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spk00: Today, and thank you for standing by, welcome to SEER First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that time, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Carrie Mandeville, with Investor Relations. Thank you.
spk02: Earlier today, SEER released financial results for the quarter ending March 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 investor at seer.bio. Joining me today from SEER is Omid Farraqzad, Chairman, Chief Executive Officer and Founder, Omid Ostudan, President and Chief Operating Officer, and David Horn, 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. Additional information regarding these risks and uncertainties appears in the section entitled forward-looking statements in the press release here issued today. For a more complete list and description, please see the risk factors section in the company's quarterly report on form 10Q for the quarter ending March 31st, 2021. And then this other filing with the Securities and Exchange Commission. Except as required by law, SEER 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 May 10th, 2021. With that, I'd like to turn the call over to Omid.
spk01: Thanks, Kerry. We're making strong progress across all areas of our business and business strategy, adding to our talented team, expanding our commercial reach, and broadening access to the Protograph product suite. We're enabling more researchers to undertake proteomic studies that will undoubtedly drive novel biological insights, create and expand new markets, and ultimately improve human health. To further drive this momentum, we continue to be focused on four areas. First, setting the pace for innovation in the proteomics space. Second, leveraging the unique capabilities of our differentiated solutions. Third, coupling exceptional customer experience with transformative products. And fourth, forming strategic relationships with key customers and partners. And of course, most importantly, the foundation for all of this is predicated on continuing to grow an incredibly talented team. Since we last updated you at the end of March, we have continued to build on our strong start to the year. Demand for the Proteograph product suite is exceptionally strong, and our value proposition is resonating with prospective customers across the globe. We expect our message to amplify even more as we ramp up on marketing activities and scale our commercial organization. Even with this strong market demand, we remain committed to a measured commercial approach, and you will hear more about this from Omid. With all full collaboration customers up and running, we have commenced limited release by signing multiple customers since our last earning call. We expect to have high single digit number of limited release customers before we commence broad release, and we're on track to deliver against this objective. These initial limited release customers also include prognomic, which we spun out last fall and retained 19% ownership. Prognomic will be using the Proteograph product suite for liquid biopsies across a range of applications, including early disease detection and proteogenomics. We believe Prognomic can play a key role in demonstrating the impact of unbiased and deep plasma proteomics in these applications. accelerating the realization of a market opportunity that we already believe to be very large. Our goal is to create an ecosystem around our technology and its broad use in proteomics and proteogenomics. This is a critical part of our strategy. Our partnership with the leading mass spec companies, our three-phase commercial approach, and our spin-out of Prognomic are all evidence of this strategy in action. We believe this will set us up long-term success and broad-scale adoption of our proteograph product suite. It is clear that customers are eager to perform studies using unbiased deep plasma proteomics at scale, and early customer data is providing strong evidence of the depth and breadth of proteomic access that can be generated easily from our platform. Both OHSU Knight Cancer Institute and the Broad have completed their initial evaluation studies, which demonstrated encouraging results. They're progressing toward the next set of larger-scale studies. In particular, OHSU's initial pilot has spurred plans for several large-scale projects including one looking at proteomic signatures of prostate cancer. Again, Omid will give you more color on this shortly. Discovery Life Sciences is already preparing to run samples for large-scale proteogenomic projects in a complex disease, which is one of the use cases uniquely enabled by our technology. The Salk Institute, our fourth collaboration site, has received their instrument and we have already completed installation. They will be up and running with samples in the coming weeks. We expect you will begin to hear more from each of these collaboration customers as their studies progress and they're in a position to share their experiences and results through presentations or publications. We continued to strengthen our leadership team, welcoming Kenny Ross as our new vice president for operations and quality. Kenny brings with him over 30 years of experience in operations and quality and life sciences, having previously held senior leadership roles at Applied Biosystems, Life Technologies, and most recently, Illumina, where he served as