Q1 2025 Quantum-Si Inc Earnings Call and Business Update
Good day, and thank you for standing by welcome to the quantum F. O I first quarter 2025 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session you'll need to press star one on your telephone you will.
Speaker Change: Didn't hear an automated message advising your hand is right to start your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to turn the conference over to todays Speaker Catherine Akerson. Please go ahead.
Speaker Change: Good afternoon, everyone and thank you for joining us earlier today quantum of thigh released financial results for the first quarter ended March 31st 2025, a copy of the press release is available on the company's website. Joining me today are Jeff Hawkins our president.
Speaker Change: And Chief Executive Officer, as well as Jeff <unk>, our Chief Financial Officer.
Speaker Change: Before we begin I would like to remind you that management will be making certain forward looking statements within the meaning of federal Securities law. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated additional information regarding these risks and uncertainties.
Speaker Change: Appears in the section entitled forward looking statements of our press release.
Speaker Change: For a more complete list and description of risk factors. Please see the company's filings made with the Securities and Exchange Commission.
Speaker Change: This conference call contains time sensitive information that is accurate only as of the live broadcast eight today may 15, 2025, except as required by law. The company disclaims any intention or obligation to update or revise any forward looking statements. During this call. We will also be referring to.
Speaker Change: Certain financial measures that are not prepared in accordance with U S generally accepted accounting principles or GAAP I.
Speaker Change: A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today with that let me turn the call over to Jeff Hawkins.
Jeff Hawkins: Good afternoon, and thank you for joining us on today's call. We will provide a business update and review our operating results for the first quarter of 2025.
Speaker Change: After that we will open the call for questions.
Speaker Change: I'll begin with a reminder of our three corporate priorities.
Speaker Change: To accelerate commercial adoption.
Speaker Change: Liver on our innovation roadmap and to preserve our financial strength.
Speaker Change: Our first corporate priorities to accelerate commercial adoption.
Speaker Change: During the first quarter, we launched the platinum pro system and completed our first customer sales are.
Speaker Change: First quarter revenue of $842000 is an 84% increase over the first quarter of 2024. So this result was slightly below our expectations.
Speaker Change: During the quarter, we observed a significant slowdown in new instrument purchases in the U S academic market due to the ongoing market uncertainties related to NIH funding and indirect cost caps. We expect these uncertainties to continue to impact new instrument sales in the U S academic market until at least the fall of 2025.
Speaker Change: Our budget is estimated to be approved by Congress.
Speaker Change: That said our existing U S academic customers continued to purchase consumables during the first quarter and we have no indication from customers that this pattern will change.
Speaker Change: Turning to other segments in the U S market, we continue to believe that pharma biotech and government laboratories represent a good opportunity for continued growth in terms of both new instrument sales and ongoing consumable sales.
Speaker Change: With the NIH funding uncertainty is expected to persist for the foreseeable future we are putting greater emphasis on the pharma and biotech opportunity with our U S commercial team and distribution partner.
Speaker Change: And we are pleased to report that we have recently completed the training of encore, our North American distribution partner.
Speaker Change: We're working closely with the advent of our sales team as they build their sales funnels and begin progress being opportunities through the sales process.
Speaker Change: Turning now to international markets, we exited the first quarter with 23 International distribution partners overall, our international business performed well during the first quarter and we are pleased with the continued interest we are seeing from potential customers across all international distribution partner territories.
Speaker Change: We continue to believe that our low capital cost simplified workflow and automated data analysis is a compelling option for researchers in these regions looking to integrate in advance proteomics platform into their research.
Speaker Change: While the NIH uncertainty may impact short term commercial results. We are optimistic about the opportunity to continue to grow our customer base in pharma and biotech and across the countries covered by our international distribution network. Additionally, we remain confident in the long term market opportunity in proteomics and the technology roadmap we are.
Speaker Change: Executing on to capitalize on that opportunity.
Speaker Change: Our second priority is to deliver on our innovation roadmap.
Speaker Change: We continue to have high confidence in our technology roadmap and our R&D teams ability to deliver on that roadmap as they have done over the past two years.
Speaker Change: As a commercial stage company, we interact with customers prospective customers and distribution partners every day and consistently receive feedback that confirms our view that whole protium sequencing is the long term future in proteomics.
Speaker Change: Our version for sequencing kit remains on track for a third quarter 2025 launch.
Speaker Change: We expect that this will further increase protium coverage via increased amino acid detection and the addition of a new enzyme that is engineered specifically to provide high efficiency cutting of the amino acid directly preceding our protein.
