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spk03: Ladies and gentlemen, thank you for standing by and welcome to the Akoya Biosciences first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker 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. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, David Deichler, Investor Relations. Please go ahead.
spk07: Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from ACOIA, we have Brian McGilligan, Chief Executive Officer, and Joe Driscoll, Chief Financial Officer. Earlier today, ACOIA released financial results for the first quarter ended March 31st, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with ACOIA's business, please refer to the risk factors section of our Form S-1 filed with the Securities and Exchange Commission on April 15, 2021. We urge you to consider these factors. You should be aware that the statements should be considered estimates only and not a guarantee of future performance. The conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 18, 2021. ACOIA disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Brian.
spk02: Thank you, David. Good afternoon, everyone, and thank you for joining ACOIA's first quarter earnings call. Joe and I will start with prepared remarks, and then we'll be happy to take some questions. So I'd like to start by saying that we're very excited to be speaking with you on our first quarter following our recent IPO on April 16th, where we listed on NASDAQ and raised $151 million in gross proceeds. And on behalf of ACOIA, I'd like to thank everyone who was involved in the IPO. We are now better positioned to execute on our mission of delivering a revolutionary class of spatially derived biomarkers to empower life sciences researchers to better understand disease and predict response to therapy. While we had the chance to tell our story to many of you through our IPO process, we will integrate within today's call and my remarks or a review of ACOIA's spatial biology platforms. We're pleased to be able to report that we had a strong first quarter with reported total revenue of 12.2 million coming in at the high end of our previously reported range of 12 to 12.2 million. As noted, this performance was achieved prior to the benefit of the additional capital investment from our recent public offering. And with our demonstrated momentum and the benefit of the additional capital, we are confident that we are on track to execute our strategic plan for 2021. Some additional first quarter highlights with more detail to follow shortly include we sold 37 instruments in the first quarter. This is higher than any quarterly total achieved in 2020. We saw continued and meaningful acceleration of our peer-reviewed publications. And with the IPO funds in hand, we began aggressive expansion of our commercial and R&D teams to accelerate our strong momentum as a leader in spatial biology. For background and review, spatial biology refers to a rapidly evolving technology that enables researchers in academia and biopharma to detect and map distribution of cell types and biomarkers across whole tissue samples at single cell resolution. ACOIA offers solutions to perform this tissue analysis and spatial phenotyping to scientists across the full continuum, from discovery through translational and clinical research. By way of comparison, current genomic and proteomic methods such as Next-Gen sequencing, single-cell analysis, flow cytometry, mass spectrometry. They do provide meaningful data, but require the destruction of the tissue sample for analysis. While these approaches are clearly valuable and broadly adopted, they do not provide the fundamental information about tissue architecture, cellular interactions, and localized measurements of key biomarkers. This spatial context is central. ACOIA has developed and deployed our Codex and Phenoptix platform to address the profound opportunities and scientific discoveries enabled by spatial biology. We provide end-to-end solutions that enable researchers to quantitatively interrogate a large number of biomarkers and cell types across an intact tissue section at single-cell resolution. The result is a detailed and computable map of the tissue sample that thoroughly captures the underlying tissue dynamics and the interactions between key cell types and biomarkers. Akoya's platforms are designed to serve the unique needs of our customers in the discovery, translational, and clinical research markets. Both Codex and Phenoptix offer seamless and integrated workflow solutions for our customers, including important benefits such as proprietary reagents to analyze a variety of tissue types, automated sample processing, scalability, comprehensive data analysis and software solutions, and dedicated field and application support. With these platforms, our customers are performing spatial phenotyping and developing a deeper understanding of complex diseases such as cancer, neurological and autoimmune disorders, and many other therapeutic areas. Our first platform, Codex, is an ultra-high parameter and cost-effective platform which is ideally suited for discovery research and provides the capability to identify more than 40 biomarkers in a tissue sample. Codex was originally developed in the lab of Dr. Gary Nolan at Stanford University and was launched in 2019. In the first quarter of 2021, we sold 20 Codex instruments compared to a total of 46 in all of 2020. The install base for Codex was 132 instruments as of March 31st of this year. And while we saw a real impact from COVID in 2020, we are extremely excited about the momentum we are seeing for Codex in 2021. Our second platform, Phenoptix, is a high-throughput spatial biology platform with the automation and robustness needed