraf product. We will complete the studies in our stacks and grandfeeze.
Speaker Change: These researchers are part of leading academic and government labs in the US and Canada and we look forward to facilitating novel insights across the oncology, cardiometabolic and neurology fields.
Speaker Change: We see these three therapeutic areas as key areas of growth for the Pertograph product suite.
Speaker Change: We will complete the studies in our stack and grantees will have an opportunity to present their findings at a prominent scientific conference in 2025. Importantly, we believe this program drove increased awareness and demand for our technology.
Omid Farokhzad: We'll have an opportunity to present their findings at a prominent scientific conference in 2025. Importantly, we believe this program will drive increased awareness and demand for our technology. Moving on to the validation of our technologies, to date, we have 10 preprints and 11 peer-reviewed publications showcasing the value of Seer technology. These are important customer publications and include multiple papers in Nature and Nature Communications, with several more to be published in leading journals in the coming months. Because of these publications, we have seen an increase in the number and nature of conversations we're having with potential customers.
Speaker Change: Now moving on to the validation of our technology.
Speaker Change: To date, we have 10 preprints and 11 peer-reviewed publications showcasing the value of peer technology.
Speaker Change: These are important customer publications and include multiple papers in Nature and Nature Communications, with several more to be published in leading journals in the coming months.
Speaker Change: With this publication we have seen an increase in the number and nature of conversations we're having with potential customers.
Omid Farokhzad: Since our last earnings call, we were excited to see three more manuscripts from Chris Mason's lab at Weill Cornell Medicine go through the peer review process and be published in high impact journals. These publications further exemplify how the photograph provides differentiated insights into space-flight for the Omic alteration for precision medicine and biomarker discovery. The first two manuscripts published in Nature highlight and discuss data and a sample repository for clinical cellular and multi-omic profiles from multiple space missions.
Speaker Change: Since our last learning call, we were excited to see three more manuscripts from Chris Nation's lab at Wild Hornel Medicine, go through the peer review process and be published in high impact journals.
Speaker Change: These publications further exemplify how the protographs provide differentiated insights into spaceflight cardiomic alteration for precision medicine and biomarker discovery.
Speaker Change: The first two manuscripts published in Nature, highlight and discuss data and example repository for clinical cellular and multi-omic profiles from multiple space missions.
Omid Farokhzad: The first-of-its-kind data resource, which includes plasma proteomic data generated from the proteograph workflow, offers the life sciences and aerospace communities information that can be further leveraged to study aerospace-associated physiological changes. The third manuscript published in Nature Communication described the study that fear scientists also collaborated on with the researchers to provide the secret home from astronauts of the first Australian Space Flight Mission, this space X inspiration for using multiple methods, including proteomic profiling from plasma using a photograph workflow. Additionally, the scientists evaluated brain-related changes and changes in the blood-brain barrier in spaceflight mice.
Speaker Change: The first-of-its-kind data resource, which includes plasma proteomic data generated from the proteograph workflow, offers the life sciences and aerospace communities information that can be further leveraged to study aerospace-associated physiological changes.
Speaker Change: The third manuscript, published in Nature Communication, describes a study that SEER scientists also collaborated on, where the researchers profiled a secret home from astronauts...
Speaker Change: Of the first all civilian space flight mission, this space X inspiration for using multiple methods, including proteomic profiling from plasma using a photograph workflow.
Speaker Change: Additionally, the scientists evaluated brain-associated changes and changes in the blood-brain barrier for spaceflight mice.
Omid Farokhzad: These papers highlight the ability of Seer's technology to provide unbiased insights into the differential expression of proteins that may represent dysregulated processes. Using the photograph, the researchers were able to pinpoint protein changes in plasma never before possible, which could offer new avenues of therapeutic and biomarker discovery. In the future, this data can be used to monitor additional physiological changes over time to then create focused and personalized countermeasures. Additionally, in June, Prognomic completed the largest and deepest unbiased multi-omics plasma biomarker study to date, utilizing the combination of the Proteograph product suite and the thermoscientific Orbitrap astral mass spectrometer for their proteomic analysis.
Speaker Change: These papers highlight the ability of SEERS technology to provide unbiased insights into the differential expression of proteins that may represent dysregulated processes.
Speaker Change: Using the photograph, the researchers were able to pinpoint protein changes in plasma never before possible, which could offer new avenues of therapeutic and biomarker discovery.
Speaker Change: In the future, this data can be used to monitor additional physiological changes over time, to then create focus and personalized countermeasures.
Speaker Change: Additionally, in June , Prognomic completed the largest and deepest unbiased multi-omics plasma biomarkers study to date, utilizing the combination of the Proteograph product suite and the thermoscientific Orbitrap astral mass spectrometer for their proteomic analysis.
Omid Farokhzad: This pioneering research involved a multi-cancer case-control cohort of 2,840 subjects, achieving the detection of over 13,000 protein groups in plasma across the study, with an average of over 8,200 protein groups in plasma per sample. Importantly, the researchers were able to find putative novel biomarkers for early detection of lung cancer.