Speaker Change: We believe this combination of improvements will allow customers to analyze more peptides for protein and detect more amino acids within the peptides present, especially those positioned behind the protein.
Speaker Change: Turning now to the library preparation we are pleased to share that we have made great progress in our innovation program aimed at enhancing library preparation performance and now expect to be able to release of version three of our library preparation kits by the end of 2025.
Speaker Change: While we are still early in the development program. The initial data gives us confidence that there is a clear path to reduce the sample input requirements for our kit.
Speaker Change: We believe that our ability to lower the protein input requirement will enable our customers to pursue an even greater range of biological samples and proteins of interest and the early data suggests that we will be able to make a very meaningful improvement in this area.
Speaker Change: Next I would like to provide an update on the Proteus development program.
Speaker Change: As a reminder, proteus incorporates a new instrument and consumable architecture that will offer significantly more reads per sample more samples per run and greater workflow automation and our current platforms.
Speaker Change: We are pleased to report that we remain on track to successfully perform protein sequencing on a prototype Proteus system by the end of 2025.
Speaker Change: Hitting this milestone in 2025 sets us up well to deliver on the launch of Proteus in the second half of 2026.
Speaker Change: In terms of interim milestones of the Proteus development program, we achieved two important milestones since our last call.
Speaker Change: First we have been able to successfully demonstrate the full fabrication process from raw material to finished wafer.
Speaker Change: This was an important step as it provides us with confidence that we can produce the quantity of consumables, we need to support the ongoing development efforts.
Speaker Change: Second we have demonstrated a set of fluorescent dyes that are compatible with the new technology architecture, and we have enough distinct die to support moving our current sequencing chemistry over to the Proteus platform.
Speaker Change: In addition, we are in the late stages of completing the delivery of additional dies that proactively position us for an expanded set of amino acid recognizes that we anticipate bringing to market as part of the Proteus platform launch in the second half of 2026.
Speaker Change: Finally, I would like to spend a few minutes updating you on the broader opportunity for our core technology beyond protein sequencing.
Speaker Change: During our November 2024, Investor and Analyst day, we shared data from our research initiatives that showed the vast capabilities 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: Because of this we believe that our Proteus platform and core technology will be capable of addressing the broadest range of proteomics analysis methods of any technology in the market today.
Speaker Change: To accelerate the realization of that opportunity and in response to customer and partner interest today, We released additional information about the application of our core technology to ultra sensitive protein detection.
Speaker Change: With only a modest amount of investment to date and using off the shelf affinity reagents, we have demonstrated sensitivity in the low FEMSA molar range working directly from serum and generating results in about two hours.
Speaker Change: All enabled on our low cost platinum pro instrument and does not require any additional readout using Pcr or ngls.
Speaker Change: Through partnerships and collaborations with organizations that have highly optimized affinity reagents. We believed the assay performance would only improve from here.
Speaker Change: We are sharing this information today to make our capabilities more visible to the broader market and thereby accelerate the path to unlocking this capability via strategic partnerships and collaborations over the coming quarters.
Speaker Change: Our third priority is to preserve our financial strength.
Speaker Change: While the current market uncertainty may impact short term commercial results, we remain confident in the long term market opportunity in proteomics and the technology roadmap, we are executing on to capitalize on that opportunity.
Speaker Change: We believe that we are the clear technology leader with the only commercially available next generation protein sequencing platform and we expect to continue to build upon that leadership position going forward.
Speaker Change: We have a strong balance sheet and we'll continue to invest our capital in an efficient manner that maximizes long term shareholder value.
Speaker Change: I will now turn the call over to Jeff to review our financial results.
Speaker Change: Thanks, Jeff now I'll review the details of our operating results for the first quarter of 2025.
Speaker Change: Revenue in Q1, 2025 was 842000, which consisted of revenue from our platinum line of instruments consumable kits.
Speaker Change: And related services.
Speaker Change: Gross profit was 486000 in gross margin was 58%.
Speaker Change: As I have said in the past our 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.
Speaker Change: Our margin has also been impacted and may continue to be impacted by the acquisition cost and any accounting adjustments general lying inventory.
Speaker Change: Which predates the commercial launch.
Speaker Change: In line of instruments.
Our gross margin for Q1 2025 includes approximately at 7% benefit for inventory utilized during the quarter that was carried at low or no value.
Speaker Change: Turning to operating expenses GAAP total operating expenses for the first quarter of 2025 or $25 6 million compared to $23 6 million in the first quarter of 2024.
