Berkeley Lights, Inc.

Thank you for standing by, and welcome to the Berkeley Light's fourth quarter 2021 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'll need to press star 1 on your telephone. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Kerry Mandeville, Investor Relations. Please go ahead.

Thank you. Earlier today, Berkeley Lights released financial results for the quarter and year ended December 31st, 2021. If you have not received this news release, or if you'd like to be added to the company's distribution list, please send an email to ir at berkeleylights.com. Joining me today from Berkeley Lights are Eric Hoggs, Chief Executive Officer, and Kurt Wood, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For more information, please refer to the risks, uncertainties, and other factors discussed in our SEC filing. Except as required by law, Berkeley Light disclaims any intention or obligation to update or revise any financial projections or forward-looking statements. whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, February 24, 2022. With that, I'd like to turn the call over to Eric.

Thanks, Carrie, and thank you, everyone, for joining us this morning. On today's call, I will provide details on the continued progress we're making across our business. I will then turn the call over to Kurt to discuss the fourth quarter and full year 2021 results and share our outlook for 2022. During the fourth quarter of 2021, we achieved revenue of $23.2 million, bringing total revenue for 2021 to $85.4 million, above our preannounced range in early January. Key revenue growth drivers were our strategic partnerships and services business, strong sequential recurring revenue, including consumables and direct placements. At Berkeley Lights, our mission is to find the biology that cures disease. To achieve this mission, we have created the most advanced platform to access and understand live primary biology at an unprecedented speed and scale. Underlying our strategy, we will continue to focus on opportunities where our innovative platform can be applied to disrupt the market and unlock significant value. In the early days of Berkeley Lights, our platform was developed to solve high-value problems for customers by providing a significant improvement over existing solutions. As we've continued to develop our platform, we are advancing opportunities where we believe the Berkeley Lights platform provides the only commercially viable solution. We have started to experience increasing levels of demand for these proprietary solutions, allowing for near-term revenue opportunities as well as longer-term participation in downstream economics. such as milestones and royalties. In 2021, we significantly expanded our strategic partnerships and services business, growing revenue more than threefold from $5.8 million in 2020 to $19.9 million in 2021, which included transactions with future downstream revenue participation. Total strategic partnerships and services contract value grew from $200,000 in 2020 to $42 million in 2021. During 2021, we announced two key partnerships with Thermo Fisher Scientific and Bear Crop Science that demonstrated our ability to capture deeper value through our technology. In Q4 2021, we signed two additional partnership agreements with contract values up to $8 million. One was with a top five pharmaceutical company and the other was with Anika Biosciences. which includes potential downstream royalty revenue. In this partnership, ANICO will use our high-throughput functional screening services based on our proprietary cell-free expression technology to rapidly identify and optimize functional antimicrobial peptides capable of killing harmful bacteria, including those that cause outbreaks of foodborne illness. In addition, our platform will be used to find peptides that are toxic to bacteria to create a new antibacterial tag that will then be applied to their bacterial spore-based barn coating technology to protect the food supply chain. An important aspect of these partnerships is a future transition into long-term services, engagements, and revenues. In this business model, we start with an R&D partnership to develop the required workflow and biology, which can span multiple years and is then followed by a distributed service offering at the customer site or internal service in our biofoundry. In 2022, we expect to continue to accelerate growth across our strategic partnerships and services business. In these engagements, our partners are leveraging the capacity of our biofoundry to solve highly complex problems. To serve this rapidly growing part of our business, we recently completed the full build out of our Boston biofoundry, which will provide additional campaign capacity as the business grows. We continue to see expansion opportunities for new and existing customers driven by increased use cases enabled by our workflows. Over the course of 2021, we announced several technology developments with three key standouts. The first was the ability to leverage our proprietary cell-free technology to enable the expression of specific proteins in each nanopen. and then test the function of that expressed protein against live primary cells. We've expressed a variety of proteins from small peptides all the way to full length antibodies and have tested their function to kill particular cell types or bind it to desired targets. This advancement to our technology is the basis for our high throughput functional screening service. The second advancement was developing a scalable way to perform terminal assays without any significant loss of live biology. In addition to cloning and culturing cells in a nanopen, we can now terminally differentiate or even lyse a subset of the cells while ensuring clonality of the surviving subpopulation. This allows us to perform terminal assays or capture