Vice President, Manufacturing Strategy. And finally, we doubled a Redwood City footprint to support our growing organization, expanding our lease to a total of 50,000 square feet of state-of-the-art office and research space. There continues to be a growing enthusiasm and energy in the proteomic space. And what we're doing at SEER is truly differentiated. We are developing innovative solutions to empower the scientific community to arrive at exceptional proteomics outcomes. We have developed a proteograph product suite, a first-of-its-kind solution, leveraging our proprietary nanoparticle technology to enable unbiased, deep proteomics at scale, eliminating the needs for scientists to make tradeoffs between depth of coverage and scale when designing their unbiased proteomic studies. Our solution is the only available state-of-the-art technology to deliver peptide and amino acid level resolution, which is necessary to match nucleotide level genomics information and broadly enable proteogenomics. The proteograph has been designed to fit in front of nearly any detector, making it easy for those who are adding proteomics to their studies to easily integrate it into their workflow. The proteograph allows nearly any lab to undertake these studies in a way that is not possible today without tradeoffs. And through these capabilities, we expect our solution will enable population-scale studies that will enrich biological datasets and enhance the number of biomarkers and drug targets, and we believe the overall impact on human health will be enormous. We are very much at the onset of this journey to transform accessibility of the proteome by finally eliminating the longstanding technology barrier that has prevented researchers from tapping into this rich, critical source of biological information. And while much work remains, we're excited and inspired by the opportunity that lays in front of us. With that, I will now turn the call over to Amit for more detail on our commercial progress.
spk07: Thanks, Amit. There is increasing enthusiasm and evidence that we're on the right path and that our current and future offerings have the potential to play a significant role in advancing our understanding of biology. We are seeing and sensing this in our ongoing interactions with our customers, our discussions with prospective customers, and the early peeks at data coming from a growing list of studies using our Proteograph product suite. The response we're getting from our expanding engagements are reaffirming our belief that we have the right strategy, the right product, and the right value proposition. We believe the continued progress of our collaboration customers will provide clear examples of the unique and differentiated value of the Proteograph product suite. All four of our collaboration customers now have their proteograph product suites installed. And in fact, three of these sites are already on the verge of or in the midst of larger scale studies. One such example is OHSU Knight Cancer Institute, the first site to receive a proteograph product suite. Recently, Dr. Mark Fleury and his colleague at OHSU Knight Cancer Institute completed a pilot study looking at prostate cancer. The aim of this study was to demonstrate that the proteograph product suite can be used to power large-scale, unbiased, and deep plasma proteomics across a range of applications, including the early detection of cancer. Dr. Fleury and colleagues were able to demonstrate that the proteograph product suite not only enables a far more efficient and scalable approach to plasma proteomics, but it does so while covering previously known proteins and a number of potentially novel protein biomarker candidates that have not previously been associated with prostate cancer. With the findings of this pilot study, Dr. Fleury and colleagues are moving forward to implement a larger study of 500 to 1,000 samples, opening up a whole new set of possibilities. We are thrilled about the progress Dr. Fleury and his team are making with the proteograph. Truly, everything we're doing at SEER is done with the aim of delivering exceptional customer experience that enables our customers to realize their scientific vision. Market response for access to the Protograph has exceeded my already high expectations coming into this year. The value proposition of the Protograph product suite is resonating with prospective customers and people are highly interested to access this transformative technology. However, as Omid stated, we remain committed to our phased approach as we believe this is the best way to commercialize a first-of-its-kind product, both for near and long-term success. To that end, we have officially moved into the second phase of commercialization and now have agreements in place with multiple limited release customers, among them Prognomic. We expect to add other limited release customers throughout the coming weeks and months to reach our target of high single digits of customers for this phase of our commercialization. We believe this is the best path for developing the right customer relationships, the right proof points, and most importantly, the right trajectory for current and future growth. These relationships will enhance our ability to rapidly develop applications, open up approaches that create markets, and drive the next phase of adoption. We are very focused on partnering with customers who are driven to leverage