Speaker Change: This pioneering research involved a multi-cancer case control cohort of 2,840 subjects.
Speaker Change: Achieving the detection of over 13,000 protein groups in Plasma across the study with an average of over 8,200 protein groups in Plasma per sample.
Speaker Change: Importantly, the researchers were able to find putative novel biomarkers for early detection of lung cancer.
Omid Farokhzad: This study represents a significant milestone in cancer biomarker research, demonstrating the value of efficiently and rapidly conducting deep, unbiased plasma proteomic studies at scale. Prognomic's findings highlight unprecedented depth and sensitivity in proteomics, unlocking significant biological insights for early cancer detection. Prognomic will use these results to develop an LBT for the early detection of lung cancer. In addition, we continuously customers submitting manuscripts to pre-print servers, which is commonly the first step to make a study publicly available while the manuscript is undergoing the peer review process for publication.
Speaker Change: This study represents a significant milestone in cancer biomarker research demonstrating the value of efficiently and rapidly conducting deep unbiased plasma proteomic studies at scale.
Proyromic: Proyromic's findings highlight an unprecedented depth and sensitivity in proteomics, unlocking significant biological insights for early cancer detection. Proyromic will use these results in development LVT for the early detection of lung cancer.
Speaker Change: In addition, we continuously see customers submitting manuscripts to pre-print servers, which is commonly the first step to make a study publicly available while the manuscript is undergoing peer review process for publication.
Omid Farokhzad: In June, researchers from Weill Cornell Medicine, Qatar, and Harvard Medical School and Brigham and Women's Hospital, in collaboration with Seer and True Diagnostics, submitted a manuscript to bioRxiv. This manuscript, currently under review, contains data from a genome-wide associated study called Jihad of Protein, Quantitative Trade, Low Size, or PQDL, that represents the first mass spectrometry-based PQTL study of such scale This study leverages the Proteograph-to-Compare Mass Spectrometry Drive PQTL identification to those PQTLs identified with affinity-based proteomic technology.
Speaker Change: In June, researchers from Wild Hornil Medicine, Qatar and Harvard Medical School of Brigham Women's Hospital in collaboration with Seer and True Diagnostic submitted a manuscript to bioarchives.
Speaker Change: This manuscript currently under review contains data from a genome-wide associated study, also called GWAS.
Speaker Change: of protein, quantitative, trade, loss, or PQTLs that represent the first mass spectrometry-based PQTL study of such scale and volume depth.
Speaker Change: This study leverages the protograph to compare mass spectrometry-derived PQTL identification to those PQTLs identified with affinity-based proteomic technologies.
Omid Farokhzad: Researchers developed a novel data analysis protocol to account for genetic variance within the analyzed peptide to reduce the epitope effect, which is the false identifications of PQTL resulting from genetic variance within the protein. These effects caused a downward or upward change in the measured protein level, but not in the true protein level, and potentially skew analysis and result in false conclusions.
Speaker Change: Researchers developed a novel data analysis protocol to account for genetic variants within the analyzed peptides to reduce epitope effects.
Speaker Change: We show the false identifications of PCTL, resulting from genetic variants within the protein.
Speaker Change: These, quote, epitope effects
Speaker Change: caused a downward or upward change in the measured protein level, but not in the true protein level, and potentially skew analysis and resulting in false conclusions.
Omid Farokhzad: Using the Protograph product suite, the researchers demonstrated the technology's capability to identify and replicate PQTLs that have not been previously identified in much larger affinity-based GWAS studies. In addition, the researchers demonstrated the technology's ability to differentiate between putative epitope effects and Tupi KTLs in previous large-scale GWAS studies performed by a friendly base for the Omid Technology and Estimate that a large fraction of previously identified PCTLs are, in fact, pitted, epitope, and induced, all the facts.
Speaker Change: Using the Protograph product suite, the researchers demonstrated the technology's capability to identify and replicate PQTLs that have not been previously identified in much larger affinity-based GWAS studies.
Speaker Change: In addition, the research has demonstrated the technology's ability to differentiate between successive effect of effects.
Speaker Change: and TRUPI-QTLs in previous large-scale GWAS studies performed by affinity-based proteomic technologies.
Speaker Change: and to estimate that a large fraction of previously identified PQTLs are, in fact, putative, epitope-induced artifacts.
Omid Farokhzad: This is an important paper for the field of proteomics and proteogenomics for three reasons. First, it is the first time a proof of principle large-scale PQTL study was undertaken using deep unbiased proteomics with mass spectrometry, and the established methodology in the study forms the basis for much larger future studies. Second, the study demonstrates the ability of mass spectrometry-based omics to confirm previously identified PQTLs and also to mark a subset of previous PQTLs as potential artifacts induced by epitope effects, which is subject to further investigation.
Speaker Change: This is an important paper for the field of proteomics and proteogenomics for three reasons.
