Q4 2024 Quantum-Si Inc Earnings Call
Speaker Change: Thank you for standing by and welcome to Quantum SI's fourth quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded.
Speaker Change: Good afternoon, and thank you for joining us on today's call. We will provide a business update review our operating results for the fourth quarter and full year of 2024 and provide our initial thoughts on 2025.
Speaker Change: After that we will open the call for questions.
Speaker Change: I will begin with a reminder of our three corporate priorities to accelerate commercial adoption.
Speaker Change: To deliver on our innovation roadmap and to preserve our financial strength.
Speaker Change: Our first corporate priority is to accelerate commercial adoption.
Speaker Change: 'twenty 'twenty four was an important year in the commercialization of our next generation protein sequencing technology and platinum instrument.
Speaker Change: The year began with our transition into full commercial launch at the end of the first quarter, followed by consistent quarter over quarter revenue growth throughout the year and concluded with our first quarter in excess of $1 million in revenue.
Speaker Change: Along the way, we significantly diversified our customer base from one that entered the year made up of largely academic researchers in the United States to a customer base spanning multiple market segments and geographies.
Speaker Change: Today, our customer base has a healthy mix of academic biotech pharma government and contract research organizations.
Speaker Change: In addition, we built an international distribution channel that currently has 18 partners, giving us access to an attractive growing global market opportunity for our products.
Speaker Change: I am pleased with how we closed out 2024 with total revenues of $1 $2 million in the fourth quarter and $3 $1 million for the full year 2020 for these.
Speaker Change: These results represented 52% increase in revenue over the third quarter of 2024, and a 183% increase in annual revenue on a year over year basis.
Speaker Change: The changes we made to our commercial strategy throughout 2024 pay dividends in the fourth quarter as we observe greatly improved commercial execution across all aspects of our strategy from lead generation to sales execution, delivering our strongest quarter ever in terms of both revenue and new instrument sales.
Speaker Change: We are also pleased to report that during the fourth quarter of 2024, we achieved a significant milestone having sold our 50, it's platinum instrument.
Speaker Change: In addition to nearly tripling revenue in 2024 as compared to 2023, we also executed on key distribution agreements for our products globally.
Speaker Change: As announced in November of 2024, we entered into a distribution agreement with <unk> for the North American market.
Speaker Change: Disagreement augments our current direct sales efforts and once fully implemented significantly increases the number of sales professionals actively engaged in selling our products across all end user markets in North America.
Speaker Change: We are currently in the sales training and implementation phase of this relationship and expect to complete this process during the first quarter of 2025.
Speaker Change: Turning now to our global channel, we exited 2024 with 18 International distribution partners. The international expansion, we executed on during 2024 added coverage to our existing direct and distribution footprint in Western Europe, Eastern Europe, and Asia and expanded our presence into new countries within the middle East.
Speaker Change: Africa, South America, and the South Pacific regions.
Speaker Change: While we are still in the early stages of our international commercialization efforts. We are very pleased with the initial end user traction we are seeing as well as the interest in our platform in general.
Speaker Change: One key learning from the early commercialization effort is that despite a rapidly growing interest in proteomics research in these regions. The cost of many of the legacy Toro genomics instruments as well as the infrastructure and specialized staff required to run these systems makes them inaccessible to many researchers.
Speaker Change: Platinum slow capital cost simplified workflow and automated data analysis provides a realistic option for researchers in these regions looking to integrate in advanced proteomics platform into their research.
Speaker Change: We are optimistic that this is an early indication of the potentially compelling international opportunity for our technology and we plan to continue to build out our international channel network to fully capture this emerging opportunity in 2025 and beyond.
Speaker Change: In addition to our focus on commercial execution. During 2024, we established a dedicated scientific affairs team to work directly with customers and key opinion leaders to publish and present data demonstrating the value of next generation protein sequencing.
Speaker Change: In addition to the focus on external data generation, our scientific affairs team works closely with our commercial and R&D teams to publish data about specific aspects of our technology like data analysis or specific applications of our technology like protein Barcoding.
Speaker Change: Over the course of December of 'twenty 'twenty four and January of 2025, four manuscripts were submitted for peer review and in parallel published as pre prints on bio archive.