the potential of the Proteograph product suite to accelerate the realization of their scientific vision. Each limited release customer must have a shared vision of disruptive power of unbiased deep proteomics at scale to unleash novel biological insight, access to large sample cohorts, infrastructure and know-how to efficiently scale projects, commitment to rapidly undertake large-scale exemplary studies and share aspects of their findings, and willingness to collaborate deeply to serve as a lighthouse account and to help others scale. We are excited for our limited release customers to get up and running and to demonstrate the power and utility of the Proteograph product suite across a wide range of applications, including oncology, complex diseases, therapeutics, and more. We will work closely with our limited release customers and leverage their success and experience to broaden and accelerate adoption. Many of our limited release customers will likely serve as strong reference sites, and their experience will provide clear blueprints that others can follow to have similarly successful experiences in adopting the Proteograph product suite. To address the broader near-term demand for access to the ProteoGraph product suite, we are prioritizing setting up select limited release customers as centers of excellence. These centers of excellence will offer end-to-end unbiased deep plasma proteomic services using the ProteoGraph product suite. In the process, providing researchers and entities globally access to CR technology in advance of broader release. Through these partnerships, we will demonstrate the scaled use of the Protograph across an ever-expanding range of applications and customers, enable more and more researchers to access our technology, and see the power and impact it can deliver to their research. We continue to scale our commercial efforts, building the team, infrastructure, and partnerships that will expand our reach and allow us to serve our customer base around the world. Over the past few months, we have added a number of highly talented individuals across marketing, sales, and support. We are prioritizing the customer experience by implementing foundational commercial tools that will allow us to seamlessly and efficiently launch, install, and support customers as we scale globally. We are also deepening our interactions with our mass spec partners to continue to develop the market and facilitate adoption, especially among new to Proteomics customers. Overall, I'm extremely encouraged by our commercial progress and look forward to continuing to work with our growing group of customers to demonstrate the unique capabilities of the ProteoGraph for a wide range of applications. We have much to do and we will remain intensely focused on the tasks ahead of us so that we can truly deliver on the promise of this transformational technology. With that, I will now turn the call over to David for more details around our financials.
spk04: Thanks, Amid. Total revenue for the first quarter of 2021 was $62,000. compared to $177,000 in the first quarter of 2020. The decrease was due to less activity associated with our Small Business Innovation Research Grant from the NIH. As a reminder, all of our revenue to date has been generated from grant-funded activities and research collaborations with biopharma companies. We expect to begin to recognize revenue from product sales in the second quarter. Total operating expenses for the first quarter of 2021 were $16.6 million compared to $6 million in the first quarter of 2020. Research and development expenses for the first quarter of 2021 were $6.2 million, compared to $4.2 million in the first quarter of 2020. The increase in R&D expenses was primarily driven by an increase in product development efforts related to our Protograph product suite, including increased compensation costs and other related expenses with the hiring of additional R&D personnel. Selling general and administrative expenses for the first quarter of 2021 were $10.3 million, compared to $1.8 million in the first quarter of 2020. The increase in SG&A expenses was primarily driven by increased employee compensation costs and other related expenses to being a publicly traded company. Net loss for the first quarter was $16.4 million compared to $5.5 million in the first quarter of 2020. We ended the first quarter of 2021 with approximately $531 million in cash, cash equivalents, and investments. This amount includes approximately $103 million in net proceeds from our follow-on offering, which closed in February of 2021. As we work to realize our vision of providing novel biological insights that will lead to new discoveries and ultimately improve human health, we will significantly increase our investment to grow and scale the company. In 2021, we are focusing our investments on building our commercial organization, broadening our reach, and providing an exemplary customer experience for our current and future customers. We're exploring new areas of research to explore the power of our Protograph product suite and its unique capabilities, continuing to build our product pipeline, and scaling our operational capabilities ahead of broad release. Finally, we are expanding our intellectual property portfolio through continued innovation and advancements in our products and technology. At this point, I would like to turn the call back to Omid for closing comments.