Speaker Change: First, it is the first time a proof-of-principle large-scale PQTL study was undertaken using deep unbiased proteomics with mass spectrometry, and the established methodology in this study forms the basis for much larger future studies.
Speaker Change: Second...
Speaker Change: The study demonstrates the ability of mass spectrometry based for the omics to confirm previously identified PQTLs and also to mark a substantive previous PQTLs as potential artifacts induced by epitope effects which are subjective further investigation.
Omid Farokhzad: And third... Producinomic customers now have the option of pursuing deep and large-scale pecateal studies using mass spectrometry, whereas previously they were limited to targeted affinity-based approaches as the only deep and scalable alternative. Deep and unbiocardiomic approaches deployed at large scale can potentially unlock novel biological insights that could not be uncovered by targeted affinity-based technology.
Speaker Change: And third...
Speaker Change: Producers and Omicustomers now have the option of pursuing deep and large-scale PCTO studies using mass spectrometry, whereas previously they were limited to targeted affinity-based approaches as the only deep and scalable alternatives.
Speaker Change: Deep and unbiased for the Omic approaches deployed at large scale can potentially unlock novel biological insights that could not be uncovered by targeted affinity-based technologies.
Omid Farokhzad: The customer studies I highlighted above are possible because of the attributes that are uniquely provided by the Proteograph product suites, including first, depth of coverage that is enabled by our assay sensibility; check-in, scale-up studies that are enabled by our assay's throughput and automation. Third, the robustness that is enabled by our proprietary engineered nanoparticles that Seer has pioneered, and Sour, David Horn, and Horn speed up data analysis that is enabled by our cloud-based protograph analysis suite software.
Speaker Change: The customer studies I highlighted above are possible because of the attributes that are uniquely provided by the Protograph product suites, including
Speaker Change: First,
Speaker Change: Depth of coverage that is enabled by our assay sensibility.
Speaker Change: Check in!
Speaker Change: Scale-up studies that is enabled by our assay's throughput and automation.
Speaker Change: Third.
Speaker Change: The robustness that is enabled by our proprietary engineered nanoparticles that CIR has pioneered.
Speaker Change: and Forth.
Speaker Change: Speaking of data analysis, that is enabled by our cloud base photograph analysis suite software.
Omid Farokhzad: While our focus this year has been on enhancing access to our technology and enabling customers to produce data, we have also made enhancements to our technology and recently launched a new version of our Protograph Analysis Suite to make the interface more intuitive, speed up and tailor analysis results for customers, and improve some functionality. We expect this new version will increase overall adoption and enhance data analysis workflow. Initial feedback on the updated interface has been very positive.
Speaker Change: While our focus this year has been on enhancing access to our technology and enabling customers to produce data, we also made enhancements to our technology and recently launched a new version of our photograph analysis suite.
Speaker Change: to make the interface more intuitive, speed up and tailor analysis results for customers.
Speaker Change: and improve some functionality. We expect this new version will increase the overall adoption and enhance data analysis workflow.
Speaker Change: Initial feedback on the updated interface has been very positive.
Omid Farokhzad: At Seer, we invent and develop products for deep, unbiased proteomics at scale, and we believe that our commercial solution is a step function above other commercial products. I'd like to take a moment to thank our incredible team for their work and efforts to improve the solutions we provide our customers. Before I turn the call over to David, I wanted to reiterate that I remain incredibly bullish on the potential of our technology to transform our understanding of the period.
Speaker Change: As here, we invent and develop products for deep unbiased proteomics at scale, and we believe that our commercial solution is a step function of other commercial products.
Speaker Change: I would like to take a moment to thank our incredible team for their work and efforts to improve the solutions we provide our customers.
Speaker Change: and
Speaker Change: Before I turn to call over to David, I wanted to reiterate that I remain incredibly bullish on the potential of our technology to transform our understanding of the podium.
Omid Farokhzad: ProDeGraph data produced and presented by our customers is truly outstanding, and we fundamentally believe in the long-term value of our differentiated technology. Looking ahead, we will continue to execute against our core strategies of driving evidence and publication, continuing to enhance access to the protograph, innovate with our products, and expand our applications. And I remain confident that our technology will help unlock the gateway to the proteome. With that, I will now turn the call over to David.
Speaker Change: photographs, data produced and presented by our customers is truly outstanding and we fundamentally believe in the long term value of our differentiated technology.
David: Looking ahead, we will continue to execute against our core strategies of driving evidence and publications, continue to enhance access to the protograph, innovate with our products, and expand our applications.
Speaker Change: And I remain confident that our technology will help unlock the gateway to the proteome. With that, I will now turn the call over to David.
David Horn: Thanks, Omid. Total revenue for the second quarter of 2024 was $3.1 million, representing a decrease of 23% compared to $4 million in the second quarter of 2023. It was primarily due to a decrease in related party grant revenue. Revenue recognized primarily consisted of sales of the Pertigraf SP-100 instrument, consumable kits, and service revenue, of which $583,000 was attributed to related parties. Product revenue for the second quarter of 2024 was $2.2 million, including $420,000 of related party revenue, and consisted of sales of SP100 instruments and concealable kits.