for translational and clinical applications. This workhorse platform enables researchers to visualize and analyze and quantify and phenotype cells in situ across the entire slide at subcellular resolution. Our proprietary multispectral imaging technologies enables whole-slide scanning and 10 to 15 minutes providing our customers in the translational and clinical research with the required and necessary automation and throughput and robustness. The Phenoptix product line is currently comprised of three scanners, the Mantra, the Vectra, and the Polaris, with the Polaris being our signature platform and the most popular solution. In the first quarter, we sold 17 Phenoptix instruments, growing the install base to 455 Phenoptix instruments. Across both Codex and Phenoptix, our total instrument install base grew 28% year over year, despite substantial impact from COVID. Reagent revenue was $2.5 million in the first quarter of 2021. And as discussed through IPO, this is an important area of investment for Akoya, and we anticipate strong growth here in 2021 and beyond. Reagents are a key revenue contributor to our business and have a positive impact on our gross margins. The quality and the value of our solutions is demonstrated by our broad customer base, our relationship with key thought leaders, and an extensive and accelerating publication list. As noted earlier, the rate of publications utilizing our technology continues to accelerate. There were 109 peer review publications in 2020. That's a near fourfold increase over 2019. We have already seen over 60 new peer review publications in the first quarter of 2021. That is also a nearly fourfold increase over the same period last year. A key driver of these publications and our commercial success is the growing body of evidence that spatial biology solutions deliver significant value to our customers and are increasingly becoming a preferred modality for biomarker analysis. One recent publication highlight comes from the team at the Providence Cancer Institute and was just recently published in the journal Breast Cancer Research. They used our Phenoptix platform to measure tumor infiltrating lymphocytes, PD-L1 expression, and other immune variables to enable, and I quote, a comprehensive characterization of activity of novel immunotherapy agents, close quote. The paper highlighted both the required concordance with current clinical assays, and importantly, the enhanced precision and predictive power enabled with Phenoptix, and I'd invite you to look at that publication. As with the team at Providence, we are grateful to have relationships with leading biopharma companies, top research institutions and medical centers, such as Dana-Farber Cancer Institute, Johns Hopkins University, UCSF, and MD Anderson, and many others. These collaborations and partnerships help demonstrate the utility of our solutions across a broad array of applications including immuno-oncology, immunology, neuroscience, and developmental biology. Specifically, our partnerships in the field of immuno-oncology are delivering real advancements in translational and clinical research. For example, ACOIA's spatial biology platforms were featured in several talks at this year's AACR meeting, and here are three highlights. First, in line with our March 2nd announcement of our partnership with Johns Hopkins, Dr. Janice Taub highlighted best practices of their validation efforts on our platform as part of a session on future directions for immunotherapy diagnostics. Second, Dr. Laura Esserman from UCSF and principal investigator on the I-SPY trials outlined her work to leverage the Phenoptix platform to identify spatial biomarker signatures in breast cancer. Third, Dr. Gary Nolan of Stanford University, ACOIA founder and Codex inventor, gave a plenary talk detailing his advanced work on Codex to understand patient outcomes in colorectal cancer and cutaneous T-cell lymphoma. Consistent with the theme of partnering with thought leaders, Akoya made two recent announcements further supporting the goal of driving accelerated adoption of and innovation on the Codex platform. First, we announced our Imaging Innovators Network, it's termed I2, which is a collaborative network of leading scientists specifically aimed at supporting open innovation on Codex for rapid application expansion. And I invite you to go to our website to read our most recent press release on the I2 network. Second, yesterday we announced our co-marketing agreement with ZEISS, one of the world's leading microscopy vendors, to further enhance the integration of our platforms for the benefit of our customers. Following our successful IPO, Akoya remains focused on driving revenue growth by investing in the business with an immediate focus on expanding our commercial team and accelerating our research into development. In the first quarter, we added 21 people to the organization, bringing our headcount up to 190. We also recently added the newest member of our executive team, Dr. Frederick Pla, who joined Akoya in March as our Chief Operating Officer. Fred most recently served as Chief Operating Officer at the Parker Institute for Cancer Immunotherapy and previously served as COO of Genomic Health prior to its acquisition and through its acquisition by Exact Sciences in 2019. He also has an impressive history at Life Technologies and GE. Fred's operational, scientific, and market expertise are valuable additions to our organization. In summary, we are pleased with our first quarter performance, achieving great progress across a range of important metrics, and we look forward to executing our financial and strategic plans as we move forward through 2021. I will now turn over the call to Joe Driscoll to discuss our financial results. Joe?
