Berkeley Lights, Inc.

Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Berkeley Light's fourth quarter and full year 2022 earnings conference call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you, and I will now turn the conference over to Suzanne Hatcher. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to the Berkeley Light's fourth quarter and full year 2022 earnings call reporting financial results for the quarter and year ended December 31st, 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, and Mehul Joshi, 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 23, 2023. With that, I'd like to turn the call over to Siddhartha.

Thank you, Susan, and thank you everyone for joining us. This was a transformative year for Berkeley Light as we made significant changes across the business. In 2022, we successfully completed the important AAV contract with Thermo Fisher, upgraded the software suite for Beacon and Lightning platforms, launched the Zabit memory B-cell workflow to accelerate antibody discovery, and extended our reach with multiple new customers onboarding the Berkeley Light technology. We made several great additions to our management team, outlined a new strategic operating plan, and hosted our first investor day. And most recently, we announced plans to acquire IsoPlexus. After closing, the combination of Berkeley Light's and IsoPlexus will form a premier functional cell biology company, PhenomeX, providing live cell biology research tools to deliver deep insights into cellular function and new perspectives on phenomes. I'm very excited for the future as we continue our transformation into growing, profitable, and sustainable life sciences companies. I will begin the call today by providing updates on the progress we've made against all the pillars of our strategic operating plan and will then turn over the call to Mehul, who will review our fourth quarter and full year 2022 financial results in more detail. Starting with our first strategic pillar of building a world-class life sciences leadership team with a proven track record in profitably scaling life sciences tools companies. Since I joined Berkeley Lights nearly a year ago, we've made significant progress building out a very strong team with seasoned executives. With external hires bringing leadership, with deep life science experience, as well as internal appointments that bring critical knowledge of the innovative technology platform at Berkeley Lights. These key hires include chief financial officer, chief human resources officer, head of strategy and corporate development, and chief legal officer. Additionally, with the anticipated closing of the acquisition of IsoPlexus, Sean McKay will join the combined company as chief thought officer. Looking forward, we are focused on building a strong global commercial team in 2023 with the goal of establishing teams and partnerships in key regions. I'm confident The combination of our experienced leadership team and a strengthened commercial team will drive a culture of innovation, customer centricity, and a commitment to excellence in quality. We anticipate making additional commercial appointments in the next few weeks. Moving on to our second strategic pillar of prioritizing R&D return on investment through increased focus and rigor on development initiatives. We made considerable progress in 2022 as we streamlined our R&D focus areas by narrowing the scope of many projects and shifting our product portfolio from complex, multi-generational launches to a more simplified approach. We believe this approach will enable us to better fulfill our customers' needs. As we have previously shared, we believe there is a significant opportunity for our technology to add value in cell and gene therapy space. We are focused on improving the cost and therapeutically relevant deals for manufacturing AAV-based gene therapies through our platform and will continue to dedicate ample resources to the development of an AAV manufacturing workflow throughout 2023. We are seeking commercial and technology partners to develop a strong out-licensing technology model and are currently in discussions with several potential industry partners for this advanced therapy initiative. We are also focusing our resources on PCR discovery, where our technology has been very useful for large companies involved in specialized personalized cancer vaccines and enables people to make personalized discoveries on PCR, similar to our antibody discovery workflow. We believe that these two areas have the highest value for our customers and, consequentially, for the entire biotech industry. Moving on to our third pillar of delivering consistent, commercial execution through a new sales structure and enhance product portfolio and pricing strategy. We are materially enhancing our approach to the market with the introduction of a more flexible configuration and pricing strategy that encompasses the total cost of ownership. In line with this approach, in early January, we introduced, we can select a two-cheap single-cell optofluidic system for cell line development, enabling scientists to clone, culture, assay, and select top clones in a single run on a single platform. The select is approximately half the price of the previous beacon model and will be available through different purchasing options, including capital placement, lease, or re-agent rental. With slightly reduced capability from our first platform, this will increase customer accessibility and expand the customer base as it is ideally suited for small to mid-sized biopharma and CROs and CDMOs. We believe broadening our portfolio of platforms will allow us to access a wider array of potential customers in the market with the products that are more tailored to their needs and budgets. Going forward, we intend to launch application-specific models of beacon systems periodically. In line with this cadence, we expect to launch Beacon Quest, a lower-cost device intended for the academic market, in the second quarter of this year. We are already seeing early interest in this model. As we said previously, in terms of our go-forward product roadmap, we believe that our technology can provide significant value in high-growth academic research segments, for example, gene editing and immuno-oncology applications. A top priority in 2020 will be to form academic collaboration pilot programs to help guide the design of these new applications. turning to our fourth strategic pillar of evaluating mergers and acquisitions opportunities that will help us accelerate profitable growth and leverage our cost structure. On December 21 last year, we announced our intention for consolidation in the single-cell biology industry with the combination of Berkeley lights and isoplexes to create Phenom X. This anticipated combination drives towards a broader, diversified cell biology company focused on understanding the phenome by providing a deeper analysis of cell function while uniquely preserving the live cells of interest. The transaction is expected to close by the end of first quarter of 2023, and our integration planning is in full swing. When the merger closes, the combined company will have about 400 plus install base in all the top 15 pharmaceutical companies by revenue, and 80% of comprehensive cancer centers in the United States. Together, there'll be more than 100 sales and support employees with greater reach to academic biopharma and CRO companies globally. Additionally, the combined company will have a strong 600 patent portfolio as state. We also have a balanced product portfolio with significantly diverse price points for our customers to access and substantially expanded reach to a much larger cell biology market. The combined product portfolio as Phenome X will include our Beacon system, the Beacon Select for cell line development launched in January, and the existing instrument platforms from IsoPlexus, the IsoSpark and IsoLite. We expect to launch several new technology offering as PhenomX in 2023. This includes the Beacon Select for antibody discovery workflow and Beacon Quest for the academic market in the second quarter of 2023, as well as Isoflexasis bulk proteomics platform called CodePlex Q. We plan to unveil the PhenomX comprehensive product roadmap in the summer of 2023 at a planned investor event. The combination of Berkeley lights and isoflexes will represent an important milestone and lay a great foundation for a very strong life sciences tools company. Importantly, we expect this transaction to accelerate our progress across every pillar of our strategic plan. We believe PhenomX will have the power to bring to market much more ubiquitous cell biology tools which could be used by every single scientific institution in the world. We look forward to joining forces with the IsoPlexus team as we embark on this new chapter and create value for our customers, employees, and shareholders. In addition to IsoPlexus, we recently acquired all the technology assets from Evorian Biotechnologies, developers of a system capable of live tracking cellular interactions. Their alternative intellectual property approach to single-cell functional analysis, called CellCity, will help accelerate the development of our pipeline. With this purchase, Berkeley Lights acquired the entire patent portfolio, complete with 17 patent families in all CellCity prototypes and software source code. for approximately $250,000 compared to the $20 million spent on developing the technology. Finally, I'd like to give an update on our fifth strategic pillar of generating positive operating cash flow. We are focused on building a growing, profitable, and sustainable business rather than pursuing growth at any cost. When we first announced our new strategic operating plan, we anticipated achieving this goal by 2025. We are making significant progress against our goal, with revenue acceleration supported by an updated market-driven product portfolio and pricing strategy, as well as disciplined expense and cash management. We have taken several actions in Q1 2023 to reduce our overall headcount spend, including transitioning existing employees, approximately 9% of the workforce, closing open positions, and reducing our consulting and contractor spend. This is an addition to our business optimization initiative in July 2022. Now, I would like to turn the call over to Mehul Joshi to discuss our fourth quarter and full year 2022 results.