David: Thanks, Omid. Total revenue for the second quarter of 2024 was $3.1 million, representing a decrease of 23% compared to $4 million in the second quarter of 2023. It was primarily due to a decrease in related party grant revenue.
David: Revenue recognized primarily consisted of sales of the Pertigraf SP-100 instrument, consumable kits, and service revenue, of which $583,000 was attributed to related parties.
Speaker Change: Product revenue for the second quarter of 2024 was $2.2 million, including $420,000 of related party revenue, and consisted of sales of SP-100 instruments and consumable kits.
Speaker Change: During the second quarter, we continue to see pressure on catpacks' budgets and elongated sales cycles for the outbreak purchase of new instrumentation.
Speaker Change: Excluding related party revenue, product revenue grew year over year primarily driven by an increase in consumable kid sales.
David Horn: Service revenue was $845,000 in the second quarter of 2024, including $163,000 of related party revenue, and primarily consisted of revenue related to stacked service projects. While service revenue grew sequentially and year over year if you're in by stack in the second quarter, we continue to prioritize running projects for key strategic studies that will result in additional presentations and publications in the near term. But we're conducted at a lower price point than our typical SAC service project.
Speaker Change: Service revenue was $845,000 in the second quarter of 2024, including $163,000 of related party revenue, and primarily consisted of revenue related to stacked service projects.
Speaker Change: While service revenue grew sequentially and year-over-year driven by STAC in the second quarter, we continued to prioritize running projects for key strategic studies that would result in additional presentations and publications in the near term, but were conducted at a lower price point than our typical STAC service projects.
David Horn: This had the effect of lowering the amount of service revenue that was realized in the second quarter. Other revenue was $46,000 for the second quarter of 2024 and consisted of lease and shipping revenue. Total gross profit was $1.7 million for the second quarter of 2024, representing a gross margin of 56%. Compared to $2.3 million in the second quarter of 2023, representing a gross margin of 57%. Gross margins were driven by a higher percentage of consumable and service sales in the second quarter relative to instrument sales. However, we continue to expect variability in our gross margin on a quarter by quarter basis since the proportion of instrument consumable and service revenue will fluctuate for any given quarter.
Speaker Change: This had the effect of lowering the amount of service revenue that was realized in the second quarter.
Speaker Change: Granted other revenue was $46,000 for the second quarter of 2024 and consisted of lease and shipping revenue.
Speaker Change: to
Speaker Change: Total gross profit was $1.7 million for the second quarter of 2024, representing a gross margin of 56%.
Speaker Change: Compared to $2.3 million in the second quarter of 2023, representing a gross margin of 57%.
Speaker Change: Gross margins were driven by a higher percentage of consumable and service sales in the second quarter relative to instrument sales. We continue to expect variability in our gross margin on a quarter-by-quarter basis since the proportion of instrument consumable and service revenue will fluctuate for any given quarter.
David Horn: Total operating expenses for the second quarter of 2024 were $28.8 million, including $7.7 million of stock-based compensation, a decrease of 5% compared to the $30.2 million, including $9.8 million of stock-based compensation in the second quarter of 2023. Research and development expenses for the second quarter of 2024 were 12.7 million dollars, a decrease of 10% compared to 14.1 million dollars in the second quarter of 2023. The decrease in R&D expenses was primarily due to a decrease in employee and stock-based compensation expenses and a decrease in labor storage.
Speaker Change: Total operating expenses for the second quarter of 2024 were $28.8 million, including $7.7 million of stock-based compensation, a decrease of 5% compared to the $30.2 million, including $9.8 million of stock-based compensation in the second quarter of 2023.
Speaker Change: Research and development expenses for the second quarter of 2024 were $12.7 million, a decrease of 10% compared to $14.1 million in the second quarter of 2023.
Speaker Change: The decrease in R&D expenses was primarily due to a decrease in employee and stock-based compensation expenses and a decrease in laboratory expenses.
David Horn: Salving General and Administrator expenses for the second quarter of 2024 were $16.1 million, in line with the prior period. Net loss for the second quarter of 2024 was $22.9 million compared to $23.4 million in the second quarter of 2023. Although winning the quarter with approximately 344.6 million dollars in cash, cash equivalents, and investment, free cash flow loss was approximately $22.5 million for the six months into June 30, 2024. And, as previously stated, we estimate that our 2024 free cash flow loss will be less than our free cash flow loss in 2023.
Speaker Change: Selling general and administrative expenses for the second quarter of 2024 were $16.1 million in line with the prior period. Net loss for the second quarter of 2024 was $22.9 million compared to $23.4 million in the second quarter of 2023.
Speaker Change: We ended the quarter with approximately 344.6 million dollars in cash, cash equivalents and investments.
Speaker Change: Free cash flow loss was approximately $22.5 million for the six months ended June 30, 2024. And as previously stated, we estimate that our 2024 free cash flow loss will be less than our free cash flow loss in 2023.