Speaker Change: Adjusted operating expenses were $22 9 million for the first quarter of 2025% compared to $21 9 million for the first quarter of 2024.
Speaker Change: Overall, we have continued to manage our operating expenses tightly while continuing to fund our investment in our commercialization efforts and funding our various development programs, including our Proteus development program, which was launched in November of 2024.
Speaker Change: Our dividend and interest income for the first quarter of 2025 was $2 5 million compared to $3 6 million in the first quarter of 2024.
Speaker Change: Overall 2024 benefited year over year from higher interest rates relative to our overall cash cash equivalence and marketable securities position.
Speaker Change: As of March 31, 2025, we had $232 6 million in cash and cash equivalents and investments in marketable securities.
Speaker Change: At a broader market level, we are tracking the potential impacts that evolving tariffs enacted by the United States and other countries throughout the world may have on our operations.
Speaker Change: Tariffs have the potential to impact us from all the acquisition cost of our inventory.
Speaker Change: Import tariffs that could impact our sales channels outside the United States.
Speaker Change: Regarding inventory acquisition costs, we have completed a preliminary analysis and have determined that tariff impacts would not have a material impact on our inventory acquisition costs in the near term.
Speaker Change: In addition for much of our underlying materials, we have supply available for several months and passed a year limiting our near term exposures.
Speaker Change: However to reduce any impact in the long term.
Speaker Change: Several mitigation strategies in play, including but not limited to sourcing raw materials and supplies from lower tariff countries are within the United States directly.
Speaker Change: As well as potential commitments to higher volume purchases that reduce our overall cost per unit balancing the cost of materials once they added tariffs.
Speaker Change: Regarding the import tariffs related to other countries, where we sell into to date, we have not seen an impact are not anticipating any impact a scientific and medical devices has historically been exempted for import tariffs.
Speaker Change: As Jeff mentioned earlier, the NIH funding environment and the related to proposed indirect reimbursement rate cost caps are causing uncertainty in the United States academic market.
Speaker Change: Given the current environment, we are working to mitigate any potential impact by focusing up market segments and geographies that are not impacted by this NIH uncertainty.
Speaker Change: Leading biotech and pharma as well as customers outside of the United States, either directly or through our 23 International channel partners.
Speaker Change: While we are confident in the long term proteomics market and the value platinum proud plays in delivering value to the market.
Speaker Change: The current environment makes it challenging to provide any clarity around topline financial guidance.
Speaker Change: As we get more information and certainty in relation to the NIH funding and indirect cost caps.
Speaker Change: We hope to be able to provide more transparency in future quarters.
Speaker Change: From an adjusted operating expense and cash perspective, we're still anticipating adjusted operating expenses to be $103 million or less for 2025, and total cash used for 2025 to <unk> $95 million or less.
Speaker Change: And finally, we remain confident that our current level of cash cash equivalents and marketable securities will provide runway into the second half of 2027.
Speaker Change: Now I'll turn the call over to the operator to open the line for questions.
Speaker Change: Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone. We also ask that you wait for your name and company to be announced before proceeding with your question one moment for the first question.
Speaker Change: And the first question will come from the line of Carl Michelson of Canaccord. Your line is open.
Carl Michelson: Hey, guys. Thanks for the questions.
Speaker Change: I guess good to hear that you are pretty confident in the biopharma side of your business just given the issues on the <unk>.
Speaker Change: Academic research side.
Speaker Change: However, there has been.
Speaker Change: Talk on potential tariffs over there on the on the pharma side as well as the most favored nations.
Speaker Change: Again potential as well on the pricing there. So just in general it seems like spending budgets and so forth on the Biopharma world, Alright, a little bit pressure or at least uncertain right now so could you just walk through.
Speaker Change: What in your recent conversations with those partners have given thats, giving you confidence that you'll be able to.
Speaker Change: Continuing to successfully penetrate that end market as well as maybe accelerate a bit to make up for the lost.
Speaker Change: Research revenue.
Speaker Change: Thanks for the question Kyle I think are.
Speaker Change: I'd say a couple of things. The first is some of the various policy related items.
Speaker Change: Items that are being discussed.
Speaker Change: Relate a lot too on market.
Speaker Change: Drugs are therapeutics, and the cost of those and such and it's obviously a complex topic that goes well beyond just the pricing from the individual pharma company.
Speaker Change: But in general we're not seeing any trickle through right now to where there are changes being made to sort of R&D priorities.