Speaker Change: The first paper was from our R&D team and covered our new protein Barcoding kit, including the workflow and analytical performance validation results.
Speaker Change: Importantly, the validation data determined the lower limit of detection as low as 50 Center mall and a 10 full dynamic range demonstrating the methods sensitivity in detecting low abundance variance.
Speaker Change: The second paper was also from our R&D team and was focused on protium <unk>, our comprehensive bioinformatics pipeline for single amino acid variance.
Speaker Change: Study described in this paper demonstrates the ability of protium view to perform robust single amino acid variant detection and quantification with applications ranging from proteoform characterization to protein mixtures and quality control assays.
Speaker Change: The third paper with from researchers at the University of Virginia. This foundational study illustrates the capacity of next generation protein sequencing to detect proteoform variation at the single amino acid level, including variance associated with disease phenotypes that are not detectable with existing technologies like mass spectrometry.
Speaker Change: And finally, the fourth paper was from researchers at Northwestern University.
Speaker Change: Study highlights the synergy of complementary protein detection methods in this case mass spectrometry and next generation protein sequencing to more comprehensively characterized proteoform relevant to biological interactions.
Speaker Change: We are excited to see these first four manuscripts being submitted for peer review publication and expect that trend to continue throughout 2025 as our scientific affairs team is actively engaged with researchers across the broad range of applications and market segments to publish the results of their ongoing research.
Speaker Change: Finally, I am pleased to announce that we have formed a world class Scientific Advisory Board led by Dr. Gloria Shenkman from the University of Virginia.
Speaker Change: Our scientific Advisory Board is made up of an outstanding group of scientists from academic research and industry that bring deep experience with protein and DNA sequencing protein modifications in relation to disease, bioengineering and molecular delivery systems as well as consumable development and product development.
Speaker Change: I'd encourage you to visit our website to learn more about our scientific advisory Board members. We look forward to collaborating with this distinguished group of scientists as we continue to expand the utility and utilization of next generation protein sequencing in the global proteomics market.
Speaker Change: Our second priority is to deliver on our innovation roadmap.
Speaker Change: Over the course of 2020 for our R&D team delivered two new sequencing kits, a new library prep kit, a barcoding kit and two new software workflows, specifically protein inference, and a single amino acid variant detection and quantification tool called Proteus view.
Speaker Change: At a high level the kit launches expanded our protium coverage significantly reduce the sample input amount required and improve the overall sample success rates across a broad range of proteins and applications.
When combined with the software workflows customers experienced a consistent flow of new capabilities that allowed them to pursue an ever increasing range of protein analysis applications sample types and proteins of interest.
Speaker Change: In addition in January we announced the launch of platinum pro with shipping expected to begin during the first quarter of 2025.
Speaker Change: Platinum Pro is an evolution of platinum that offers a streamlined and more efficient processing experience for the user.
Speaker Change: The ability to process data onboard or in the cloud and includes promos, which enables customers to develop custom applications using the power of our single molecule kinetic detection technology.
Speaker Change: Next I would like to provide a recap of the innovation roadmap, we laid out at our Investor day on November 20th 2024.
Speaker Change: First we reviewed the proteomics market in the long term growth drivers.
Speaker Change: The proteomics market is a large important and growing market, which is still in its relative infancy.
Speaker Change: Some examples of the long term growth drivers. We shared include large scale screening studies that once completed will drive the need for follow on studies to more deeply characterize the most clinically and therapeutically actual proteins identified. Additionally.
Speaker Change: Additionally, the move to greater use of artificial intelligence tools, whether in drug development protein engineering or multi omics analysis will require vast amounts of data to be generated to train the models in.
Speaker Change: In both cases, we believe that tools like next generation protein sequencing will be a key tool to drive these research initiatives forward.
Speaker Change: Second we laid out a new instrument and consumable architecture that can scale to billions of reeds and when combined with other technology development initiatives creates a clear path to de Novo sequencing.
Speaker Change: The Proteus platform will be the first platform to incorporate this new architecture, and we expect Proteus to launch in the second half of 2026.