internal components of a cell while maintaining the viability of a subset of the clones in the nanopen. Once the analysis of the terminally differentiated or lice cells has been completed, we can use our OEP technology to recover the viable subset of live clones. This opens a whole class of solutions for our customers, such as polyfunctional assays, polygene editing, and precious cell interrogation. It is also a core technology enabling the stable viral vector line workflow that is currently under development. The third development was in the application of our T-cell characterization, or killing assay, to apply to patient samples. Our goal is to ensure our customers have access to the most relevant biology. There are a huge number of cell types, in particular primary disease cells and PBMCs that come directly from humans that cannot easily be cultured and leveraged in therapeutic studies today. Access to primary biology can be achieved through speed enabled by nanofluidics and automation. With this capability, customers can discover new antigens and TCRs, answer questions regarding particular disease progressions, and estimate the efficacy of a particular therapeutic solution. At Berkeley Lights, we are committed to continuing to develop and deliver capabilities that were not previously thought possible through our technology and workflow advancements. As we look ahead into 2022, we are focused on three key areas to drive growth across our business. First, growing our strategic partnerships and services business to enable downstream economics to our differentiated offerings. Second, continuing to release high-value workflows in our core antibody therapeutics market. And third, ramping up our high-throughput functional screening service workflows. In terms of CapEx sales, we are experiencing cash conservation around large capital purchases where those customers are accessing our platform through CROs and CDMOs and postponing or eliminating CapEx purchases. We believe this is in part driven by the current macroeconomic environment and a shift towards conservative capital allocation. While this pressure may cause some delays in the near term, we're confident that our differentiated access models, including tech access and strategic partnership and services, which are designed to better serve our customers' needs in this environment, will continue to see increased demand as we move into 2022. Further, in 2022, we will continue to drive innovation and expand into new market opportunities. Starting with antibody therapeutics, we will continue to deliver and advance our core workflows in both antibody discovery and in cell line development. In antibody discovery, we will continue to expand the diversity of antibodies customers can evaluate on the Berkeley Light's platform. This year, we plan to release a rabbit memory B-cell workflow and a human memory B cell workflow. In addition to these new species, we will also continue to drive assays that help our customers find the highest quality product. Additionally, we plan to release the ability to understand and rank affinity on chip during the discovery process. Adding additional access to diverse antibody solutions and incorporating deeper understanding of how the antibodies will perform will further increase the probability of success that our customers will find treatments and cures against more challenging targets. In cell line development, our customers face challenges manufacturing bispecific and multispecific antibodies. In these modalities, cells are edited to make the bispecific, but the cells also produce unwanted variants, leading to additional costs and timelines during manufacturing. Late last year, we presented data from a collaboration with a major pharma partner. showing we can measure the quality of bite specifics being manufactured by the cells at the time of clonal selection. In 2022, we plan to provide turnkey reagent kits so our customers can include this level of understanding and characterization in our cell line development workflow. Turning to our opportunity in cell therapy, we will springboard off the great work completed by our internal teams to accelerate the manufacturing and quality control of cell therapies. Additionally, we will continue to enable access and understanding of complex cancers by onboarding additional primary tumor types, which will further the understanding of the killing or inhibitory mechanisms using the Bergdahlite cell killing assay. In gene therapy, we expect to deliver our stable viral vector clone selection workflow to Thermo Fisher Scientific as part of our collaboration agreement and wrap up additional commercialization efforts with other partners. Related to synthetic biology, we anticipate releasing certain workflows to Ginkgo over the next couple of quarters to increase their production efforts. Over the course of the year, we plan to also accelerate our high-throughput functional screening capacity and move beyond ag bio. We expect to see additional deal flow here in 2022. As we shared at the beginning of this year, I will be transitioning from my role as CEO to president of the antibody therapeutics business. The Berkeley Knights Board of Directors has initiated a search for a new CEO that is progressing well. Before I hand the call over to Kurt, I'd like to again thank our team for their hard work and dedication towards making our vision a reality. We are at the forefront of something profoundly important, and we continue to push the envelope every day on what is possible through the cutting edge fusion of biology and technology. As we have advanced the platform's capabilities, We increasingly hear from customers how our technology is enabling them to solve complex problems that were previously thought to be unsolvable. I will now turn the call over to Kurt for more details on our financials. Kurt?