David Horn: Turning to our outlook for the year, while we continue to see healthy interest in the Prairie Raff product suite and in the number of opportunities we are pursuing, we are experiencing elongated sales cycles due to continued funding and macroeconomic challenges. This dynamic, when coupled with our results from the first half of 2024, leads us to believe that there will be a slower recovery in the second half of the year than contemplated in our previous guidance.
Speaker Change: Turning to our outlook for the year, while we continue to see healthy interest in the Proteograph product suite and in the number of opportunities we are pursuing, we are experiencing elongated sales cycles due to continued funding and macroeconomic challenges.
Speaker Change: This dynamic, we're coupled with our results from the first half 2024, we just believe that there will be a slower recovery in the second half of the year and contemplate it in our previous guidance. As such, we now expect revenue to be in the range of $13-15 million for 2024, and we're to our previous guidance of $16-18 million.
David Horn: As such, we now expect revenue to be in the range of $13 to $15 million for 2024, compared to our previous guidance of $16 to $18 million. As previously announced, our Board of Directors authorized a $25 million share repurchase program in May of this year. Under this program, we repurchased approximately $3.7 million of Seer Class A common stock at an average cost of $1.84 per share during the second quarter. As of June 30th, we had approximately $21.3 million in authorization remaining under this share repurchase program. At this point, I'd like to turn the call back to Omid for closing comments.
Speaker Change: [inaudible]
Speaker Change: As previously announced our Board of Directors authorized a $25 million share of a purchase program in May of this year. Under this program, we're going to purchase approximately $3.7 million of the share of a class 8 common stock in an average cost of a $1.84 per share during the second quarter. As of June, curious, we had approximately $21.3 million in authorization for meeting under the share of purchase program. At this point, I'd like to turn the call back to a meeting for closing comments.
Omid Farokhzad: David, while we continue to navigate a challenging macroenvironment for the adoption of novel technology, I have never been more confident in the power of our technologies to change the trajectory of proteomics research. We remain focused on enhancing access to the image of products we produce and assisting our customers to generate novel data in order to capture the huge opportunity ahead. I am grateful to our team for their hard work and dedication, and I look forward to keeping you updated on our progress. With that said, we will now open it up for questions. Afraider?
Speaker Change: Thank you, David. While we continue to navigate a challenging macroenvironment for the adoption of novel technology, I have never been more confident in the power of our technology to change the trajectory of proteomics research.
Speaker Change: We remain focused on enhancing access to the Proterra product suite and assisting our customers to generate novel data in order to capture the huge opportunity ahead.
Speaker Change: I'm grateful to our team for their hard work and dedication and I look forward to keeping you updated on our progress. With that, we will now open it up for questions. Operator?
Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star one to join the queue, and your first question comes from the line of Yuko Oku of Morgan Stanley. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Thank you. We will now begin the question and answer session.
Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.
Speaker Change: And if you would like to withdraw your question, simply press the star 1 again. If you are called upon to ask your question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue.
Jason (on behalf of Yuko Oku): Hi, this is Jason on behalf of Yuko. Thank you for taking our questions. So first, maybe just to start off, you noted seeing some elongated sales cycles. Could you comment on the length of the sales cycle that you saw in the second quarter? And how does the length compare to what you would consider to be a normalized sales cycle? How did this trend over the quarter and, in particular, in June and July? Did it worsen? Or did it stabilize? So any comment on the length and trend you're seeing would be appreciated. Thank you.
Speaker Change: And your first question comes from the line of Yuko Oku of Morgan Stanley .
Jason: Hi, this is Jason. I'm for Yuko. Thank you for taking our questions. So first, maybe just to start off, so you noted seeing some elongated sales cycles. Could you comment on the length of the sales cycle that you saw in the second quarter? And how does the length compare to what you would consider to be a normalized sales cycle? How did this trend over the quarter, in particular in June and July ? Did it worsen? Did it stabilize? So any comment on the length and trend you are seeing would be appreciated. Thank you.
David Horn: Sure, thanks Jason. It's David.
Speaker Change: Sure, thanks Jason, it's David.
David Horn: Look, in terms of the overall sales cycle, I think, as I said in the comments, we have a good pipeline of opportunities, and certainly we expected to see some of those, more of those come to fruition in the second quarter than we did. So I think, I think, you know, in terms of what it's doing to the sales cycle, I think it's just pushing it out, and I, you know, again, we hope it's, it's, you know, moves out a quarter or, you know, maybe two.
David: Look, in terms of the overall sales cycle, I think...
David: As I said in the comments, we have a good pipeline of opportunities and certainly we expected to see some of those more of those come to fruition in the second quarter than we did. So I think in terms of what it's doing to the sales cycle, I think it's just pushing it out and again we hope it's...
David Horn: It's really around budgets and budget cycles for folks. So again, I think it just reflects more broadly what we're seeing in terms of constrained capital budgets around instrumentation and just people not having the dollars right now to purchase it, especially around novel technologies such as the proteograph.