Speaker Change: At a high level Proteus will offer significantly more reads per sample more samples per run and greater workflow automation than our current platform.
Speaker Change: As an example, our current platform platinum process is a single consumable per run and that consumable contains 2 million wells.
Speaker Change: Proteus is being designed to process to consumables at a time and each consumable is expected to contain up to 80 million wells for a total of 160 million wells per run.
Speaker Change: This expanded number of wells can be used to process more samples per run or it can be used for extremely deep analysis of a single or small number of samples.
I'm a development perspective, the Proteus program is derisked compared to a typical new platform development project in two ways.
Speaker Change: First we can utilize many aspects of our current commercially available technologies, such as surface chemistry consumable fabrication methods library prep and sequencing chemistry.
Speaker Change: And second we can take advantage of the advancements in the field of optics that had been developed over the past decade to meet the needs of next generation DNA sequencing platforms.
Speaker Change: Finally, we shared data from our research initiatives that showed the vast capability of our core technology to be extended into other areas of proteomics beyond protein sequencing.
Speaker Change: Based on the data presented we believe our core technology is the only commercially available technology that can enable single molecule top down and bottoms up proteomics methods.
Speaker Change: In summary, we believe that our Proteus platform and core technology are capable of addressing the broadest range of proteomics analysis methods of any technology in the market today.
Speaker Change: We expect to unlock that potential through a combination of both internal R&D initiatives as well as strategic partnerships to ensure that Proteus will enable every lab to be a core lab without the need to own multiple instruments are a specialized facilities and staff to perform proteomics research.
Speaker Change: If you'd like to learn more about any of these topics I would encourage you to visit the Investor Relations section of our website, where we have a comprehensive slide deck, an audio recording of the fall event.
Speaker Change: In the coming months, we will certainly provide you with updates on the Proteus development process to allow you to understand our progress relative to our anticipated launch date in the second half of 2026.
Speaker Change: The key milestone this year is successful protein sequencing on a prototype Proteus system by the end of 2025.
Speaker Change: We certainly have numerous other incremental milestones that we will achieve throughout the development process and as those items come up we will provide you updates as appropriate.
Speaker Change: Additionally for 2025, we announced today that we expect to launch a version for sequencing kit in the third quarter of the year.
Speaker Change: We expect that this new sequencing kit will further increase protium coverage and protein accessibility via new recognizes and cutters.
Speaker Change: We are also continuing to advance other product development initiatives across library prep application development and software and we expect to provide updates to you in the coming months on these programs.
Speaker Change: Our third priority is to preserve our financial strength.
Speaker Change: We remain committed to utilizing our capital in the most efficient manner that maximizes shareholder value.
Speaker Change: We will continue to be nimble and adjust our capital deployment strategy at the business or market may require.
Speaker Change: To that end post our Investor day presentations and partnership announcements in November of 2024, we observed a significant increase in interest from investors is the long term strategy was now clear and the market was able to better understand the full potential of our uniquely differentiated technology.
Speaker Change: Based on this market interest we raised capital through our at the market facility in December as well as raising additional capital at the start of January Jeff.
Jeff: Jeff will go into more details, but the combination of these capital raises effectively provides us another year cash runway as we work to execute on our commercial strategy and innovation roadmap.
I will now turn the call over to Jeff to review our financial results.
Jeff: Thanks, Jeff.
Jeff: Now I'll review the details of our operating results for the fourth quarter and full year 2024.
Jeff: Revenue in Q4, 2024 was approximately $1 2 million.
Jeff: Which consisted of revenue from our platinum instrument consumable kits and related services.
Jeff: Gross profit was 610000 in gross margin was 51%.
Jeff: As I have been saying throughout 2024 gross margin percentage will be somewhat variable for the foreseeable future as we work through our continued commercialization efforts and may be impacted by the timing and mix of instruments versus consumable sales.
Jeff: Our margin has also been impacted and may continue to be impacted by the acquisition costs and any accounting adjustments to underlying inventory that predates the commercial launch of the <unk>.
Jeff: Platinum line of instruments.