Thank you, Eric. Total revenue for the three months ended December 31st, 2021 was $23.2 million, up 7% year over year. Regionally, North America accounted for 60% of total revenue in the quarter, followed by APAC at 33% and EMEA at 7%. Looking at a breakout across the three revenue streams, in the fourth quarter of 2021, revenue from direct platform sales totaled $9.7 million. These results included six platform placements in the quarter, including five CapEx beacons and one tech access subscription, ending the quarter with an installed base of 111 platforms. As a reminder, in Q2 of 2021, we launched a new tech access subscription offering tailored to the antibody discovery and cell line development customers with lower annual campaign capacity requirements. As of the end of the year, approximately 10% of our year-to-date placements were to tech access customers in North America and EMEA. We plan to begin offering the tech access subscription in the APAC region later in 2022. Recurring revenue, which includes revenue related to consumable purchases, subscriptions, and services and warranty, was $6.1 million in the fourth quarter, an increase of 27% over the prior year and up 30% sequentially. The sequential growth from last quarter was primarily driven by the seasonal increase in consumable purchases normally seen in the fourth quarter. Strategic partnership and services revenue was $7.4 million in the fourth quarter of 2021, up $1.6 million from the prior year and up $1.9 million sequentially. These increases were driven by the first full quarter of activity on bear crop science initiative, as well as revenue recognized on a newly signed agreement with a top five pharma customer that Eric mentioned earlier. For the full year, we signed agreements with a total contract value of up to $42 million compared to approximately $200,000 in contract value in the prior year. These bookings include our agreements with marquee players like Thermo Fisher Scientific and Bayer CropScience, as well as $8 million in new deals signed in the fourth quarter. Of the $42 million signed during the year, approximately $11 million was recognized as revenue in 2021. Gross profit for the fourth quarter of 2021 was $16 million compared to $14.8 million in the prior year period. Gross margin for the fourth quarter of 2021 was 69% compared to 68% in the fourth quarter of 2020. Excluding the impact from Ginkgo, gross margin for the fourth quarter was approximately 74%, above our long-term gross margin target of approximately 70%. Fourth quarter 2021 operating expenses were $33.8 million compared to $26.6 million in the prior year and included $5.1 million and $5.7 million of stock-based compensation, respectively. The increase was driven by $1.8 million in R&D, $2.7 million in G&A, and $2.7 million in sales and marketing. Net loss for the fourth quarter of 2021 was $17.7 million, compared to a loss of $12.1 million for the prior year period. All net loss numbers are inclusive of stock-based compensation. Looking at the full year, total revenue for 2021 increased to $85.4 million, up 33% year-over-year. Regionally, North America accounted for 48% of total revenues in the year. followed by APAC at 41%, and EMEA at 11%. For 2021, revenue from direct platform sales totaled $46.4 million. Recurring revenue was $19.2 million, an increase of 38% over 2020. Strategic partnerships and services revenue was $19.9 million, growing more than threefold over the prior year. Gross profit for the full year 2021 was $56.6 million compared to $44.6 million in the prior year. Gross margin for 2021 was 66%. Excluding Ginkgo, full year gross margin was 71.5, which is well aligned to our long-term model. Total operating expenses in 2021 were $127.3 million, comprising of $58.5 million of R&D, $43.4 million of G&A, and $25.4 million of sales and marketing. Stock-based compensation, including in operating expenses, was $21 million and increased $10.3 million year-over-year. Operating expenses were up $42.4 million from $84.9 million in 2020 due to an $11.3 million increase in R&D, $10.9 million increase in sales and marketing, and a $20.2 million increase in G&A as we transition to a public company. Net loss for 2021 was $71.7 million, compared to a loss of $41.6 million in 2020. We ended the year with cash and cash equivalent balance of $178 million. Our available liquidity is $188 million, which includes our revolving debt facility. Turning to our 2022 outlook, As we shared at the beginning of the year, we expect revenue for 2022 to grow approximately 30% compared to 2021. Consistent with prior years, we expect revenue to be more heavily weighted to the back half of the year as more business development collaborations and partnerships come online, coupled with our typical seasonality. Embedded in this outlook are a few key assumptions. First, we expect strategic partnerships and services to grow at a faster rate than other areas of our business. similar to what we experienced in 2021. Second, we expect CROs and CDMOs to continue to be a growth driver. Third, we expect campaign capacity to be in line with 2021 campaign. Fourth, we continue to see APAC as an important market for our antibody therapeutic business. Before we turn it over to Q&A, I would like to echo Eric's appreciation for our team for their continued hard work. As we have advanced the Berkeley Light's platform's capability, we increasingly hear from our customers how our technology is enabling them to solve complex problems that were previously thought to be unsolvable. We look forward to continuing to provide revolutionary technology to our customers and to help them advance their discoveries. With that, we will now open the line up for questions. Operator?