David: It's, you know, moves out a quarter or, you know, maybe two. It's really around budgets and budget cycles for folks. So, again, I think it just reflects.
David: More broadly into what we're seeing in terms of constrained capital budgets around instrumentation and just people not having the dollars right now to purchase it, especially around novel technologies such as the protograph.
David Horn: Guys, thank you for sharing that. Then I made this as a follow-up question. Could you provide some color on your confidence and visibility into the revenue ramp into H? It seems at the midpoint of your new guidance, you're implying about 56% revenue in the second half. So where are the key underlying assumptions around the acceleration and the top line into H? Is it purely based on forecasts, or do you have a backlog, or are you baking in any budget flash dynamics and forties? Any color on your confidence and visibility into the second half ramp would be appreciated. Thank you.
Speaker Change: Thank you for sharing that.
Speaker Change: Then, maybe just as a follow-up question, could you provide some color on your confidence and visibility into the revenue ramp in 2H? It seems at midpoint of your new guidance, you're implying about 56% revenue in the second half. So, what are the key underlying assumptions around the acceleration, the top line in 2H? Is it purely based on forecasts or do you have a backlog or are you baking any budget flush dynamics in 4Qs? Any color on your confidence and visibility into the second half ramp would be appreciated. Thank you.
David Horn: Yeah, so we are seeing, and we are feeling pretty good about the second half ramp, and it really comes down to a number of factors that you mentioned. One, we do have obviously the pipeline, you know, interestingly from the publications that we have out there now, and we have, you know, a number of those out there now that have been published in the first and second quarters. We are, you know, having more interest, more conversations, more people looking at doing some potentially larger studies, and so that is what gives us confidence that in the second half, we will continue to see an uptick. That said, we continue to see STAC doing quite well, and so we are pretty confident that the second half and our revised guidance is, you know, we feel comfortable with. Thank you.
Speaker Change: Yeah, so we are seeing, we are feeling pretty good about the second half.
Speaker Change: Ramp, and it really comes down to a number of factors that you that you mentioned. One, we do have obviously the pipeline. You know, interestingly, from from the publications that we have out there now, and we have, you know, a number of those out there now that have been published in the first and second quarter,
David: We are, you know, having more interest, more conversations.
David: More people looking at doing some potentially larger studies.
David: And so that's what gives us confidence that in the second half we will continue to see an uptick. That said, we continue to see stack.
David: We're doing quite well, and so we're pretty confident that the second half and our revised guidance is, you know, we feel comfortable with.
Jason (on behalf of Yuko Oku): Got it. Thank you for sharing that. And then maybe, just like as a final question, so with the launch of Stack in Germany, I know it's early days, but could you provide some color around the traction it has generated so far? Could you talk a little bit about the market opportunity you see in Europe, and how does the market opportunity for the proteograph in Europe compare to the U.S.? Do you see the opportunity being larger than the U.S., smaller, or more or less the same?
Speaker Change: Got it. Thank you for sharing that. And then maybe just like as a final question, so with the launch of Stack in Germany, I know it's early days, but could you provide some color around the traction it has generated so far? Could you talk a little bit about the market opportunity you see in Europe , and how does the market opportunity for the proteograph in Europe compare to the US? Do you see the opportunity being larger than the US, smaller, or more or less the same? Thank you.
Omid Farokhzad: Thank you.
Omid Farokhzad: Jason Romit here. I mean, obviously, this stack in the U.S. was the right call for us for two reasons. It's kind of building on the point that David made in that. This has been a capex constrained by the customers that we and just about everybody else are experiencing for novel technologies like the photograph, and the stack really lowered the barrier for customers to begin to experiment. Pertigraph Data, I expect a subset of those customers may choose to bring a Pertigraph in house, so as you know, some customers refer to work on a service-based in any way, and if they do, long term, we don't want to be servicing those customers; we would ask them to work with our COEs, but that said. We weren't able to provide a similar type of support to our That site became operational in June.
Omid: Jason, Omid here.
Speaker Change: I mean obviously this stack in the U.S. was the right call for us for two reasons, kind of building up on the points that David made, in that
Speaker Change: There has been a capex constraint from the customers that we and just about everybody else is experiencing for novel technologies like the proteograph.
Speaker Change: and the stack really lowered the barrier of our customers to begin to experience.
Speaker Change: Photographed Data
Speaker Change: I expect a subset of those customers may choose to bring a photograph in-house, so as you know,
Speaker Change: Some customers prefer to work on a service basis anyway, and if they do, long term, we don't want to be servicing those customers. We would ask them to work with our COEs. Now, that said…
Speaker Change: We weren't able to provide a similar type of support to our European customers and that was the motivation.
Speaker Change: to open the EU stack in Germany. That site became operational in June . We are beginning to receive the first round of customer samples and processing those.
Speaker Change: I think the ratio in terms of
Speaker Change: The revenue that we're expecting from the Europe stack versus US stack will probably be along the same lines that we're seeing in terms of sales between Europe and US.