spk01: Thanks, David. I could not be more excited about what's ahead for SEER. Unbiased, deep, rapid proteomics at scale will pave the way for broad scale and novel biologic insights with incredible impact across science and medicine. I'm so incredibly proud of and amazed by our team and the progress we have made this quarter. We look forward to continuing to build our commercial momentum throughout 2021 as we bring the next phase of omics to the labs all around the globe. With that, we will now open it up to questions.
spk00: Thank you. And as a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw the question, press the pound or hash key. Please stand by while we compile the Q&A roster. Our first question is from with Morgan Stanley. Your question, please.
spk06: Hey, guys. Good evening. Omid, just one opening question for you on the collaboration customers you now have. Can you just shed some light on what have been the key learnings for you so far that you hope to leverage going forward here, not just into limited release but also the broader commercial rollout? Perhaps some pain points that you've ironed out or, you know, the way you train those customers. Any key learnings there?
spk07: All right. Just for a second, we're clarifying which one, although I knew which one you were talking to here on that question. It's a really good question, and so I would put it in a couple of different buckets briefly. In terms of things that you talked about, pain points, nothing outside of the ordinary, quite frankly. I mean, what we've run into would be some of the stuff that you would expect the very first time you ship a product and install as a customer, making sure that you're clear on, for example, your site breadth requirements, making sure that you've got all the things that you need for installation and so on and so forth. So installations have by and large gone fairly smoothly, nothing out of the ordinary. And in fact, what we've seen is that as we've done more and more of these installations, the time for every install has come down, which is exactly what you want to see. So that puts us on the right trajectory for being able to go to limited release and be able to build on it. And in terms of the engagements with the collaboration customers, I suppose as we talked about in our earnings, Again, the early data is looking very positive and promising, and we, as our collaborators, are encouraged by it. And so all of that is reaffirming to me that the product that we have is going to be able to continue to deliver unique value to the customers. So hopefully that answered your question.
spk06: Got it. Perfect. And then one for the other, Omid. So now that you're a few months into limited early release, Omid, you mentioned signing multiple sort of agreements with customers here, including Prognomic. Can you quantify how many customers and then perhaps shed some color on how that order funnel is shaping up? I believe you've mentioned sort of one to two installs across six customer segments in the past. And then on a related note, if you can update us on your conversations around setting up those centers of excellence in the reference sites, that will be terrific as well.
spk01: Yeah, so let me break it up into a bunch of parts. So the first is that, as we said, we're going to have upwards of high single-digit number of limited release sites. And there's been a tremendous amount of demand. We aren't going to be identifying names going forward in terms of the customers we sign. Suffice it to say that we have signed some in the limited release, and Prognomic is actually one of them. Some of these limited release sites going forward are going to become centers of excellence for us. And I think think of it, Tejas, in that It's a temporarily required solution because of just the high level of demand that we're seeing in terms of players, many of whom are actually not even proteomics folks. These are people who play with large-scale omics data. They just don't have the capabilities. They want access to large-scale proteomics. And our centers of excellence will actually give these guys an opportunity to get to the level of information that they need over the coming time until they build the infrastructure and actually have photographs or a detector installed for their own sites. So, Amit, was there anything else that they... Tejas, was there anything else in your question that I did not answer?
spk06: No, I think that covers it. And then one for David on the OPEX. Should we still be thinking of 50 million targets for OPEX, David, outside of stock comp? And anything you can comment on the cadence through the year over here?
spk04: Yeah, Tejas, you know, as we've said in the past, we're not giving guidance either on revenue or on OPEX. I do think we still see a lot of significant opportunities for investment, both on the commercial side in the R and D side. So we have said that, you know, obviously that investment will increase this year, but again, we are being disciplined about how we, how we go about that in the areas we invest such that, you know, we, we will generate a good return over the longterm for those areas. Got it. Super helpful. Thanks guys.