Certainly. Ladies and gentlemen, once again, if you have a question at this time, please press star, then 1. On your touch-tone telephone, if your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Julia Chen from JP Morgan. Your question, please.

Hi, good morning. Thanks for the question. I want to start on the organization. You mentioned that business segment alignment is a key near-term focus to drive the revenue inspection at a conference. Could you maybe give us a progress update and if you could give some color on the current morale and team stability, that would be great.

Yeah, thanks for the question, Julia. Great to hear from you this morning. As we continue to move into 2022, Kurt had mentioned that our growth drivers include growing our strategic partnership and services business for ensuring that we enable the downstream revenue and second to continue to release our high value workflows in our core markets and And, you know, our team couldn't be more excited as we continued to deliver, you know, key capabilities in our antibiotic therapeutics market. You know, our development teams continue to be motivated to deliver both the species expansion in antibody therapeutics plus an additional affinity assays. And not only those things, but, you know, in cell line development, we've got some very interesting capabilities that we're delivering in the biospecific space. So, you know, our team continues to be motivated to continue to move forward on our mission for helping our customers find the biology that cures disease.

Great. And then on a quarter specifically, six instrument placements, including tech access. I remember when you pre-announced at the beginning of the year, there were eight placements. So could you maybe bridge the gap for us? Has there been additional delays? And then on a related note, you know, given the noise about biotech funding environment, are you guys expecting any meaningful change in the mix of capital versus tech access this year?

Yeah, Julie, this is Kurt. I'll take that first part. I don't think we ever, you know, specifically said how many placements were in the year. We just gave a revenue number. So the six placements for the quarter is in line with where we were at the beginning of the year when we preannounced. And as you recall, we said we had a few that shifted out of the fourth quarter and into the first half of this year. So that kind of no change there. And those orders that have moved from the fourth quarter, it's not a matter of if they're going to hit, it's when. It's in the first half. We still feel confident about that. And then I'll let Eric address the second question there.

Julie, can you repeat the second question for me, please?

Yeah, I was just wondering, in light of the noise around biotech funding environment, are you guys expecting any meaningful change in a capital versus, you know, tech access mix this year?

Yeah, we, I mean, of course, we're all seeing, you know, cash conservation, you know, potentially happening in that market. But the wonderful thing about our offerings is we have not only the tech access model, but we also have strategic partnerships and services, which, you know, we saw triple from 5.8 million in 2020 to over 19 million in 2021. The additional backlog, we mentioned that we signed $42 million in contract value in 2020, 2021. That, of course, gives us a backlog into 2022. And I think the result of the market situation right now really gives credence to that strategic partnership and services business model, which is one of the pillars of our focus in 2022 to achieve and exceed our outlook.

Got it. Last one from me. You said you're expecting to deliver the cell and development workflows to Thermo around 2Q and 3Q, which I believe will kickstart the subscription revenue stream for you. How should we think about the pull-through, and how long do you expect that subscription revenue stream to last? I believe you also said in prepared remarks that you plan to wrap up additional commercialization efforts with other partners. So just wondering if you could be more specific for Ginkgo or Bayer and how to think about the associated milestones.