Speaker Change: Or funding I think a lot of the.
Speaker Change: The funding levels and areas of focus for at least the biotech and pharma companies that we're speaking with they've sort of been set in motion. Some of those have been adjusted historically to the levels. They were comfortable with so we're not seeing any of the headlines sort of trickle through to a chain.
Speaker Change: Engine the.
Speaker Change: The engagement from those from those partners. So thats, what really gives us the confidence that we're solving for.
Speaker Change: For a problem that does fit.
Speaker Change: Something they're focused on which is how do they work more efficiently and more cost effectively.
Speaker Change: Alright, that's great and then with the platinum pro launch.
Speaker Change: It's super early but some of them you have to see how early adopters.
Speaker Change: What's the feedback been like and how is that.
Speaker Change: Differ from maybe like initial kind of.
Speaker Change: Almost like beta or alpha use of the product and how do.
Speaker Change: Do you think about that feedback.
Speaker Change: I mean.
Speaker Change: Ill walk down.
Speaker Change: The platform I guess until you kind of get the Proteus later on.
Speaker Change: Yes, I think the platinum pro system as we would consider that locked down that was.
Speaker Change: Not a what I would consider an early access or or some sort of.
Speaker Change: Minimal commercial release sort of approach, we released we're making the device with our contract manufacturing partner.
Speaker Change: Had great success, producing it we've been able to deliver it and installations and usage sort of reliability has been fine.
Speaker Change: We've talked about on prior calls.
The customers adopting it right now.
Speaker Change: Tend to be customers, who either want access to the open mode or what we call pro mode of the device or perhaps want access to the ability to do some level of data analysis on the device.
Speaker Change: Perhaps they have institutional.
Speaker Change: Policies around the access to the cloud and other things.
Speaker Change: You always have some number of people, who just prefer to have the newest device and to be clear. We still are selling some platinum devices. We had some inventory of those coming out of.
Speaker Change: The end of 2024, and we are continuing to sell those and we expect.
Speaker Change: To be able to sell through that inventory over the course of the coming months.
Speaker Change: Got it and maybe just going a step further could you talk about what's going to happen I guess what the.
Speaker Change: Cost of goods and the gross margin profile going forward given this almost like transition as well as you have this installed base of over 50 units out there already.
Speaker Change: I would imagine that utilization has sort of.
Speaker Change: Ramped up over time and at this point some people would probably relatively comfortable.
Speaker Change: Leveraging and using these instruments, so how should that progress this year as we think about what happened in the first quarter and some of the challenges and pressures that are have been happening from a macro perspective.
Speaker Change: Yeah, let me start and talk a little bit about utilization.
Speaker Change: Turn it to Jeff to talk more about our gross margin and what we're doing to manage our cash.
Jeff Hawkins: Cost of goods and the current landscape.
Jeff Hawkins: Utilization front I would say a couple of things the first is.
Jeff Hawkins: As we said in our prepared remarks, our U S. Academic customers are continuing to purchase consumables. So we haven't seen some sort of change in there.
Jeff Hawkins: Their ability to purchase consumables and continued to perform experiments, we certainly do see utilization rates that vary across different customers or different our different segments, but I would say the overall trend. We're seeing is consistent with what we would expect which is an increasing level of utilization of consumables.
By existing customers as they adopt the platform get it into their workflow and sort of get comfortable with its capabilities and how to apply it. The other thing I would say is we have a very focused effort from our application scientists are both in our direct channels, but also in support of our international partners to really make sure.
Jeff Hawkins: Sure that we're there to help customers as they want to tackle different types of applications or analysis to really make sure. We're doing everything we can to proactively.
Jeff Hawkins: Help the the lower utilizes increase their utilization and help those who utilize it at a higher rate make sure. They're on unlocking sort of every application they would like to do and maybe Jeff do you want to speak to cost of goods and margin.
Jeff Hawkins: So.
Jeff Hawkins: Our historical margin has been hovering between that 40% to 50% range. Obviously, we had 58% this quarter, but I commented that 7% of that was from low or no cost parts that predate a commercialization. We generally expect that we're going to be in that same.
Jeff Hawkins: Range going forward and obviously, that's a mix of consumables in hardware, we're still ramping up commercially so theres going to be just variability on a quarter by quarter basis on hardware units, a consumable units, but I would say the cost of goods sold for the new platinum pro is fairly consistent with our existing platinum.
Jeff Hawkins: Obviously, it's got some more features and things that we've added to it but it's in the same general ballpark.
