Akoya BioSciences, Inc.

Good day, and thank you for standing by. Welcome to the Akoya Biosciences first quarter 2023 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand it over to our first speaker.

Thank you, Operator, and thank you to everyone who is joining us today on this call. I'm Priyam Shah, Head of Investor Relations at Akoya Biosciences. On the call today, we have Brian McElligan, Chief Executive Officer, and Johnny Yak, our newly appointed Chief Financial Officer. Earlier today, ACOIA released financial results for the first quarter and did March 31st, 2023. 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 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 the COIS business, please refer to the risks identified in our filings with the U.S. Securities and Exchange Commission, including in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2022, filed on March 6, 2023, and subsequent filings of the SEC, including our quarterly report on Form 10-Q for the quarter ended March 31, 2023, filed today, May 8, 2023. We urge you to consider these factors, and you should be aware that these statements are considered estimates only and are not a guarantee of future performance. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 8th, 2023. 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. The audio portion of this call will be archived on the investor section of our website later today under the heading events. And with that, I will now turn the call over to Brian.

Thank you, Prem, and good afternoon or evening to everyone. We appreciate you joining us today. On today's call, we will discuss our performance for the first quarter, review our product strategy, and give updates on the upcoming product launches. Johnny will then provide a more detailed look at our financials, business trends, and outlook. I'd like to start by extending a warm welcome to Johnny Eck, who joined Acquia's leadership team as Chief Financial Officer in March. Johnny brings more than 20 years of financial and operational leadership across the diagnostics and life sciences industries, including at leading companies like Affymetrix, Genmark, and most recently, Specific Diagnostics. Johnny succeeds Joe Driscoll following his retirement. Joe was an integral part of Acquia's success over the last four years. and guided the company through an incredible growth trajectory, including our IPO. He will be missed, and I wish him a wonderful and well-deserved retirement. Additionally, we announced the appointment of Jennifer Comichai as our new general counsel. She will be a vital member of the executive leadership team and will oversee all the company legal activities. So let me move on briefly to summarize our performance in Q1. Akoya had a very strong start to 2023, highlighted by the placement of our 1000th instrument in the field in April. This was a major milestone for the company. We also reported record revenue of $21.4 million for the first quarter, a 27% growth over the prior year. Our continued robust growth is a byproduct of our leadership in spatial biology, delivering a portfolio of products and services spans the full continuum of market opportunities from early discovery to translational and ultimately the clinical markets. Now, this is an important and valuable differentiator for Akoya. That is, we're achieving success across a broad range of market segments with complete end-to-end solutions purpose-built to serve the unique needs of each customer type. This range and diversity of products provides the company with a strong foundation and the core fundamentals for both near-term and long-term sustained growth. A key demonstration of our current and predictor of our ongoing success is the continued and rapid growth of publications featuring ACOIA's platforms. As of March 31st, there are now 860 publications featuring our solutions, a 62% growth from the prior year period. Additional highlights for the quarter include $5.7 million in reagent revenue, a 27% sequential quarter-over-quarter growth, and the largest quarterly reagent revenue in ACOIA's history. We reported $5.9 million in service and other revenue, a 64% year-over-year growth driven by the continued success of our lab services business. Prior to reviewing our forthcoming strategic initiatives, I want to spend a minute to review and reiterate ACOYA's multi-year strategy initiated following our IPO in April of 2021. Our primary goal was to establish ACOYA as the market leader in spatial biology from discovery to diagnostics. Now, there's two phases to this strategy. The first phase was initiated following the IPO and lasted to the end of 2022 and included three distinct strategic objectives. First, following the IPO, we made immediate investments in R&D to develop and deliver a complete and industry-leading portfolio of instruments and solutions to serve the discovery, translational, and clinical markets. We expanded our SG&A organization to have the scale, the expertise, the processes, and the systems in place to immediately capitalize on these product launches to drive revenue growth. Third, we solidified the clinical readiness of our organization and our product portfolio to set the foundations to achieve our long-term goal of penetrating the large spatial biology clinical camp. And by all accounts, We successfully executed on this the first phase of our strategy. Specifically, we delivered solid revenue growth ahead of expectations every quarter since our IPO in April of 2021 through Q1 of this year. We successfully launched new products like Diffusion as key drivers of this growth. And we launched and expanded our lab services business and achieved CLIA certification culminating in our first companion diagnostic partnership. Our revenue performance, 1,000 instruments in the field, and nearly 900 publications are the most obvious metrics that highlight our solid R&D and commercial execution. And now in 2023, we are embarking on the second phase of this multi-year strategy to lead in spatial biology from discovery to diagnostic. And now underway, the objectives of this second phase include the following. First, with our organization now at a scale to deliver on our strategic priorities, we will focus on improving operational leverage by limiting and targeting our investments while also continuing to deliver robust top-line growth. Second, we're focusing our R&D initiatives on workflow improvements and reagent solutions that drive increases in consumable revenue and system pull-through. Over time, we expect that these high margin reagents will contribute a growing percentage of our total overall revenue, driving an increase in our gross margins. Third, we will continue to focus on advancing our clinical market development efforts, lab services, and advancing and expanding key partnerships like Akron and Agilent to begin to address the significant spatial clinical opportunity. The goal of this second phase of our strategy will be to deliver sustained high top-line growth with increasing margins, achieve cash flow positivity