This is in regards, of course, to the viral vector workflow. So, yes, we will be delivering cell lines through the partnership agreement in Q2 and Q3 to Thermo Fisher Scientific. The team continues to develop the workflow, and it's progressing quite well. We are entertaining discussions into additional customers participating in that market with us. That will keep you updated with additional announcements as we do with our strategic partnership and services business as those materialize.

And, Julia, like we talked about before, embedded in that contract is, you know, on the delivery of that workflow to Thermo, they will have a subscription on the back end that lasts a couple years that's You know, not a tech access subscription, obviously. It's a significantly higher-priced quarterly-type payment aspect that lasts multiple years.

Got it. Thank you.

Thank you. Our next question comes from the line of Tejas Savon from Morgan Stanley. Your question, please.

Hey, guys. Good morning, and thanks for the time here. So maybe one for you, Eric. On the five direct placements of the beacon that you talked about in the quarter, can you just give us some color on new versus existing customers and any color on sort of, you know, application mix there?

Yeah, we continue to see, you know, additional, you know, new customers and additional customers with, you know, mix in CRO business, Tejas, and and really driven by the workflow applications in antibody therapeutics, antibody discovery 4.0, but also the roadmap of adding additional species in 2022 and also the affinity assay. I think as we continue to move forward, as we briefly talked about before, we do see the rotation of the business towards more of the strategic partnership and services business for us as we move into the future. As we talked about in Q3, we had GSK acquiring their third beacon and also Genovac acquiring their third beacon. So we continue to see great pull from existing customers, but we also have new customers who are understanding that without the technology, they are left with older methods to find antibodies, which are proving more and more difficult to find the hard-to-hit targets.

Got it. That's helpful. And then on the subscription side of things, Eric, I think you guys talked about one subscription this quarter that's sort of a bit of a step down versus the three you saw in 3Q. Can you just sort of help us sort of contextualize that a little bit, particularly given your commentary on, you know, a little bit of conservatism or caution among your customers on CapEx purchases? Sure.

You know, in 2021, we saw our subscription business, you know, be about approximately 10% of our overall placements on the year. And, you know, we felt that that was pretty good in the first year of us going out here. You know, as we move forward, I do believe that we will likely, as cash conservation continues to move forward, that we will see more of that subscription business growing. That being said, Tejas, right, our customers also look at, you know, longer-term ROIs in which it's better for them to purchase the equipment rather than work through the subscription. And so we'll continue to let our customers, you know, decide what, of course, is best for them in regards to their financial situation. But we do provide both offerings for our customers to support them in the decision that they need to make, which would be best for their business.

Got it. And Tejas, Kurt, if I can just add one thing in there, you know, you also see, You know, as we talked about, you know, in the last call and again on this call about the, you know, increased demand coming from CRO and CDMOs. So we have seen, you know, their campaign usage be slightly higher than what we would anticipate. And that would tell me that, you know, some folks are going that route, which again, as we said before, we're indifferent because that means the technology of Berkeley Lights is being used and we're getting that campaign market share.

Got it. And a couple of quick ones for you, Kurt, to follow up. I mean, on that sort of cash conservation mode comment, I mean, how are you thinking about your OPEX cadence through this year? I think you talked about doubling your commercial team in 21 and, you know, obviously R&D investments as well. Just walk us through what your expectations are for OPEX and the cadence through the year.

Look, you know, OPEX will grow at a – you know, we don't give guidance on OPEX in general, but, you know, what we're – is obviously OpEx will grow at a lower rate than what it did in 2020 and obviously at a lower rate than what we're anticipating our revenue to grow when we said revenue would go up about approximately 30%. Obviously, and particularly with some of the geopolitical uncertainty that unfolded overnight, we remain cautious and prudent where we're going to invest. Last year, obviously, the first year being a public company, you have expenses like year one SOX. We obviously had some litigation expenses. and some other things that were going on in the P&L that we expect to be non-returning. So we expect some scale there. But we do believe, you know, like we said with any company, there's a certain amount of, you know, critical infrastructure that you need and that scales pretty nicely thereafter. And we will continue to be prudent. And when the new CEO comes in, you know, I'm sure one of the first things on their mind is going to be, hey, you know, What do we need to do to ensure we preserve as much cash as possible to give us as much optionality as possible and focus on the critical items that matter and continue what Eric has put into place here?