Jeff Hawkins: And then finally on tariffs and things like that in my prepared remarks, I talked about that a bit we're managing that I wouldn't say the number is zero, but it's really not material that we can see from a <unk> standpoint, but we're going to continue to manage through that.
Jeff Hawkins: Obviously, the part that we don't know is what the administration is going to do and we closely watch that and adjust as needed.
Jeff Hawkins: Alright, great and then.
Jeff Hawkins: Maybe sticking on that side the financial side. So I understand you guys have cash until.
Jeff Hawkins: Through 2027.
Jeff Hawkins: Solid runway however, the topline is relatively.
Jeff Hawkins: Look I'll moderate base, but let's call it uneven.
Jeff Hawkins: Street estimates are.
Jeff Hawkins: About $50 million for revenue in 2007, so it sounds like given your burn it sounds like.
Jeff Hawkins: Beyond 2007, it could be.
Jeff Hawkins: Youre going to have to layer on to the balance sheet. So and then in there you have the Proteus kind.
Jeff Hawkins: Kind of like upgrade cycle, as well, probably and if that frees us things for a bit so how do you think about it.
Jeff Hawkins: Maybe like pulling back on R&D or marketing for SG&A, let's say sales in that event I guess im just comparability on.
Jeff Hawkins: From a cash perspective, given again some of these macro issues.
Speaker Change: Yes, Carl I think so first yes, we have cash we said we have cash and carry this out into the second half of 2027.
Speaker Change: Feel comfortable with that guidance, even in light of what's happening in the macro environment.
Speaker Change: Environment.
Speaker Change: The way, we think about this is sort of twofold one is.
Speaker Change: I think we've taken a lot of steps in our commercial strategy to strike that balance between where to make the direct investments and have our own employees doing certain activities. Some level of sales some marketing some of the application support but have also been very proactive.
Speaker Change: And the utilization of channel partners, we have we have our international distribution network with 23 partners and we have our north American distribution partner of onshore and I think those are good examples of gaming footprint in terms of the number of people out talking about our product everyday without us having sort of the dirt.
Speaker Change: Carrying costs of those folks in the event.
Speaker Change: Revenues are choppy or the macroeconomic picture, what's the change so I think in that regard we were being very thoughtful we don't have.
Speaker Change: Significant plans to expand our investments theyre very sort of targeted investing in those areas and really leveraging those partners from an R&D perspective.
Speaker Change: I feel like we've done a lot there over the last two years.
Speaker Change: To really get the R&D investment and priority is really aligned to get the right roadmaps in place and really deliver the innovations to the market I think at the end of the day.
Speaker Change: US continuing to keep our technology leadership and deliver on the Proteus launch and and the various improvements to the library prep and chemistry are key to <unk>.
Speaker Change: Succeeding in the market they are key to having the most competitive product and we're playing the long game. We think the current challenges are are are short term in nature theyre going to at some point resolve and we're going to continue to invest in the business I think our view on on cash is simply.
Speaker Change: We are capitalized out into the second half of 2007, we're going to invest wisely, we think there'll be a lot of value creation opportunities between here and the end of 'twenty six Nonetheless, Nonetheless, a which is the launch of the Proteus platform.
Speaker Change: And I think we'll sort of evaluate when we get there what are the various strategic options.
Speaker Change: And what's the best way to capitalize the company to the extent, we need additional capital to carry us out. So I think we're really focused on what do we do between here and there to really add value and get to that launch and then really look at the strategic options.
Speaker Change: What's the best thing for the company and the best thing for our shareholders.
Speaker Change: Alright, perfect and finally last one on your international presence. Thank you have you have 23 partners and recently I felt like that was that was 18 partner. So youre kind of interesting that thats. Good could you just.
Speaker Change: Can you just clarify how many let's say countries or maybe like more detailed regions lets say that gives you access to and then maybe just a little bit of like a flavor for the for the tariff situation I guess and how you see it in those areas.
Speaker Change: Yeah. So first on the on the tariff situation as Jeff said in his prepared remarks, we haven't seen any impact to date in terms of <unk>.
Speaker Change: Importation related tariffs that would increase the cost for those partners to bring our product into country. We haven't we haven't seen that happen and thats pretty consistent with historical practices, which our scientific and medical instrumentation has largely been exempted from those things in the past. So we're watching it closely but nothing to report at this point.
Speaker Change: In terms of the partners themselves.
Speaker Change: Most of our partners cover.