Jeff: Our gross margin for Q4 2024 includes approximately a 2% benefit our inventory utilized during the quarter that was carried at low or no value and dates back to prior to the initial commercialization.
Jeff: We do expect to see more variances that will flow through our gross margin as we move forward and I will highlight them if they are material.
Revenue for the full year 2024 was $3 1 million and gross profit was $1 6 million and gross margin was 52%.
Jeff: Similar to the comment I just made about Q4 gross margin for the full year 2024 includes approximately a 3% benefit for inventory utilized during the quarter that was carried at low or no value.
Jeff: Turning to operating expenses.
Jeff: GAAP total operating expenses for the fourth quarter of 2024 were $31 3 million compared to $28 1 million in the fourth quarter of 2023, while adjusted operating expenses were $26 7 million for the fourth quarter of 2024 compared to $26 3 million for the fourth quarter of 2012.
Jeff: Three.
Jeff: Overall, we are essentially kept our adjusted operating expenses flat, while funding the ramp up of our commercial operations.
Jeff: For the full year 2024, our GAAP total operating expenses were $110 2 million compared to $111 7 million in the prior year a decrease of about 1%.
Jeff: Included in total operating expenses, our R&D and SG&A expenses.
R&D expenses were $59 6 million in 2024 compared to $67 million in 2023.
Jeff: 11% decrease year over year.
Jeff: SG&A expenses.
We're $55 million in 2024 compared to $44 6 million in 2023, an increase of 13%.
Jeff: As a reminder, we executed an R&D realignment in August of 2023 and that streamlined our R&D efforts on focused product library to the market and a portion of the year over year decrease is the impact of the 2023 restructuring program.
Jeff: In addition in November 2024, we initiated a corporate wide restructuring program.
Jeff: To streamline and focus corporate resources as well as align requiring resources to focus on our recently announced Proteus platform development.
Jeff: All in all a year over year change in R&D expenditures reflects the impact of the aforementioned restructuring programs.
Jeff: While the optimization activities in November 2024 are expected to align and optimize spend on our core R&D programs, including Proteus development, while keeping for total R&D spend roughly equivalent to 2024.
Jeff: Overall, SG&A expenses increased year over year as plan with the majority of the year over year increase in Q4 2024, as we ramped up our commercialization efforts stepping back is important to note that we have kept overall operating expenses and adjusted operating expenses flat year over year.
Jeff: At the same time delivering multiple products to the market.
Jeff: Initiating and funding a game changing development program with Proteus and funding our commercial operations ramp.
Jeff: Our dividend and interest income in the fourth quarter of 2024 was $2 2 million compared to $2 3 million in the fourth quarter of 2023.
Jeff: For the full year 2024 dividend and interest income was $11 4 million compared to $9 5 million for the full year of 2023.
Jeff: Overall, we benefited year over year from higher interest rates relative to our overall cash cash equivalence and marketable securities position.
Jeff: As of December 31, 2024, we had $209 6 million in cash and cash equivalents and investments in marketable securities.
Jeff: Included within the $209 $6 million or the gross proceeds from our ATM facility raised in the fourth quarter.
Up to $36 2 million.
Jeff: Not included in the $209 $6 million is the gross proceeds from our capital raise that closed on January six 2025.
Jeff: $50 million.
Jeff: Taking into consideration the $209 $6 million of cash cash equivalent to marketable securities at December 31, 2024, and the gross proceeds of $50 million from our capital raised on January six 2025.
Jeff: As well as our continued financial discipline and focused efforts on capital allocation, we expect to have cash runway into the second half of 2027.
Jeff: Our 2025, there are two key activities that are evolving that currently limit our full view into 2025 revenue that we are tracking against.
Jeff: These two items, our avatar distribution relationship in North America, and the current uncertainty surrounding the NIH funding environment for 2025.
Jeff: As Jeff mentioned earlier, we are working through the process of training and Onboarding, the Avatar organization, which we expect to be complete by the end of the first quarter.
Jeff: Once these onboarding activities are completed and initial traction on sales are observed we will have more clarity on the full impact of avatars contribution to our 2025 revenue.
Jeff: Now turning to the NIH funding environment as many of you have already heard from other companies in the life Science tool space. There is uncertainty regarding NIH funding that has the potential to impact the academic research market in the United States.