Got it. And then one final one for me on supply chain. Are you seeing any signs of sort of disruptions there and anything you're doing proactively to just stock up on inventories here, perhaps like chips and other components? I mean, to what degree are you sort of future-proofing your manufacturing here, given some of the volatility?

Yeah, I think you hit the nail on the head there. Obviously, some of the supply disruptions are particularly in the microchip and semiconductor shortages that you see impacting audio and others, it's certainly not immune to us. We have semiconductors that are put into our tools, particularly around the optics. We have gone around and tried to secure those types of items as much as possible, and in some cases, buying components that have those chips embedded in them so that we can have as much optionality and flexibility there. It's a very low-cost chip that's used, but it's obviously a critical chip, so buying as much as we can on there. But we obviously have enough demand or enough supply to meet what we believe our demand is for at least through 2022. Got it. Very helpful. Thanks, guys.

Appreciate the time.

Hey, thank you.

Yep, thanks for this.

Thank you. Our next question comes from the line of Brian Weinstein from William Blair. Your question, please.

Hey, good morning, guys. Thanks for taking the question. There's probably not much you can say on the CEO transition, but I am curious if you have any kind of thoughts on transition timing and also what the board is focusing on as far as qualities that they're looking for in a new CEO.

Yeah, absolutely, Brian. Thanks for the question. As we discussed at the beginning of January and now that you know, the board has initiated the search. We've got, you know, Russell Reynolds in, you know, doing the search for us. And we've been seeing some very, very interesting candidates. You know, I think, you know, of course, we can't disclose where we are throughout the process. But, you know, in regards to the characteristics that the board is looking for, right, you know, having a CEO with a proven track record and experience to drive, you know, our type of business, right, around a business segment strategy is going to be important to support the next level of growth and And so, you know, the board is diligently looking for a person with those characteristics. And I'm confident that, you know, we'll find that person. And as I said, in regards to timing, you know, it's, you know, not tomorrow and it's not in a year, right? And so there's some time in between there. And I know that's a large range, but that's where we're at.

Okay. And then on the guidance to 30% growth, I think that gets you to about $110, $111 million. or so in revenue, are you guys able to give us any kind of direction as to the makeup that you expect that revenue to look like in terms of partnership, recurring revenue in direct in 2022? And then longer term, how do you see that mix playing out? Have you guys been able to better refine what you think that longer term breakout looks like between the various categories?

Yeah, you know, hey, Brian, thanks for asking the question. You know, I was going to say approximately 30% for the year. You know, we gave a few nuggets in the script with saying that we expect, you know, the strategic partnership and services business to grow at a faster clip. You know, we had about 7.4, 7.5 million of partnership and services revenue in Q4 last I would expect that to be kind of flattish as we go into Q1, and then we expect, similar to what we saw in 2021, that to accelerate a little bit in the back half of the year. We're obviously, you know, going to grow that business. And if you look at what we did last year, we signed up to $42 million of new contracts last year. In addition to that, you know, some of them now start to have, you know, additional upside in the form of downstreams. revenue participation, whether that be milestones in the case of their, you know, BCS or if it's, you know, the royalty that we saw with ANICA that we announced and signed as part of the $8 million in deals we signed in Q4. So we're seeing good progress there. So I think that's going to be, you know, call it in the, you know, mid-20 to 30% of total revenue. Recurring revenue is going to be, you know, pretty well predictable. And then, you know, the fallout of that's going to be, your direct placement. But we do anticipate it being more back-end loaded. And, you know, historically we've been in that 60-40 split, and I think that's probably what you're looking at this year as well.

60-40, meaning 60 in the back half, 40 in the front half, just to be clear.

Yes, yes, thanks for that clarification.

Okay. All right. Okay, thanks, guys. I appreciate it.

Thank you.

Thanks, Mark.