Speaker Change: More than one country you have some instances, where it's a more significant country in terms of size.
Speaker Change: Perhaps they cover a single country. They cover Singapore, maybe as an example, our Japan as an example, but when you get into some areas.
Speaker Change: <unk> of the world like Eastern European you might see.
Speaker Change: One distributor have.
Speaker Change: Three four or five countries. So there is some mix.
Speaker Change: In terms of the number of countries. Each partner covers you are correct that we expanded that network a bit.
Speaker Change: <unk> to 'twenty.
Speaker Change: Three we think we're largely complete with that build out there are a couple of countries left that we think represent good proteomics opportunities and have existing established.
Speaker Change: <unk> that we could tap into so we may add a few more partners to that mix over the coming quarters, but we think we're largely complete with that build out.
Speaker Change: Alright, great. Thanks, so much guys. Thank you.
Speaker Change: Thank you one moment for the next question.
Speaker Change: Okay.
Speaker Change: And the next question will come from the line of Scott Henry of AGP. Your line is open.
Thank you and good afternoon.
Speaker Change: Big Picture question you may have.
Speaker Change: You mentioned it already but I think it's worth.
Speaker Change: Double doubling down on it.
Speaker Change: When you think about your total market U S O U S all segments what percent.
Speaker Change: Do you think of your target market.
Speaker Change: Falls in that kind of NIH slash academic U S based market.
Scott: Just trying to get a sense of the magnitude because I know you do a lot overseas as well, yes. So maybe I can give a couple of data points that help to elucidate that I think maybe one general comment I would make Scott is that obviously at the at the current <unk>.
Scott: Commercial scale, where the market is very large so.
Scott: We're not in a situation where.
Scott: We maximize penetration and even the slightest change in a market size is going to in some way constrain us so I think from a macro perspective.
Scott: Obviously large markets with fairly modest penetration so a lot of upside to go tackle a couple data points. We can give you. One is if you think about our customer mix. So like maybe just think about it in terms of instrument installations, where are those that so.
Scott: At the end of the quarter, we're at about 60% of our instrument installations are in.
Scott: Laboratories outside of the U S and about 40% of those are in the U S. So that gives you a little flavor for the diversification of the base of installed instruments today and in terms of the U S market. The data point, we can give you is.
Scott: Round, 20% of the total business. We have is in the U S. Academic market. So if you think about all machines placed globally about 20% of those are in U S. Academic markets again, those people are still buying consumables, but if you want to sort of have a way to think about the instrument.
Scott: Sort of distribution today that I think those two data points give you a couple of ways to think about it.
Scott: Yes, that's really helpful. I appreciate that.
Scott: And then yes.
Speaker Change: Spending patterns.
Speaker Change: Certainly Q1 was lower sequentially from R&D and SG&A.
Speaker Change: The question is yes.
Speaker Change: Do you think is that a seasonality or yes.
Speaker Change: Are we seeing.
Speaker Change: Some some lower cost structure and I know the <unk> sits.
Speaker Change: Situation helps on that front.
Jeff Hawkins: Hey, Scott this is Jeff.
Speaker Change: Theres always a little variability quarter to quarter on how spend goes out probably more in the R&D bucket as we go through development stages of our products and so that's why we provide guidance for the full year on what we're going to do from a <unk>.
Speaker Change: Total opex spend is at $103 million or less but I can say as we as we went through the end of last year, we did at <unk>.
Speaker Change: Restructuring of our R&D Department, and really overall organization to really focus resources to development of the Proteus project.
Speaker Change: Right sized everything and fully funded that Proteus development spend to be within that $103 million. So there may be some variability on a quarter to quarter, but for the full year, we're well on the track to kind of hit that number or below but always some variability depending on the stage and the activities that are going on in the R&D.
Speaker Change: <unk>.
Speaker Change: Okay, great. Thank you.
Speaker Change: Final question just on the <unk> relationship.
Speaker Change: It looks like training is complete any comments on the progress. There is is it matching up with your expectations.
Speaker Change: Just any kind of feedback on the early returns of that sure.
Speaker Change: Sure, Yes, so as you said the training and Onboarding of their their team has been completed we will continue to obviously provide continuing education and assistance, where they need it but they are trained they are out now building those sales funnels we have.
Speaker Change: Regular calls both at what I would call more of a regional level between one of our sales professionals and a smaller number of theirs, but also at the executive level.
Speaker Change: Between our company and the folks over there that lead their broader teams.
Speaker Change: As part of those interactions they share with us sort of their activity metrics.