spk06: Thanks, Brian. Good afternoon, everyone. As Brian mentioned earlier, total revenue for the first quarter of 2021 was $12.2 million. compared to 11 million in the first quarter of 2020. As a reminder, we have seasonal fluctuations in our business, where the first quarter is typically our lowest revenue quarter of the year, the second and third quarters being somewhat higher than Q1, and the fourth quarter being our strongest. We expect 2021 to follow this quarterly pattern. Product revenue was 10 million for the first quarter of 2021, compared to 8.9 million in the first quarter of 2020. Services and other revenue totaled 2.2 million for the first quarter of 2021, as compared to 2.1 million in the prior year. Within product revenue, two important categories are instrument revenue and reagent revenue. Instrument revenue was 6.8 million in the first quarter of 2021, compared to 6.7 million in the prior year quarter. Reagent revenue was 2.5 million in the first quarter, of 2021 versus 2.1 million in the first quarter of 2020. We saw meaningful orders near the end of the first quarter for both instruments and reagents, resulting in strong backlog heading into the second quarter. We monitor instruments sold and the install base as key performance indicators for our business, which Brian discussed earlier. We had a strong quarter with 37 total instruments sold highlighted by 20 Codex installations. Over the last 12 months, our total installed base has grown 28% to 587 instruments as of March 31st, 2021, which gives us a great base to drive growth in reagents and all other parts of the business. We continue to expect a solid recovery in our business in 2021 after some COVID-related disruption in 2020. Gross profit was $7.4 million in the first quarter of 2021 compared to $6.7 million in the first quarter of 2020. This resulted in solid gross profit margin of approximately 61 percent. As reagents become a larger portion of the overall revenue mix, this will benefit gross margins in future periods. Total operating expenses were $12.8 million in the first quarter of 2021 compared to $8.1 million in the first quarter of 2020. As discussed during our IPO process, the increase was part of our strategic plan to invest in the business as we aggressively hired during the quarter, in addition to increasing marketing spend. Our plans are to invest the IPO proceeds heavily into the business, especially in expanding the worldwide commercial team, as well as in research and development to accelerate progress in a number of active projects related to instruments, reagents, and software. We expect the total operating expenses will be at least $15 million for Q2 of 2021. Net loss for the first quarter of 2021 was $8.1 million compared to $2.1 million in the first quarter of 2020 due to increased investment in the operating expenses and certain non-cash charges. We ended the first quarter with $11.7 million of cash. In April, the net proceeds of the IPO after deal-related fees totaled approximately $138 million, which gives us significant resources to invest in the business. Post-IPO, as of April 30th, total common shares outstanding are 37.1 million, and fully diluted shares are 41.1 million. Moving on to our outlook for 2021, we expect full-year 2021 revenue to be at least $52 million. As highlighted earlier, we remain confident in our ability to deliver strong growth in 2021 and are anticipating second quarter revenue growth of approximately 45 percent over the prior year second quarter. The first quarter results represent a solid start to fiscal 2021, and we are focused on delivering consistently strong results each quarter. Now I'll turn it back over to Brian.
spk02: Thank you, Joe. In summary, we continue to see robust adoption of our Codex and Phenoptix solutions in the discovery, translational, and clinical research markets. We're very pleased to report strong results in our first quarter as a public company. We're thankful for the hard work of our dedicated ACOIA team and for the support of our customers and shareholders. Following the IPO, ACOIA is well positioned for growth and we're excited about the opportunities ahead. At this point, we will open up the call for questions. Operator?
spk03: Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by, we'll compile the Q&A roster. Our first question comes from Thea Savant with Morgan Stanley. You may proceed with your question.
spk05: Hey, guys. Good evening. Brian, just wanted to get your take on sort of reagent trends, particularly in April and into May here. You know, and where I'm coming from with that question is that a couple of your peers saw some residual COVID impact continuing, and they expect that to continue through the second quarter. So just wanted to get your take on sort of lab activity levels, where they stand today versus pre-pandemic, and what are the assumptions you're baking into your 21 outlook?
spk02: Yeah, it's a great question, Tejas. I think what we're seeing is, you know, there were some, you know, a bit of a hangover. Some instances on the capital equipment side, I recognize that wasn't your question, in Q1, a few instances where COVID had an impact. But for us in our business, as we're looking at the activity here in April and May, we're continuing to see growth versus Q1. So, we're really continuing to see a resurgence of our portfolio in terms of our reagent consumption. Is there still some sort of lingering COVID impact? You know, perhaps some, but I think not to an extent where it's going to meaningfully mute our performance in Q2. And I'd invite Joe maybe to add any color if you'd like.