Jeff: The degree of this impact is hard to predict until the NIH budget and spending priorities are finalized by the new administration.
Jeff: On a positive note our.
Jeff: Our international opportunity and our U S opportunity in other market segments, such as pharma and biotech.
Jeff: Are all not expected to be impacted by the NIH funding uncertainty.
Jeff: Having said that for the first quarter 2025.
Jeff: We anticipate revenue to be at least $900000.
Jeff: This level of revenue record net represents approximately a 100% growth year over year in the first quarter and takes into account the typical drop off.
Jeff: And life Science tool company has seen in terms of quarter over quarter revenue when moving from Q4 into Q1.
Jeff: Minimal contribution from Avatar.
Jeff: And the uncertainty around NIH funding and the potential to delay some academic customers in the U S market for.
Jeff: From finalizing their capital spending plans for 2025.
Jeff: Turning to adjusted operating expenses and anticipated cash usage for 2025.
Jeff: We're able to provide more clarity based on our past run rates continued corporate efficiency initiatives and our development roadmap.
Jeff: Our preliminary guidance for our adjusted operating expenses for 2025 is a $103 million or less and total estimated cash used for 2025% will be $95 million or less.
Jeff: Now I'll turn the call over to the operator to open the line for questions.
Speaker Change: Certainly and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on just it looks like our first question comes from the line.
Speaker Change: From Canaccord Genuity your question please.
Speaker Change: Thanks.
Speaker Change: Carl Mixon your line is open.
Speaker Change: Hey, guys. Thanks for the questions. So you launched the pro system in January to do sell any since the announcement.
Speaker Change: How is that.
Speaker Change: In fact, it tells of its legacy platinum boxes that because they'll holston.
Speaker Change: Yes so.
Speaker Change: As you said, we announced the launch of platinum pro.
Speaker Change: In earlier this quarter, we expect to start shipping the machine before the end of the quarter were not sort of giving out a specific number of machines. At this point, we haven't seen any impact right now on the the platinum sales Theres, obviously, two different price points of those devices.
Speaker Change: Some people may still acquire the platinum while it's available and others may move directly to pro and given the consumables are the same across the machines. We also haven't seen any impact on consumable ordering patterns of.
Speaker Change: Platinum users, even those who may be considering sort of an upgrade in the future to a platinum growth.
Speaker Change: Got it thanks, Jeff I, just want to confirm actually I guess, taking a step back I know that.
Speaker Change: You guys kind of.
Speaker Change: Provided explanations for essentially quarterly revenue going forward, but was any of this $1 2 million in the fourth quarter or is that pushed from <unk>, maybe pull forward from the first quarter of 2005.
Speaker Change: Yes, nothing was pushed from Q3 I think.
Speaker Change: We certainly saw some end of year buying decisions occur in the fourth quarter I wouldn't say it was sort of a significant level of those I wouldn't go as far as calling it a budget flush, but there were certainly some folks who knowing that platinum would likely see a price increase and that we had announced that platinum.
Speaker Change: <unk> was coming in the first half of the year back at our Investor Day in November of 2024, we did see a few areas, where we believe customers may have pulled those purchase decisions forward, but again not.
Speaker Change: Not a significant trend in either direction.
Speaker Change: Alright that makes sense and again I can take this was sort of talk a little bit in the guidance expectations, but.
Speaker Change: Would you mind.
Speaker Change: Kind of clarifying the expectation is for the oven towards partnerships this year because that pivotal for some of the potential targets that you have.
Speaker Change: Yes, so on inventory again, we signed the distribution agreement in November of 2024 as a standard in these types of <unk>.
Speaker Change: Distribution agreements, we have a phase where we're implementing our products into their operating system. So that they can be ordered.
Speaker Change: Sailed through that through the system and then we have the training of the actual sales professionals. So they have.
Speaker Change: Sort of meetings that were set up throughout the first quarter of the year as is typical with commercial organization. So we'd been slotting into those meetings and providing training for the teams and now the teams as they get trained are out beginning to interface with our direct reps and really strategize and coordinate.