Thank you. Our next question comes from the line of Mark Massaro from BTIG. Your question, please.

Hey, guys. Thanks for the questions here. I guess, so recognizing that you had six placements in Q4, I think that took you to 36 for the year. I know earlier in the year you had guided for at least 40, but one thing I haven't heard is what your expectation is for capital placements in 2022. I haven't heard any outlook on that. And I guess help me think about that in the context of your commentary of how some of your customers are postponing or eliminating CapEx purchases.

Yes, we're not giving guidance on particular unit placements in 2022, Mark. But what we are providing, we are providing that 22, we expect to continue to grow. And we've pegged the number at approximately 30%. And as we were just discussing right now with Brian, right, you know, the 60% on the back end and 40% on the front end. Although, you know, we have our strategic partnerships and services, we've mentioned that will grow at a faster rate. But, you know, we do see campaign capacity in the market to be in line, if not higher than 2020-2019 campaigns. And when we say campaign capacity, that's the number of campaigns that are running for both therapeutic antibodies and reagent antibodies. So we continue to see the CROs and CDMOs continue to be a growth driver as we customers get into that cash conservation mode, that creates demand at CROs and CDMOs. And we feel that we're really well positioned, both with the tech access model or even direct placements with those customers into that market. So expect to see additional placements in 2022 in both tech access and direct placements. And I do believe that Asia Pacific is going to continue to be an important market as that is an emerging and growing market for us. in our antibody therapeutics business.

And, Mark, one of the things to keep in mind there is we are seeing customers, you know, the trend of them accessing the technology through CROs and CDMOs who aggregate demand, obviously, for, you know, multiple customers. They run at a much higher utilization and, therefore, use higher consumables. We are seeing that, particularly in the capital-constrained, you know, type of environment. So, you know, Like Eric said, we're not giving specific, you know, guidance on the placements. We'll give, you know, colors that unfold throughout the year.

That's helpful. And then can you provide some clarity around the $42 million that you had in your total contract value? It looks like you recognized 11. You've got $31 million left. I mean, how should we think about that backlog playing out in 2022? And just walk us through, you know, some of the mix of that.

Yeah, you know, if you recall what we said on the last call is that, you know, we had secured – we're entering 2022 with about $20 million of, you know, firm kind of backlog of partnerships into – from this partnership and services. You know, and that's up pretty significantly, and that's a nice starting point. You know, that's up significantly from the prior year. We continue to sign new deals, including the $8 million that we signed in the fourth quarter of last year. Um, so, you know, from that aspect, we're not giving the exact cadence that goes out into 2023, 2024, et cetera. But, you know, I think you can look at, you know, our total backlog, including, you know, what was on the books at the beginning of, you know, 2021, you know, we believe about 20 million of that is going to be recognized in the, uh, in, in the, this fiscal year, 2022. And then obviously we expect to continue to sign new deals and, uh, that will add to the revenue of the business development or I should say the strategic partnership and services we'll have for the year. And, again, as you mentioned, you know, of the deals we signed within the calendar year last year, 2021, $11 million materialized out as revenue. And so, obviously, there will be some deals that are signed in 2022 that have, you know, meaningful revenue contribution in 2022. Understood.

Okay. And then my last question, Eric, you talked about, some new assays, some turnkey reagent kits, and some other new products. I assume these to be maybe product enhancements, if you will, as opposed to significant new sources of capital purchase or the like. Can you maybe just expand on the value of these new products, and how should we think about the contribution of them to the top line?

Yeah, I think it's important to put that in context of the overall position we are in the market as we're still a new and emerging player, right, with the ways to go as we cross the chasm into the early majority, right? And so as we continue to add these, you know, new capabilities, whether it's the additional species in rabbit or human, the affinity assay and antibody discovery, the bispecific assays with the kits and cell line developments, all of these things not only enhance the product experience for our customers, our current customers, but also lead us to additional new customers to move onto the platform. And so we continue to see increasing demand from customers who are not currently using the Berksite's platform to come onto the platform as we continue to release these things. So it's not just reagent pull-through increases, Mark. It's additional placements as we move into that early majority segment of the overall market.