spk06: Yeah. Yeah. Similar to what Brian said, you know, we're seeing good ordering levels across the board in Q2 and, You know, you can expect a number $3 million or more in Q2 for reagents versus the 2.5 we had in Q1. So we're feeling good about that.
spk05: Got it. Very helpful. And then just in terms of the rapidly evolving competitive landscape here in terms of, you know, instruments with single cell or perhaps even subcellular resolution, Brian, can you share some light on what the product pipeline looks like for Akoya over the next sort of 12 to 18 months, particularly on the Codex side of things?
spk02: Yeah, I mean, I think we're going to probably withhold explicit details on the exacting product development launches that are forthcoming in likely impacting 2022. I think our focus right now is really driving adoption of the existing products, but maybe a couple of additions to adjust. Number one is I think what we're seeing in the market, and I think it's an endorsement of spatial biology, is a real flood of new entrants, some really powerful announcements by some of our colleagues of forthcoming future products. And I think our mindset right now as a company, with Codex having been on the market just since 2019, and 2019 also being our first full year with Phenoptix, is really focused on driving the performance of those existing products. That said, I think you can expect us to continue our advancements on two fronts. You'll see forthcoming product announcements as we get, you know, through this year into next year, but also as highlighted in some of the opening comments, Tejas, we feel like partnerships are also a key part of our product innovation driver, and I made some specific mentions to some stuff on the discovery side with Codex, with our I-squared innovation network, using our customers to help drive innovation, but also our partnership with ZEISS. So, you know, we'll review more details on our product roadmap as it comes, but I think what you can also see, as I mentioned, is a parallel branch of leveraging our partners to help drive innovation.
spk05: Got it. And then one final one on OPEX for Joe. Joe, you guys, it looks like you came in a touch ahead of where we were in terms of the first quarter. So should we think of $15 million essentially as a run rate to use on a go-forward basis for OPEX? And then on a related note, can you share any updates on your investments in the CRO service offering? I mean, you're obviously seeing very strong traction there. So any plans to expand capacity, or do you essentially view it as a hook to drive instrument purchases down the road?
spk02: So, Joe, why don't you take the OPEX, and I can take the CRO portion.
spk06: Sure, sure. So definitely for Q2, we believe OPEX will be $15 million. And then... we see it expanding actually beyond that, you know, for Q3 and Q4. So if you used 15 million in Q2 and then bump it up, you know, closer to 16 for Q3 and a little bit more for Q4, because we're in the mode right now where we're in an aggressive investment mode and we're trying to hire people really in all phases of the business. So that would be my recommendation on OpEx. And Brian, do you want to? talk about the CRO?
spk02: Our CRO lab services business is really a strategic arm of our business, working very closely with our key biopharma partners on clinical trial work. And we are investing in not just the laboratory resources, but dedicated business development and field, you know, to help drive that portion of the business. It's not focused on doing proof of concept studies to support capital purchases of our instruments. It really is a strategic driver as part of our aim to work with large pharma on clinical trials and become really integral and integrated to their clinical trial efforts.
spk05: Got it. Very helpful. Thanks for the time today, guys.
spk02: Thank you, Teja.
spk05: Thank you.
spk03: Thank you. And our next question comes from Stephen Maul with Piper Sandlin. You may proceed with your questions.
spk04: Oh, great. Thanks, guys. Thanks for the questions.
spk02: Hey, thank you, Stephen.
spk04: So first, on the headcount expansion, I was wondering if you could provide some color on that and a sense for where the ads were. It sounds like they were mainly in sales and commercial, so maybe just a little bit more color on that if you could. And then also if any of the headcount expansion was global.
spk02: Yeah, so I would say of the numbers that we quoted, they're evenly split between expanding our commercial team and our research and development organization, so it's consistent with our priorities on the use of funds. And the expansion of the commercial team is global across all geographies, and that will continue through the balance of the year.
spk04: Okay, great. And then digging in a little bit on the ZEISS co-marketing agreement, can you give us a sense on how that's structured? Is it going to be some ACOIA resources and then ZEISS resources combined for the co-marketing of Codex? And maybe give us a sense for their Salesforce capacity and commercial scale that they can bring to bear.
spk02: Yeah, so at a high level, the real objective, there's really two prongs to that partnership. Number one, as you know, Codex integrates with existing microscopes, and what this partnership allows us to do is really be very close with their development teams on ensuring current and ongoing integration with their microscope platform and platforms going forward. That is the... You know, that is the technical side of that partnership. You know, in terms of the co-marketing agreement, we're really just beginning to map out the detailed co-marketing activities and exactly how we sort of leverage our respective marketing and field organizations. But, you know, they've got – they really are one of the leaders in terms of their install base for microscopes that we integrate with. And I can't at this time speak to the exacting scale of the number of field reps that they have.