Speaker Change: Territory level, so as we said when we announced the distribution agreement, we expected Q1 to really be that training and implementation phase we expect to see some.
Speaker Change: Contribution from the relationship in the second quarter of the year and really see more of the acceleration from that relationship in the back half of the year after their reps.
Speaker Change: Been trained and been out in the territories for a period of time to build their funnels and ultimately be able to deliver more of a ramp in the second half of the year.
Speaker Change: Got it Okay and then in light of the recent.
Speaker Change: <unk> EBT confidence can you just talk about the recent feedback from the both the proteomics and the genomics communities and how they are sort of interacting so far with the technology and the kind of value.
Speaker Change: Composition.
Speaker Change: Sure I think <unk>.
Speaker Change: <unk>, which is obviously a more.
Speaker Change: Focus show in genomics next generation DNA sequencing some of the spatial technologies. There were obviously a lot of new product announcements or new new.
Speaker Change: New entrants into the space so lots of <unk>.
Speaker Change: Lots of competitive noise in the space certainly within the genomics field NIH funding was certainly a.
Speaker Change: Hot topic amongst the academic researchers so not normally a core event for us. So we never expected to be a huge source of sort of what we would call more lead generation, our marketing activities, but we did have people there I mean attendance.
Speaker Change: Presenting scientific data and posters on the technology and we had very good.
Speaker Change: Traffic at those poster sessions lots of great questions from people really in that community thinking about that multi omics workflow how do they go from RNA sequencing and incorporate proteomics technologies to sort of close that that look very similar to what the University of Virginia talked about in their paper.
Speaker Change: That was pre print on bio archive. So that's maybe a good analog or sort of how the genomics community at that meeting was.
Speaker Change: Interfacing with us with a protein sequencing technology hoopoe, obviously, a very targeted.
Speaker Change: Nowhere near the size of <unk>, but very focused on the proteomics.
Speaker Change: Market the proteomics customers, we had tremendous booth traffic there we had interest at posters that were a mix of some data. We presented also data that customers presented.
Speaker Change: Other workshops and activity so.
Speaker Change: Very positive feedback were getting each time, we bring out new capabilities that gets people talking about new applications.
Speaker Change: And ultimately in these events as we've talked about on these calls before our mix of customers presenting data and some of that peer to peer exchange of information is a very valuable tool in driving the awareness and ultimately the adoption.
Speaker Change: Alright.
Speaker Change: Would you mind like maybe.
Speaker Change: Relatively high level could you talk about why the EMEA of acid binder like well based approach.
Speaker Change: We're confident that's going to.
Speaker Change: Be successful here relative to like a <unk> base approach that we've seen just.
Luke: Coming off the rose kind of comments I guess Luke.
Luke: Blue <unk> things like that just why is like your approach.
Luke: But potentially versus something that we've kind of seen and look more for R&D.
Luke: Kind of a case.
Luke: Yes I.
Luke: I think Kyle its a little hard to know exactly how to compare it to Nana por based approaches for protein sequencing given there aren't any commercially available products that utilize that technology and there are certainly some very early stage research papers that have been published on trying to apply <unk> technology.
Luke: But most of those papers as is often the case with early technology development are focused on very simple samples perhaps.
Luke: Amino acids with spacers in them to improve their reading accuracy or the ability to detect the changes in amino acids. So.
Luke: Our common technology feasibility approach, but not necessarily.
Luke: Something that we know what the specs would look like in a commercial environment and how to think about positioning our technology against that I think what we're focused on with our approach is.
Unlike DNA, where nano force have been applied you have.
Luke: For DNA basis to deal with everything is negatively charged.
Luke: In amino acids were talking 'twenty, we're talking about a wide range of properties of those amino acids.
Luke: The sequence context of those amino acids is a very challenging endeavor. So while while perhaps nano force we will get there we think it's a significantly harder challenge than.
Luke: And then perhaps DNA nanoparticle in terms of how we focus on our approach what we like about our approach is a couple of things one is.
Luke: Our amino acid recognizes our capable.
Luke: They typically detect.
