Berkeley Lights, Inc.

Thank you for standing by. Welcome to the Berkeley Light conference call. I would now like to turn the call over to Suzanne Hatcher. Ms. Hatcher, please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Berkeley Light's second quarter 2022 earnings call reporting financial results for the quarter ended June 30th, 2022. My name is Suzanne Hatcher, Vice President of Communications and Investor Relations at Berkeley Light. I'm joined today by Dr. Siddhartha Kadia, Chief Executive Officer, Mehul Joshi, Chief Financial Officer, and others from the management team. Before we begin, I'd like to remind you that management will be making statements during this call that are forward-looking statements within the meaning of federal security law. 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 if 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 the live broadcast on August 9th, 2022. With that, I would like to turn the call over to Siddhartha.

Thanks, Suzanne, and thank you, everyone, for joining us. In our call today, I'll spend a fair amount of time discussing Berkeley Light's updated near-term strategic plan and then Mayhole, our new chief financial officer will review our second quarter 2022 results. Since joining Berkeley Lights in early March, I've become even more confident in our market opportunity and enthusiastic about the advantages of our differentiated technology. On our last earnings call in early May, I shared my plan to spend my first 100 days at Berkeley Lights reviewing our business strategy recruiting for key leadership positions, and engaging with key stakeholders. I have assessed the company's current situation comprehensively, speaking with customers, investors, employees, and industry partners to make informed decisions on how to move the company forward. It is clear to me that the Berkeley Life Technology has pioneered an entirely new process by which functional biology at a cellular level could be researched and applied in therapeutic discoveries with unprecedented speed. However, to enable adoption of this technology, we must evolve our organization. The new Berkeley Rice leadership team and I are turning the page and focusing on building a diverse life sciences tools and services company with a culture of innovation, customer-centricity, and a commitment to excellence in quality. We have updated our near-term strategy and execution plans, focusing on five key pillars. Number one, generate positive operating cash flow by early 2025. We will do this by building a growing profitable and sustainable business versus pursuing growth at any cost. This will be accomplished through revenue acceleration supported by an updated market-driven product portfolio and pricing strategy and disciplined expense and cash management. We expect to generate positive operating cash flow at $150 million of revenue. The management has taken an initial step to reduce operating costs through a global workforce reduction of approximately 12% in July 2022 and an optimized business structure and processes. This resulted in an immediate decrease in operating costs and working capital requirements. In conjunction with other cost-saving initiatives, We expect to reduce our cash burn to approximately $30 million in 2023. Number two, prioritize R&D return on investment through increased focus and rigor on development initiatives. We will only dedicate resources for the highest value projects. In our partnership and services business, This means that the high throughput functional screening service agreements must support our margin and profitability goals, as well as create the opportunity to participate in downstream economics, such as milestone payments and royalties when appropriate. In the near term, we are committing resources to partnership and services business to accommodate the growing interest from a diverse set of companies in partnering with us, specifically in the gene therapy, viral vector development, and manufacturing space, where there is significant market demand, and our technology provides a highly differentiated solution. In Q2, Berkeley Light validated the unique capability of our platform to select and retrieve high-value table producer cell lines that will improve the cost and therapeutic relevant yields for manufacturing AAV-based gene therapies. The Berkeley Lights workflow takes roughly 10 days to screen up to 3,000 cell lines, enabling an unprecedented timeline and throughput that allows us to discover rare clones at a speed and cost that no other technology can match. The cost of AAV production is widely regarded as the most significant constraint in this segment of the gene therapy industry, and we believe that Berkeley Life Technology is the long-sought solution. There are a growing number of AAV clinical trials every year. With 353 clinical trials and clinical studies in 2021, and projected to reach 850 by 2025. We will partner with CDMOs and gene therapy companies to enable them to meet the largely unmet demand of the significant number of potential drugs to hit the market in the next 10 years. Given initial market and customer interest in this Berkeley Light's capability, this could be game-changing in the industry and the company's largest return on investment opportunity in the near term. While our partnership and services team has experienced strong demand for many applications, we intend to dedicate a majority of that team to the development of this workflow in the balance of 2022 and in 2023.