Singular Genomics Systems, Inc.

Good day, everyone, and welcome to the Singular Genomics Systems, Inc., second quarter 2023 earnings conference call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Tripp Taylor. Sir, the floor is yours.

Thank you, Operator. Presenting today are Singular Genomics founder, chair, and chief executive officer, Drew Spaventa, and the company's Chief Financial Officer, Dalen Meter. Earlier today, Singular Genomics released financial results for the three months ended June 30, 2023. A copy of the press release is available on the company's website. Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, August 9, 2023 only, and will include forward-looking statements and opinion statements, including predictions, estimates, plans, expectations, and other information related to our financial and operating results, plans, and strategies. Actual results may differ materially from those expressed or implied by these statements as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission. including our most recent Form 10-Q and 10-K filings and the Form 8-K filed with today's press release. Our SEC filings can be found on our website or on the SEC's website. Investors are cautioned not to place undue reliance on forward-looking statements. We disclaim any obligation to update or revise these forward-looking statements. Please note that this conference call will be available for audio replay on our website at investor.singulargenomics.com in the Presentations and Events section. With that, I will turn the call over to CEO Drew Spaventa.

Good afternoon, and welcome to Singular Genomics second quarter 2023 earnings call. I'm pleased to provide you with an update on our company's performance. We will focus our update on the following four key areas. One, commercial execution. Two, market opportunity. Three, operational execution, and four, our innovation pipeline. As a reminder, we previously outlined these key areas during our Q1 earnings call as the 2023 Four Pillars of Success. These pillars are the framework for how we intend to measure our progress throughout the year. Let's start with commercial execution. The second quarter was an important time for the company, which yielded a moderated pace of additional key external placements that we expect will support our ramp of unit shipments in the second half of 2023. We continue to believe that this measured deployment of systems among influential key opinion leaders, or KOLs, and other strategically important partners is the appropriate strategy to establish our G4 platform as the foundation for our sustained success during the second half of the year and into 2024. We shipped three G4 systems during the quarter to academic labs, bringing our total system placements in the field as of the end of the quarter to 11. We also added to our library prep compatibility menu and grew the number of qualified leads in the sales funnel. We are excited to continue expanding our installed base and delivering the speed, power, flexibility, and accuracy of the G4 system to our customers. Customer feedback continues to validate the G4's value proposition as a superior alternative to other mid-throughput sequencers. For instance, the University of Vermont noted that, quote, the flexibility and consumable costs were undeniably compelling to purchase the G4, substantially better than an Illumina instrument with excellent flexibility in flow cell loading tolerances. Output is much higher than reported in company spec sheets, end quote. We continue to be pleased with the G4 performance at initial customer sites. Customer feedback has validated that our G4 instrument exceeds key data specifications and is capable of addressing a broad set of applications. As you would expect at this stage, it takes time and work to get users up and running, including time for trainings, workflow and protocol optimization, and completing field services and upgrades on the instrument. Nevertheless, there has been encouraging progress throughout the quarter, which is enabling quicker customer bring-up, more seamless support and training, and better system support. These important improvements will enable customers to scale quicker, run more frequently, and raise pull-through. We will provide more color on utilization and pull-through now. We believe higher utilization of our G4 platform will be enabled by two things, usability and product availability. First, the usability of the platform. It is critical we make the G4 as easy to use as possible for customers to move their work and scale their work on the platform. This includes ease of training or onboarding, ongoing operation of the system, usability feature sets such as dashboards, run tracking, system monitoring, and system uptime, which is a symptom of both system reliability and field service support. We have made significant progress on each of these in the second quarter and will continue to focus on these key factors for the rest of 2023, which are critical to utilization and pull-through. Second, product availability. New consumable kits offerings will be available in the second half of the year, including the F3 and max-read flow cell kits. The F3 doubles the throughput of the F2 kit, delivering a highly competitive price per gigabase or price per read, and further expands the set of applications that make sense to run on the G4. The Max Read Single Cell Kit delivers over 800 million reads on a single flow cell, or 3.2 billion reads per run. This will deliver a unique combination of throughput, flexibility, and cost for a leading application, single cell