Luke: Two or three amino acids, and the relevant sort of post translational modifications or changes that approach will prevent us from needing to have 20 different recognizes which we think trying to scale up to these really large numbers of <unk>.
Luke: Potential recognizes would be a very difficult biochemistry problems, so sort of our kinetic detection and that ability to have these multi affinity.
Luke: Sort of recognized us for different amino acids. We think is definitely an advantage from a development perspective, and when we talk about sort of the engineering architecture, what we like about the direction, we're going with with Proteus is we've really put ourselves on a consumable architecture that can be scaled to billions of <unk>.
Luke: Read sort of the type of capacity, you're bound to need to get the de Novo sequencing and then youre really leveraging.
Luke: Lot of the optical detection technology capability, that's been evolved over the last decade, or so so we really like that sort of trying to leverage a lot of that capability. That's out there getting onto that architecture that will scale.
Luke: And.
Luke: Underpinned by sort of our unique genetic detection with those amino acid recognizes.
Luke: Perfect and then maybe just on that on that last night and this will be a final question for me.
Luke: Could you maybe confirm if the Proteus architecture and the initial assay is locked down but how that how is that progressing I know you have the.
Luke: Second half of next year at launch, but in terms of like some of the.
Luke: Technical milestones how are those going.
Luke: Yes. So good question, so maybe I'll start with what we said in the call which is our key milestone we want to achieve this year is that we demonstrate our next generation protein sequencing chemistry on that Proteus platform and the consumer want sort of a prototype of that platform and consumable so.
Luke: We expect to do by the end of the year.
Luke: I'd say a couple of things about sort of how we're progressing right. So at our Investor day, we showed some of the early.
Luke: Technology feasibility data around the consumable fabrication method.
Luke: The change from lifetime detection to color ratio.
Luke: So that was some of that early data we talked about the partnerships, we did to help de risk and accelerate so sky water around the consumable plenty of innovation around the instrument.
Luke: Nvidia around AI and compute and then more recently you probably saw that we partnered with IDEXX health and science is really the leader in <unk>.
Luke: High performing optical systems in the life science space. So we feel really good about the partners we have around us.
Luke: Sort of how the technology has progressed from what we showed in November and are very confident we can get to that goal of having sequencing on a prototype platform by the end of the year. If we achieve that goal. Kyle then were.
Luke: Right, where we'd want to be in terms of getting to that second half of 'twenty six launch so.
Luke: As we go this year will certainly provide other updates, but really right now progressing the way, we like set up well for that end of year milestone and assuming we hit that really gets us down to that second half 'twenty six launch.
Luke: Got it okay. Thanks for the help.
Luke: Thank you.
Douglas Peterson: Thank you and our next question comes from the line of Douglas Peterson from H C. Wainwright Your question. Please.
Speaker Change: Hi, there nice to speak with you and congrats on a good quarter.
Douglas Peterson: Thanks, Doug.
Douglas Peterson: So similar to what was touched on by the last caller.
Douglas Peterson: I recall last quarter, there was some variability in the sales cycle, sometimes taking a little bit longer than expected.
Douglas Peterson: Adding more experience with more customers are you starting to see and experience sort of a more predictable cadence to those sales cycles.
Douglas Peterson: Yes, good question Doug.
Douglas Peterson: The sales cycle, we're seeing is certainly longer than it has been.
Douglas Peterson: Storage <unk>.
Douglas Peterson: In our market share in instrument at the similar price I think we are comfortable with now what that sales cycle looks like and yet we're seeing it consistently but it is still a long dated from what it's historically been in our space or a device of this sort of price point.
Douglas Peterson: Sure.
Douglas Peterson: Thank you for that and then.
Speaker Change: Far as target markets, you said, mostly it's been academic researchers, but youre sort of branching out and getting some traction with CMO as biotech large pharma government.
Speaker Change: What do you see is the largest market and are there any markets that you find it a little difficult to crack and you feel like it's an untapped market and maybe we'd like to undertake some initiatives in order to in order to penetrate into that those markets.
Yes, so two questions there Doug let me take the first one so as we exited 2023.
Speaker Change: Our customer base as I said in the prepared remarks was largely academic right as we exited 2024, it's about a 50 50 split now between academic customers in those academic for both in the U S and in.