Speaker Change: And we have visibility to that sort of on a regional level and I would say.
Speaker Change: While it's early days, we've been quite pleased with the activity level, we're seeing across all the regions and it's just something we have to stay.
Speaker Change: On top of and continue to make sure. We're both monitoring it but also providing the support and I think we're starting to see our teams worked together to progress opportunities through the sales funnel. So we were not.
Speaker Change: <unk> is no less immune to.
Speaker Change: That there is a sales cycle in a sales process than anybody else. So I think we're we'll work through those processes, but right now the early.
Speaker Change: Data says, we're seeing a nice level of activity and engagement in pretty uniformly across all the different regions. They have.
Speaker Change: Okay, great. Thank you for taking the questions Youre welcome.
Speaker Change: Thank you would you like to ask a question. Please press star one on your telephone and we'll move to the next question.
Speaker Change: The next question will come from the line of.
Speaker Change: Popular Remo Kenneth.
Speaker Change: H C. W. Please go ahead.
Speaker Change: Thank you this is RK from HC Wainwright.
Speaker Change: Good afternoon, Jeff and Jeff.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: <unk>.
Speaker Change: On the next version of the sequencing kit.
Speaker Change: Do you plan to release in the coming quarter.
Speaker Change: No.
Speaker Change: I'm trying to understand like how how do you make it do these sequencing kits.
Speaker Change: Are they different in terms of.
Speaker Change: Efficiency or the speed with which the.
Speaker Change: I know you have a separate one for <unk>.
Speaker Change: Making the sample.
Speaker Change: When somebody thinks through.
Speaker Change: Product industry, our biopharma use versus government use.
Speaker Change: Is there any differential at all cost and then too.
Speaker Change: As you improve these versions so water people getting the next generation and the next question.
Speaker Change: Yes, so I would say two things one is there is not a different kit in terms of sequencing that we.
Speaker Change: Let's say an academic research would use than a biopharma or government lab might use I think we when we go through these sequencing kit evolutions.
Speaker Change: Ultimately a period, where both the current version and the new one are offered but then reasonably short after the launch of a new kit, we tend to phase out the.
Speaker Change: The prior Kid and all customers move over to the new one so in that regard.
Speaker Change: Sort of uniform kit used across all the segments.
Speaker Change: Very similar.
Speaker Change: Sort of explanation about about library prep as well I think when we move between these kits what we really look at RK is when do we have.
Speaker Change: Enough individual changes that when combined together lead to a meaningful improvement in performance and when I say meaningful improvement in performance, what we're really looking at us.
Speaker Change: Our customer is going to be able to.
Speaker Change: Get more information when they when they sequence will they see more peptides with a C. Moore amino acids. We're also obviously as we're out in the market, we know what applications or proteins people, maybe have wanted to try to sequence.
Speaker Change: And perhaps an older version of the kit wasn't capable of that we add new capabilities. We can also see how many of those additional sort of applications or proteins of interest would now be accessible to customers. So we look for things like that as example, the addition of the cutter.
Speaker Change: We've discussed in the prepared remarks to cut through the amino acid of directly before propylene that really opens up a lot of amino acids at CIT downstream of that protein as example antibody QC.
Speaker Change: <unk> seed antibody tend to be fairly rich and in propylene, so having the ability to cut through those in sequence. The remainder of of those peptides should help us in that example.
Speaker Change: Be able to cover more of the types of QC applications people might want to do with antibody. So let's just sort of one example, but that's sort of how we look at it it's really that what what additional applications or proteins or capabilities with customers, yet and when do we have enough of those to put into it.
Speaker Change: Kit and for US that's been sort of that cadence of about every nine months or so we've been able to make enough improvements that.
Speaker Change: That we really think there's a meaningful lift for customers and therefore, it's worth the R&D investment.
Speaker Change: Okay.
Speaker Change: The last time, we were talking.
Speaker Change: No.
Speaker Change: Sure.
Speaker Change: Youre, telling we.
Speaker Change: We were discussing that.
Speaker Change: All of this we want to keep.
Speaker Change: I guess since between yourself and the next competitor.
Speaker Change: Sure.
Speaker Change: Market like this.
Speaker Change: Since you have the little bit of a cushion that you have on the financial side, you always want to maintain the distance or even try to increase the distance artificially the other company that doesn't have enough financing.
Speaker Change: But.
Speaker Change: <unk> said that you know.
Speaker Change: As this was about a month and a half ago.
Speaker Change: Probably have a little bit more.