spk04: Okay, great. Thanks for that, Keller. And my last question on the Imaging Innovators Network, is this what you guys are doing for – you're providing it for free, but is this what you're providing as a Proxima software on a fee-for-service, except you're giving it for free?
spk02: I really appreciate you asking that question and giving me a chance to get more clarity. So the – the announcement of the Imaging Innovators Network is these are instruments that are purchased. We're not giving away Codex instruments. And what is powering that, our ability to build a network of users of Codex that are exploring novel applications, our ability to do that, and that is the goal of that network, Stephen, is to allow people to innovate on Codex because, if you recall, Codex really is an in-situ reagent delivery device, and it allows our customers, when we sort of unlock the system, as outlined in the press release, it allows them to integrate Codex with novel microscopy technologies, attempt new assays. So this is really about expanding the field of applications that Codex can attack and leveraging real thought leaders in the market to develop new capabilities on Codex. That's what it's really about. Proxima is a whole separate offering, and that is our cloud-based compute technology that is enabling our customers to leverage the power of the cloud to store, share, and analyze their data sets. So hopefully that clarification was helpful.
spk04: Oh, yeah, it was. Yeah, I appreciate the questions, and congrats on the quarter.
spk02: Thank you, Stephen. I appreciate it.
spk03: Thank you. And as a reminder, to ask a question, you'll need to press star 1 on your telephone. Our next question comes from Julia Kim with J.P. Morgan. You may proceed with your question.
spk01: Hi. Good afternoon. Congrats on the quarter. Maybe just to follow up on the I-Square partnership, could you give us an idea of the scale of this network, like how many labs are involved? And you mentioned, you know, this is really to facilitate research. development of novel applications, what specific applications should we be thinking about? Is it kind of, you know, expanding into other disease areas, or should we think about it another way? And also for, you know, customers involved in this network, are there any preferential pricing or terms that we should be thinking about?
spk02: Yeah, I think there are some details within the agreement, but in terms of the scale right now, We're talking sort of 10 to 20 sites, and we have a lot of different areas that we're investigating with the partners. We're just onboarding many of those now, and they include novel microscopy approaches. They include novel assay methodologies on the Codex instrument. It really is about expanding the application menu that's available on Codex, not just in terms of analytes, but other microscopy technologies. So that That's really the focus is leveraging the capabilities of our customers and their ability to innovate to help drive the advancement of the Codex application space.
spk01: Got it. That's very helpful. Then in terms of Codex, obviously the placement strength – is above what we were modeling. So could you just give some color on the drivers of this strength and what surprised you to the upside? And have those been mostly greenfield placements, or have you seen any, you know, competitive wins against other discovery spatial platforms?
spk02: Yeah, I mean, there's always evaluation of competing technologies, and it just comes down to the scientific preferences of our customers. And I think what's what's really growing our ability to continue to do well in Codex is the recognition and continued proselytization of the use of the platform, not just at conferences like the one I highlighted, but also with growing publications. You know, as the platform is in the market, you know, for more meaningful periods of time, you know, people begin to recognize the power of the system, and I think we're just beginning to feel that momentum. And again, we sort of, like everybody, we had this sort of wet blanket that was last year, which was one of our first full years of Codex. So we're just really coming out of that kind of regaining the momentum that we had.
spk01: Got it. Very helpful. And last one from me, in terms of the Salesforce expansion, you've added 21 additional people already. How should we think about the cadence of additional hires throughout the year, and what's the timing for these new hires to reach full productivity?
spk02: Yeah, and we will continue to expand our sales team throughout this year and into next year. And I think the number that we gave you, you know, in aggregate across the company of 21, you know, we will continue to aggressively hire at that rate or hire quarter over quarter, you know, generally equally balanced likely between our commercial and R&D teams. So that is our objective through this year, and I think that the numbers we gave you for for this last quarter, I think, are our starting benchmark. And, you know, Jill, feel free to add any additional color if you'd like.
spk01: All right, that's great. Thanks.
spk02: Okay, thank you, Julia.
spk03: Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Brian McKelligan for any further remarks.
spk02: Yeah, just in closing, I just want to thank everybody for joining the call and We're looking forward to providing you our next update after this second quarter. So thank you all so much.
spk03: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
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