spk00: Thank you. Our next question comes from Derek DeBruin with a bank of America. Your question, please.
spk05: Hi, good afternoon. Hi, Derek. Hey. Just a bigger picture question, I think, to start with. It's like, given the growing number of proteomic companies that are going public, emerging from stealth, are you seeing a similar increase in funding for proteomics? And also, could you sort of like gauge your interest at this point from pharma and biotech, or is it still too early?
spk01: Look, Derek, Omid here. I think we're just way too early in this game for me to give you clarity. Remember, these companies that you're mentioning that are all coming public, this is all happening in just the last three or four months. So I think it's a bit early to see how that movie plays out. I can tell you that proteomics has obviously been around for a long time. The value of proteomics is clear to the scientists that do this. The magnitude of what is now becoming possible in terms of deep unbiased proteomics at large scale is something that's going to play out over the coming months and years. And frankly, as you think of academic grant cycles and from the time you submit the grant until funding starts, I mean, these are not in the order of weeks. They're typically in the order of many, many months. So I think any change in grant funding, I think you're going to have to give it more time to see that. But what we're seeing is that there's a high degree of demand. Frankly, we had expected it. it's actually nice to see that it exceeds our own expectation in terms of interest in deep, unbiased proteomics, and specifically plasma proteomics is an area of interest to a lot of the customers that we're talking to.
spk05: Great. Just one follow-up on that. So, you know, your first release is a five-nanoparticle set. Have you sort of found when you were sort of looking at those particles and what they cover. Are there certain parts to the plasma proteome that maybe are underrepresented and so that you need to add incremental particles on it? I'm just sort of wondering now that you've had it, now you've gone much deeper and across different customers, if there's any sort of like nuances you're noticing that you might need to expand or change the current offering.
spk01: Derek, let me say the following, which is look, obviously we have a tremendous amount of experience with the use of those, with the use of that panel and those particles with our own samples, we know what we see and the implication of the content, the proteomic content that we get. What is super exciting for me is when I hear feedback from Omid about the emergence of data from our customers, let me turn it to Omid who may be able to give you some indication of the kind of content that is being generated and the enthusiasm around that. Omid?
spk07: Yeah, thanks. So I think coming into this year, it was really clear for us that there was a need for a product that could enable unbiased and deep plasma proteomics at the scale that we are enabling in the order of, you know, protein groups that we're talking about. And that is playing out the way we expect it to. So as customers are starting to generate more and more data, and again, I want to just temper it. This is early. We need to generate larger data sets. What we're finding from them is that this is a really enabling technology that's given them the ability to be able to dive deeply and broadly in the proteome, in particular at scale, in terms of the number of samples. So the way I'm starting to read, and I'm learning this, again, coming from the genomic side of it, is really as I kind of think about it, as they scale the sample size, the ability to be able to increase the total number of proteins that one can identify across a growing project size using our technology is massively powerful and something that, quite frankly, they haven't been able to do not with this level of ease. And so why do I say that? Because what that brings us back to is that this product, as it exists, is an awfully enabling product that is going to give us access to a very substantial part of the opportunity that is in front of us for the coming years. That doesn't mean we're not going to have other products. We're not going to have other product additions. But this product unto itself is extremely powerful, enables customers to be able to go to depth and breadth that they just flat out can't, And especially as you look at increasing sample sizes, being able to catalog an increasing number of protein and peptide variants, that just flat out is impossible. So just with the five nanoparticles, I think we're going to be able to go a very, very long ways in enabling customers. And as we've talked to you all previously, you can expect that we're going to have a continuing stream of products that are going to only enhance our market opportunities moving forward. But the five, as they exist, from what we're hearing, are doing what they're supposed to do and more.
spk05: Great. Thank you very much.
spk00: Thank you. Again, if you have a question, simply press star 1 on your telephone. Our next question is from Tycho Peterson with JP Morgan. Your question, please.