in 2025, and to expand on our success in the clinical market. So now let me walk through our product roadmap for this year with the goal of continued workflow simplification and consumable revenue growth. We have coordinated priorities for investments and improvements across reagents, instruments, and software. We expect that our expanded reagent menu with our PhenoCode discovery and signature panels will drive an increase in system utilization, Plex, and pull-through. Our planned hardware upgrades on both the PhenoCycler Fusion and the HT will further simplify our workflows and also contributing to utilization and pull-through growth. And our expanding ecosystem of software partners will reduce our customers' time from data to answer. Let me talk in more detail in each of these, first starting with our reagent strategy. We are expanding our reagent menu this year with ready-made panels for both the phenocyclic diffusion for HyFlex Discovery and the PhenoImager HT for high-throughput translational studies. These biomarker panels fall under our PhenoCode reagent brand and include our PhenoCode discovery panels for the phenocycler fusion and the PhenoCode signature panels for the PhenoImager HT. The discovery panels will have a rolling launch throughout 2023. The first panel focused on immune profiling was launched at this year's AACR. The next three panels were launched throughout the second half of this year. These panels are designed in a modular fashion of 10 to 20 markers, providing our customers the ability to combine them while also including additional ACOIA catalog antibodies or their own as needed. For the translational clinical markets, we're launching five PhenoCode signature panels for the PhenoImager HT. The first three panels were launched in Q1, and the next two are due in the second half of this year. These panels were created for the rapidly advancing immuno-oncology therapy landscape that includes nearly 6,000 ongoing clinical trials. The signature panels enable fast and scalable assay to development and deployment, and accelerating utilization and higher revenue per sample on our HT system. With the launch of these high-value reagent panels, we're also making continued workflow improvements across all of our systems to simplify and accelerate our workflows. As previously discussed, the Fusion 2.0 instrument field upgrade is planned for this the second quarter and will deliver an increase in throughput and workflow simplification for our customers. This upgrade includes a multi-slide carrier on the fusion for parallel processing of tissue samples, which effectively doubles the system throughput from approximately 10 samples per week to up to 20 or more samples per week. This upgrade also includes the necessary hardware and software components to support biotechnics R&A scope to be used on the phenocyclofusion. On the PhenoImager HT, we are continuing our efforts to simplify and streamline our informatic workflow and post-processing to a true clinical standard. In mid-2023, we plan to introduce further improvements to the HT that moves the post-processing and tissue analysis steps directly onto the HT for on-instrument real-time compute. The result will be a several-fold reduction in image post-processing and turnaround time. This upgrade supports our translational and clinical customers' demand for a rapid and standardized workflow to drive throughput and standardization. Expanding our content menu and streamlining our workflows are two out of the three necessary improvements to drive increased system use. continue to advance and improve our data analysis and software solutions is the final piece. As we have discussed, our software strategy is grounded in two assumptions that are absolutely proving true. First, the rapidly expanding spatial biology market is driving the introduction of many new powerful data analysis solutions from both industry and academia. Our customers benefit the most if we can partner with these groups to ensure compatibility with our platforms. Second, our resources are better spent enabling these partners versus building a single solution that must serve this broad range of customer needs. And to remind you, Akoya's platforms leverage an on-instrument image processing and file compression technology that reduces file sizes by 30-fold. from terabytes to gigabytes, into a standardized file format called QPTIF. Now, this novel and proprietary technology enables an ease of data transfer through this standardized format to help simplify and accelerate the development of third-party software solutions. At ACR, we announced the newest member of a software partner ecosystem, EnableMedicine. Enable is now commercializing a cloud platform specifically optimized for phenocycler data sets. To date, they have already established the platform's robustness, having analyzed over 20,000 samples on the Enable cloud platform. Available as a software as a solution package, it will accelerate the ability of Akoya's customers to go from data to cell phenotypes to insights in minutes or hours instead of days or weeks. In addition to this partnership, we have also partnered with other established industry leaders like Visioform, Indica Labs, Path AI, and Oracle Bio. We expect the continued growth of spatial biology will spur ongoing developments of additional software solutions for the discovery, translation, and clinical markets. In addition to the upstream discovery market, we continue to make great progress in the downstream translational and clinical diagnostic markets, leveraging the PhenoImager HT and our Advanced Biopharmaceutical Solutions CLIA Lab or ABS. Our partnership with Angeline has already generated meaningful customer engagements with top biopharmaceutical precision medicine groups, driving and expanding our ABS pipeline. In addition, Our agreement with Akravan Therapeutics to exclusively co-develop and commercialize a first-of-its-kind spatial signature companion diagnostics continues to advance. Akravan recently announced that it anticipates initial clinical data from the Phase II multicenter open-label trial in patients with platinum-resistant ovarian, endometrial, and urothelial cancer during the second half of 2023. Now, to review, we're focused on the following initiatives throughout the rest of 2023. First, continue to deliver new applications and drive further workflow and speed improvements to increase the reagent pull-through on the phenocycler fusion in the discovery market and the PhenoImager HT for the translational and clinical markets. Second, continue to partner with leading biopharma, medical centers, CROs, and diagnostic leaders to drive the adoption of the PhenoImager HD in the translational research and clinical diagnostic markets. Finally, with the support of our new and expanded leadership team, we will drive operational efficiencies and make limited and targeted investments going forward to achieve cash flow positivity in 2025. Now, with that, I will now turn the call over to Johnny to discuss our financial results. Johnny?