Great. That's it for me. Thanks, guys. Thanks, Mark.

Thank you. As a reminder, if you have a question at this time, please press star then 1. Our next question comes from the line of Gaurav Gauravichu from Bernberg Capital. Your question, please.

Hey, guys. Thanks for taking my call. Good morning. So I guess for Q3 earnings, I remember you guys had mentioned that you expected the co-developed workflows with Ginkgo to be completed by 2021 year end. Just wanted to get some more color here. You know, was there a slight delay? You know, was it externally driven or internally driven? I know you mentioned that, you know, expecting them to be delivered in the upcoming quarters. Just wanted to get some more light on that.

You know, thanks, Clark. Great question. We were always targeting Q1 to deliver them. Of course, we'd finish them internally, but we needed to transfer them in Q1 and Q2 to Ginkgo Bioworks. And so continue to work on those overall workflows and make sure that, you know, our customers have, you know, a very functional and reliable workflow that they can operate in their overall biofoundry. So on track to delivering those this and next quarter, and we'll continue to work with Ginkgo to make sure that they you know, ramp those into production.

Got it. Thanks. And then are you able to disclose the end market of that second partnership that you mentioned from Q4 that wasn't from Onika, the one with the top five pharma that you mentioned, or is that undisclosed?

No, happy to talk about that. It is in the antibody therapeutics market as we continue to move that forward with the top five pharma customer and looking forward to really bridging bridging, you know, adding additional capabilities that bring our antibody discovery closer to our cell line development workflow.

So then you're basically open to signing these new partnerships in the antibody space, right? Because I remember you guys had mentioned that you mostly or a majority look for, use these partnership opportunities to enter into new end markets. So it's fair to assume that you guys will still, I guess, address the antibody therapeutics market through these partnerships.

Oh, absolutely. I mean, we started out as a company in 2013, 2014. We signed the Amgen deal, which was one of the first deals that we signed as a company, but that was followed by BMS, Rose, Pfizer, several others that we did business development deals or strategic partnerships and services deals in the early days of the company. And that's continued as we work to add additional capabilities, whether it's in a market that we're already participating in or into new markets. We do these deals to develop new capabilities and help our customers achieve results that, you know, they can't achieve other ways than with the broker rights platform.

Thanks for the color. And then last one for me, you know, just trying to get an idea of the capacity of the partnerships that you could currently effectively handle, especially, you know, looking into subsequent years, 2022, 2023, you know, Should we expect the amount of new deals to exponentially increase year to year, or is it more of a slight step up from flat each year? Just trying to think about how to look at that moving forward.

Well, I think there's a couple components to that. One, if you think about how these deals are embedded, like we talked about before, You know, they generally start out to where we're doing kind of a little bit more of the R&D workflow and kind of a fixed set of capacities that are subscribing to the number of chains or beacon utilization that they can get. Then it moves into somewhat of a development to fine-tune that. And then when you release the workflow, you know, it enters into a separate thing, like, for example, with BCS, we will always run the screens in our bio foundry. So when that workflow goes into production and they want to run it in a production environment, you know, they will arrive to a, you know, and it's embedded in the contract to a separate, you know, contract for production screens, and then you're still continuing development and other activity on the developing new proteins and things like that. To answer your question in terms of, you know, the capacity, et cetera, You know, generally what it is in the bio foundry is for us to be able to get another beacon and then, you know, obviously, you know, lab technicians to be able to run the tool. You know, we keep with our supply chain, you know, pretty ample, you know, demand like that. We can get something installed within a few weeks and we make sure we have ample space in our various facilities to make sure we can accommodate that. And we do expect that, you know, over time the amount of activity and campaigns run through our our bio foundry, you know, will increase. And I think you saw the growth that we exhibited last year was signing up to $42 million in deals. And then obviously there's back-end royalties on some of those in addition to that or milestones. And then this year we said that we were going to grow at a faster pace than what the overall 30%, approximate 30% growth rate that we said the company was doing. The strategic partnership and services would grow at a faster pace.

Perfect. That's it for me. Thanks, guys. Appreciate it.

Thank you. Thank you. This does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation. You may now disconnect. Good day.