Speaker Change: And so I think the service is going to basically follow the product revenue in terms of a percent of our revenue on a going forward basis.
Speaker Change: And I look forward to giving you a bit more detail in terms of the EU stack capacity and demand as we get clarity on it. It's the early days, so it's premature for me to comment on that.
Jason (on behalf of Yuko Oku): God, I appreciate our time together. Thank you, guys.
Operator: Again, if you would like to ask a question, please press star 1 on your telephone keypad. And your next question comes from the line of Dan Brennan of TD Cowen. Please go ahead.
Speaker Change: I appreciate your time. Thank you, guys.
Speaker Change: Again, if you would like to ask a question, please press star 1 on your telephone keypad. And your next question comes from the line of Dan Brennan of TD Cowen. Please go ahead.
William (on behalf of Dan Brennan): Hi, this is William on Dan's behalf. My first question is, you talked about some of those publications. How have these recent publications aided in your conversations with customers? And how long should it ultimately take for a third-party publication to drive meaningful revenue inflation? If you could just maybe give me a timeline on that, thank you.
William: Hi, this is William for Dan. My first question is, you talked about some of those publications. How have these recent publications
Speaker Change: Cated in your conversation with customers.
Speaker Change: And how long should it ultimately take for a third party publication to drive meaningful review and question on if you could spend to give me a time on that.
Omid Farokhzad: William, Omid here, and thank you for the question. Look, I think... What drives demand for products like the photograph is demonstration and validation of the differentiated biological insights that you uniquely get from the product, and that the value that the product gives you is cost-effective and is easy to use, etc. We obviously feel extremely bullish about the value proposition of the photograph, and we have since day one. What is fantastically rewarding to see is that that value proposition is becoming increasingly clear, probably to a more dramatic level than I had expected, in the hands of our customers.
Speaker Change: William, Omid here and thank you for the question.
Speaker Change: Look, I think...
Speaker Change: What drives demand for product like the photograph is demonstration and validation.
Speaker Change: of the Differentiated Biological Insight.
Speaker Change: that you uniquely get from the product and that the value that product gives you is cost-effective and it's easy to use, etc.
Speaker Change: We obviously feel extremely bullish about the value proposition of the protograph, and we have since day one.
Omid Farokhzad: Meaning, the types of studies that a customer is able to do and the kinds of biological insight that a customer is able to gain simply would not have been possible to do without the proteograph. And I'll give you two examples of that that make the point for me.
Omid Farokhzad: One is, if you look at this study that Prognomic did in early detection of lung cancer... Day investigated 2800 subjects with Lan Cancer, at various stages, with comorbid controls, smokers that don't have cancers but also healthy, non-smokers. The photograph allowed them to look at the proteome of those subjects deep to 289,000 proteins per subject that allowed them to identify protein biomarkers for early detection that you could never do if you didn't use the photographs because you could either not go deep enough, or you couldn't scale it to have done 2,800 subjects, and both the depth and the scale were needed to achieve the data.
Speaker Change: The program allows them to look at the protium of those subjects deep to a tune up 80 509000 proteins for subjects that allowed them to identify protein biomarkers for early detection that you could never do if you didn't use the prettier graph because you could either not go deep enough.
Speaker Change: Or you couldn't scale is to have done 2800 subjects.
Speaker Change: And both the depth and this scale was needed to achieve to data.
Omid Farokhzad: The consequence of that was that they have now gotten the best-in-class early detection classifier for lungs that would not have been possible otherwise. And then if you look at a proteogenomics study from Carsten Suri, again, the largest, deepest PQTL study ever done using an unbiased approach, and what Carson's study showed is that when you look at a mass-packed deep mass-packed base, PQTL study, because you're looking at multiple peptides across the length of the protein, it significantly decreases F2FFFFFFFFFFFFFFFFFF [inaudible] which is a major problem when you do similar types of studies with targeted approaches.
Speaker Change: The consequence of that was that they have now gotten the best in class early detection classify it.
Speaker Change: That would not have been possible otherwise.
Speaker Change: And then if you look at our protein genomic study from Carsten theory.
Speaker Change: Again, the largest deepest PQ <unk> study ever done using an unbiased approach.
Speaker Change: And what Carsten study showed is that when you look at <unk> and mass spec a deep mass spec based PQ <unk> study because you are looking at multiple peptides across the length of the protein it's significantly decreases epitope effect.
Speaker Change: Which is a major problem when you do similar types of studies with targeted approaches.
Omid Farokhzad: And so you identify accurate QQPLs, and you can actually identify previously falsely identified QQPLs. Again, that study would not have been possible if you couldn't have done it in the depth and the scale that is uniquely possible by the photograph. I think as customer data and the differentiated value proposition become evident, the customer is seen, the tone of the conversation, the level of interest, the incoming interest, literally changing just in the past few months.
Speaker Change: And so you identify.