sequencing, in the academic and research segment. We expect these additional product offerings to drive utilization of the system and increase consumable pull-through for systems in the field over time. Turning to the market opportunity, we believe the demand for our G4 platform continues to be strong among our target customer segments as evidenced by a growing funnel of qualified leads, additional prospective G4 evaluation sites, and increased inbound interest from positive reference sites. The sales funnel continues to grow, with total qualified opportunities nearing 200. In addition, we are seeing initial traction with academic core labs, the majority of which comprise our current placements. These labs are often managing varying sample volumes and output requirements from a range of applications like RNA-seq and single-cell sequencing. The speed, power, and flexibility of the G4 enables these labs to optimize sequencing runs based on varying experimental needs and delivers results in less than a day. Interest in the G4 has continued to increase from researchers and lab directors at leading academic labs. For example, MIT recently noted that, quote, we have been very excited by the enthusiasm of the researchers we support for the G4, with many labs already submitting projects to be run on the sequencer. These include samples for RNA-seq, both standard and high throughput, cut and run, as well as custom protocols where the laboratories are preparing their own libraries, end quote. We are encouraged by the positive traction and growing interest and expect this to translate to increased demand and unit placements over time. As expected and discussed on prior earnings calls, we shipped a moderated number of G4 systems in the first half of the year. We believe that this measured deployment of systems was the right approach for three reasons. First, to establish a foundation for sustained success. Second, to implement system improvements aimed at reliability, usability, and manufacturability. And third, to make sure customer expectations are met or exceeded. We believe unit placements will ramp in the second half of 2023, given the progress made in manufacturing and the ability to supply instruments to the field, coupled with increased commercial traction, growth in the sales funnel, and availability of F3 and then MAX read kits for single cell sequencing. Turning to operational execution. Our focus has been on optimizing the supply chain, streamlining manufacturing processes, and enhancing the G4's usability and reliability. We've been executing on several key initiatives to support these goals. In operations and manufacturing, we've taken steps to strengthen our G4 production capabilities. This includes engaging second sources for suppliers of critical components, working collaboratively with vendors to refine specifications and subcomponent testing protocols, and implementing additional QC testing for incoming parts. These initiatives are designed to reduce the time required to build and bring up a G4 instrument and increase predictability in the supply chain. In addition, we rolled out several important software updates to systems in the field, providing new features, and enhancements designed to improve usability and reliability. In our commercial organization, we are expanding our presence outside of the U.S. We attended the European Human Genetics Conference in Glasgow, Scotland in June, where our commercial team met with industry KOLs and scientific leaders from the region and showcased the G4 through system demos, technical talks, and presentations. In addition, we are excited to have brought on board a general manager of Europe, which we believe is an important step in our international commercial growth strategy. Turning to innovation and our product pipeline. Our team is excited about the progress being made on the pipeline of innovations, including improvements in the G4 system performance and specs, higher throughput flow cells and consumable kits, and novel content and workflows for widely run applications. We're pleased to have F3 flow cells available after a successful early access period. The F3 flow cell doubles the number of reads from our F2 flow cell offering, allowing users to get up to 450 million reads per flow cell or 1.8 billion reads per run, addressing some of the most widely run applications. We have also started shipping max read kits for single cell sequencing to early access customers. This kit is designed to allow users to get up to 800 million reads per flow cell or 3.2 billion reads per run. This enables NovaSeq level pricing for single cell sequencing on a benchtop system. We look forward to offering this kit for broader commercial release later this quarter. With a compelling set of kits available in the second half, our major focus will be on execution of the already announced products, ensuring quality, availability, and supporting customers in moving their work onto these new offerings. Thus far, feedback from customers on F3 and early access users of max reads has been positive. We believe this will be an important catalyst for scaling the G4 placements over the rest of the year and facilitating more system usage and higher pull-through. And finally, we continue to progress our work in multi-omics. We have a lean team dedicated to the development of the PX, our high-throughput, in-situ spatial and single-cell system. We look forward to providing additional updates in the future at the appropriate time. I'll turn the call over to Dalen to go through the details of our second quarter financial results. Thank you, Drew.