Speaker Change: <unk>.
Speaker Change: Various customers are behaving.
Speaker Change: Does that still resume between you and the board and everybody in the company in terms of.
Speaker Change: Keeping that.
Speaker Change: A couple of steps ahead of the competition or do you see that at some point you might have to slow down a bit just to conserve.
Speaker Change: Cash.
Speaker Change: Maintain and run there.
Speaker Change: Yes, I think RK, it's a fair question.
Speaker Change: I think consistent with what I see.
Speaker Change: Said.
Speaker Change: Kyle on a similar threat I think our view is one is our view is that yes, we are still.
Speaker Change: Well ahead of other.
Speaker Change: Technologies attempting to do something very similar to us trying to sequence proteins at the amino acid level.
Speaker Change: We have technology Roadmaps, we while we're investing in a healthy way in R&D I can tell you that we have more ideas than we do programs. So we are making decisions everyday on where to apply that investment.
In an effort to continue to extend that market leadership, but.
Speaker Change: But not.
Speaker Change: Spend.
Speaker Change: Above what we think is prudent for the stage of the business the market dynamics cash balance et cetera. So this is something we.
Speaker Change: As a management team.
Speaker Change: Closely.
Speaker Change: Sort of watch and talk about we have mechanisms in place to really monitor the way, we're allocating that R&D investment across.
Speaker Change: Those may be longer term investments in research or innovation versus the product development efforts that will directly lead to product launches in the nearer term and can be capitalized on commercially. So we're very careful with those allocations and these are all things, we discussed very openly and candidly with with our board and.
Speaker Change: Get great counsel and advice from those folks and I think right now we.
Speaker Change: We collectively.
Speaker Change: Are comfortable with the way, we're investing we were comfortable with where our runway is but we are we are taking in data and watching the markets and the trends just as everybody else isn't.
Speaker Change: If things were to deteriorate in the macro economy in some way.
Speaker Change: We've shown a willingness in the past to be proactive here and make changes when they are called for but at this point, we think we've done that.
Speaker Change: Some of that hard work really have the investments focused the right way and believe we've got it allocated to the most high value programs and we're sort of continuing with that approach at this time, but always monitoring watching and prepared to react if indeed.
Speaker Change: Sort of if it's required.
Speaker Change: Okay. Thanks for that and then.
Speaker Change: Just this morning, there was a webinar by runoff.
Speaker Change: One of them that can emissions, who has been using our system.
Speaker Change: Howard such conversations.
Speaker Change: By their commissions to our then current emissions how does that's helping out.
Speaker Change: Is that.
Speaker Change: Is that sort of thing that you're trying to do in terms of soft.
Speaker Change: Sure.
Speaker Change: Sorry.
Speaker Change: And our software manner.
Speaker Change: Two.
Speaker Change: Luke propagate the utility of our systems.
Speaker Change: Yes, I think the way to think about it is we see peer to peer.
Speaker Change: As.
Speaker Change: A very powerful sort of medium to gain.
Speaker Change: To gain awareness and interest in the technology I think in this case youre talking about a webinar that a customer did but we also.
Speaker Change: RK have hosted.
Speaker Change: Sort of what we call user group meetings, where we invite both current and perspective customers to virtual events, where theyre able to hear about the type of research our customers around the world are doing with the technology here what other people are doing ask questions about.
Speaker Change: How the technology has performed what it's been like to implement it in their laboratory so.
Speaker Change: I think that adds on top of the posters that get presented at meetings or the papers that get published I think it's to me. It's a collective of activities that are about.
Speaker Change: Customers and researchers sharing their experiences and trying to provide people with their perspective.
Speaker Change: And really just build that peer to peer.
Sort of those linkages I think it's a nice complement to the direct selling activities you do and I think it's an important part of.
Bringing new technologies to market.
Speaker Change: And doing so in a very high integrity high scientific sort of focus.
Speaker Change: Thank you. Thank you Jeff for taking my questions.
Jeff Hawkins: Yeah welcome.
Jeff Hawkins: Thank you and this does conclude today's Q&A session I would like to turn the call back to Jeff Hawkins for closing remarks. Please go ahead.
Jeff Hawkins: Thank you for attending our call today, we look forward to providing more business updates during our next earnings call.
Jeff Hawkins: Thank you for participating in today's conference call you may now disconnect.
Jeff Hawkins: Okay.
Jeff Hawkins: [music].
Jeff Hawkins: Okay.
Jeff Hawkins: Okay.