spk03: Hi, guys. This is Casey on for Tycho. How quickly do you expect a typical customer to scale up their studies? And, you know, where do you think cost per sample needs to go for customers to effectively scale up and then You know, as a follow-up to that, how does that cost per sample compare with existing targeted HyFlex proteomics?
spk01: Look, I mean, we obviously have experience with just a limited number of customers, and our first customer, Oregon, has reached this stage that you're kind of referring to. Let me have maybe Omid give you a little bit of additional color in terms of the size of the studies, you know, and their viewpoint about the cost associated with it. Omid?
spk07: Sure. So, again, as we said, it's early. But our expectation is, look, and this is drawing a lot from my perspective on how I saw some of these things play out with products initially in genomics, that, you know, the first few months, let's just say roughly about a quarter or so, customers are getting their arms around the technology, getting familiar with it, doing pilots. And we've seen it sort of play out that way at, say, OHSU to begin with and others. And then what you see is that sort of this following next three-month period is is when they start to begin to scale the next set of their projects. And that typically plays out somewhere in the order of a couple of quarters. And then beyond that, you begin to see them be able to really now take that next inflection point. That's, again, drawing a lot from genomics. I have no reason to expect it's going to play out differently here, largely because all of this is driven as a function of overall power, sample size, the way you think about studies and scaling. So that's the rough cadence that we're expecting customers to follow through. Now in the case of some of our limited release customers, remember we talked about this in our earnings call, we are focusing on customers who can operate at scale and who have a clear scientific vision and so that we can actually as much as possible see these customers in action sooner rather than later. In terms of price per sample, I'll put it in this context. So we think what the value that we're actually delivering with these products at these price points are really quite substantial and far better than what any customer can get today trying to use alternative means of doing deep and unbiased plasma proteomics, which involves depletion and fractionation. So even discounting for the cost of time, the value of labor, and all the rest of it, the overall price per protein group, if you will, that we're delivering to customers is far better than any alternatives that's available to them. And to date, we have not had a single customer interaction, particularly in the context of limited release, where the issue of price per sample has been a concerning point for them. So I don't expect it to be a limitation in driving upscale. And also keep in mind, the price points that we're talking about are the price points that, again, in genomics, people are routinely paying to do large-scale genome studies, right? So for the right biological value that you deliver, and especially if you're uniquely enabling a particular avenue of investigation, I haven't found these price points to be a problem, either in genomics and certainly not so far in plasma proteomics.
spk03: Got it. Thank you for that. And maybe just one last one. Can you talk about the thought process around choosing the number of limited release customers here during Phase 2? You know, how do you plan to balance the number and pace of publications along with the depth of early customer engagement. Thanks.
spk07: Yeah, sure. I mean, this is, you know, all of this went into the overall strategy coming into this year, which is why, you know, the way we've approached it for collaboration customers and then you layer on top of that high single digits of limited release customers, we believe are going to put us in a position to be able to have the right balance of customer critical mass and what's more important than sheer number is is the type of customer, the type of experiment that they're gonna do, and their willingness, and quite frankly, the credibility to stand up and deliver that data. And so we're being very thoughtful in not only the number of customers, but the type of customers and the engagements, because exactly to your point, right, so much of this is about making it very clear broadly that this technology platform has a unique and differentiated value proposition that can absolutely be realized in the context of large-scale unbiased ND proteomics This has to be done in the context of several customers speaking about it, which is why we're very much focused on having the right type of partnerships in limited release to couple with the right type of partnerships we have in collaborations so that we have these substantial proof points coming out. Because, again, it's not so much the number of the customers. It's what do those customers do and how fast they move. So I feel very good that we are going to be able to strike that right balance between the customer number and pace of publication and proof points coming out.
spk00: Thank you. And this concludes our Q&A session and program for today. Thank you for your participation, and you may now disconnect.
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