Speaker Change: Accurate <unk> and you can actually identify previous defaults. The identified <unk> again that study would not have been possible. If you couldn't have done the depth and the scale that is uniquely possible by the Purdue gap I think as customer data and a differentiated value proposition becomes ebb.
Speaker Change: Evident.
Speaker Change: The customer adoption becomes a lot easier to do we are already seeing the tone of the conversation the level of interest the incoming interest.
Speaker Change: Yes.
Speaker Change: Literally changing just in the past few months if I look at the number of publications that has come out in total there is 11 peer reviewed publications, but importantly, eight of them have come just in the last six months. So we are the velocity and the sloped by wish publications are coming is rapidly increasing at the customers' experience.
Speaker Change: And the project graph and we're seeing our conversations with the prospective customers also changing as a reflection of these positive data coming from our customers.
William (on behalf of Dan Brennan): Thank you so much for that answer. I need to ask one more question, Randy, a briefer question. With in your sales funnel, could you, would it be possible to just discuss this split between far-mind academic customers and how your conversations are progressing with these customer classes? Yeah, that's a great question.
Speaker Change: Thank you so much for that answer.
Speaker Change: I can just ask one more question.
Speaker Change: A brief question.
Speaker Change: Within your sales funnel could you, let me bucket and Scott the split.
Speaker Change: Between pharma and academic customers and how your conversations are progressing when it comes to.
Speaker Change: Classes.
David Horn: Yeah, that's a great question, William, thank you. In kind of dovetailing on what Omid just said, you know, what's interesting about that is that we've seen a kind of a shift in the pipeline, whereas our revenue to date is about 60% commercial, 48% academic. You know, that is actually flipped for the pipeline, and as you see, the pipeline's about 60% academic, 40% commercial in terms of opportunities, and I think that's a function of these publications coming out and the academics taking notice, you know, starting to apply for grant funding to get funding for the technology, and so it's really encouraging that while the commercial folks have been quicker to move just because they have more budget flexibility to act if they want to, the academics have shown a lot of interest, and we're seeing that reflected in our pipeline of opportunities.
Speaker Change: Yes, that's a great question and thank you.
Operator: Again, if you would like to ask a question, please press star 1 on your telephone keypad. As there are no further questions at this time, that concludes our Q&A session and today's call. Thank you everyone for joining us. You may now disconnect. [music]
Speaker Change: And kind of Dovetailing on what Amit just said what's interesting about that is that we've seen a kind of a shift in the pipeline.
Speaker Change: Whereas our.
Speaker Change: Our revenue to date is about 60% commercial 48% academic.
Speaker Change: That is actually flipped for the pipeline and as you see the pipeline is about 60% academic 40% commercial in terms of opportunities and I think thats a function of these publications coming out.
Speaker Change: And the academic is taking notice.
Speaker Change: Starting to apply for a grant funding to get funding for these.
Speaker Change: For the technology and so it's really encouraging.
Speaker Change: While the commercial folks have been have been quicker to move just because they have more budget flexibility.
Speaker Change: To act if they want to.
Speaker Change: The academics.
Speaker Change: They have shown a lot of interest and we're seeing that reflected in our pipeline of opportunities.
Speaker Change: Thank you very much.
Speaker Change: Okay.
Speaker Change: Again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: As there are no further questions at this time that concludes our Q&A session and today's call. Thank you everyone for joining you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Operator: Zachary Smith, David Horn, Omid Farokhzad, Rachel Olson, Marta Nazarovets, Yuko Oku, Carrie Mendivil, Seer Zachary Smith, David Horn, Omid Farokhzad, Rachel Olson, Marta Nazarovets, Yuko Oku, Carrie Mendivil, Seer Zachary Smith, David Horn, Omid Farokhzad, Rachel Olson, Marta Nazarovets, Yuko Oku, Carrie Mendivil, Seer Zachary Smith, David Horn, Omid Farokhzad, Rachel Olson [inaudible] [music] and David. Thank you. Thank you.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Operator: [music].
Operator: [music].
David Horn: During the second quarter, we continued to see pressure on cattex budgets and elongated sales cycles for the outright purchase of new instrumentation. However, related party revenue, product revenue grew, year over year, primarily driven by an increase in consumable kitsail.
Omid Farokhzad: We are beginning to receive the first round of customer samples and processing those. I think the ratio in terms of the revenue that we expect from the European stack versus US stack will probably be along the same lines that we're seeing in terms of sales between Europe and the US. And so I think the service is going to basically follow the product revenue in terms of the percent of our revenue on a going forward basis.
Omid Farokhzad: If I look at the number of publications that have come out, in total, there are 11 peer-reviewed publications, but importantly, eight of them have come out just in the last six months. So we are the velocity and the smoke by which publications are coming is rapidly increasing, and customers are experiencing the photograph, and we're seeing our conversations with prospective customers also changing as a reflection of these positive data coming from our customers.
Omid Farokhzad: And I look forward to giving you a bit more details in terms of the EU stack capacity and demand as we get more clarity on that. But it's the early days, so it's premature for me to comment on that.