Speaker Change: Western Europe, and then those other segments pharma biotech government, so really good diversification of that base of customers.
Speaker Change: Expect that diversification.
Speaker Change: Continue.
Speaker Change: As we go forward in terms of.
Speaker Change: More and more of those biotech pharma et cetera are coming online.
Speaker Change: The second part of your question.
Speaker Change: Doug was more about the untapped opportunities.
Speaker Change: Yes, I think the key one right now that we see line of sight to given the diversification we're already seeing with our tech in terms of end users really is that international opportunity.
Speaker Change: We had.
Speaker Change: A couple of partners earlier in the year, and then added to that international distribution channel over the course of 2024 and I think as I said in the prepared remarks really seeing an interesting opportunity in these other regions of the world, where perhaps they don't have.
Speaker Change: The capital to buy a half a million a million dollar piece of equipment. They don't have the infrastructure scientifically or bioinformatically to analyze the data and do the laboratory workflow, so really feel like there could be.
Speaker Change: A nice opportunity across multiple end segments within that.
Speaker Change: Ex sort of O U S or outside the United States sort of opportunity through those channel partners. That's why we built into that network over the course of 'twenty four and we'll continue to do that and twenty-five really feel like that's more of the the untapped opportunity right now because I think the diversification of the base in general is going well in all regions and we will.
Speaker Change: To sort of push on that and invest in that.
Speaker Change: Sort of that distribution or decentralization of their customer base.
Speaker Change: Alright, thanks for the thanks for the color on that and then last one for me beyond the.
Speaker Change: The <unk> agreement.
Speaker Change: You had.
Speaker Change: <unk> tended to do some internal expansion of your own commercial team have.
Speaker Change: Have you brought on a lot of new people and then sort of what phase are they and are they still under that.
Speaker Change: It was three to six months of training or are you starting to see them out in the field and even sort of delivering a return on that investment from Europe from your internal commercial teams sure.
Speaker Change: Sure Yeah. Good question. So we did do some additions to close out the year and right into the start of this year as we sit here right now on this call we have ours.
Speaker Change: Our commercial team our direct team sort of staffed the way we expected it to be staffed for this point in 2025, obviously, we expect there to be some modest hiring throughout the year.
Speaker Change: As we continue to scale up.
Speaker Change: Some of that could be in the sales cycle, both but also in the application support and sort of the debt.
Speaker Change: More scientific in support and service as that installed base keeps growing.
Speaker Change: In terms of where are they adding the process. The majority of those sales professionals are.
Speaker Change: In territory and have been out there now for at least that three months period, but there are some that came on later in the year or came on first thing. This year that are still in that training and ramp up phase. So over the course of the next quarter or so all of those folks will sort of be at an operating scale.
Speaker Change: And then anybody who would come on new obviously would go through the same types of training.
Speaker Change: Final build in progression.
Speaker Change: Okay. So we might sort of see that impact in the back half of 'twenty five similar to the eventual agreement.
Speaker Change: I agree with I think.
Speaker Change: I would say two things about it one is our reps.
Speaker Change: Or are getting are in that phase of being in the in the territory working their finals.
Speaker Change: And working their space. They are now interfacing with those of onto our reps who just got.
Speaker Change: Train so we should start to see some of the synergies of those groups working together just sort of share leads and build the pipelines as we get into the back half of the year similar with our international Channel partners. Many of those came on in the second half of the year. We just held a big channel partner training meeting last week, so those folks now.
Speaker Change: We are getting more and more engaged with the tech.
Speaker Change: Getting trained getting their application support people up to speed and we should see those folks out now able to start to build their funnel and then execute on winning new customers as we move into the second quarter and second half of the year.
Speaker Change: Thank you ladies and gentlemen.
Speaker Change: It does conclude the question and answer session of today's program I'd like to hand, the program back to Jeff Hawkins for any further remarks.
Speaker Change: Alright. Thank you we are excited about the progress during 2024 and are looking forward to delivering on our commercial scale up and technology Roadmaps. During 2025, we look forward to providing you more updates on our next call. Thank you for attending.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
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