Seer, Inc.

for the quarter ended June 30, 2023, and in its other filings with the Securities and Exchange Commission. Except as required by law, SEER disclaims any intention or obligation to update or refine 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 August 8, 2023. For that, I'd like to turn the call over to Omid.

Thanks, Kerry, and thank you, everyone, for joining us this afternoon. We ended the second quarter with $4 million in revenue, increasing 11% year-over-year and in line with the prior quarter. Based on our first half results taken together with our outlook for the remainder of the year, we now expect full-year revenue to be in the range of $16 to $18 million for 2023, representing 10% year-over-year growth at the midpoint of the range. While our top line growth this year will be slower than our previous expectations, we firmly believe in the significant underlying market opportunity for proteomics technology. Our technology has the potential to change the trajectory and status quo of proteomics. However, changing this status quo takes time. I continue to have full confidence in the strength of our vision and our differentiated product offering to capture the opportunity ahead of us and to push the boundaries of what is possible. Just 18 months after the launch of our flagship Proteograph Assay Kit, we have launched our second product, the Proteograph XT Assay Kit. We also recently expanded our collaboration with Thermo Fisher Scientific to enable population scale studies using the recently launched Orbitrap Astral Mass Spectrometer in combination with the Proteograph XT Assay Kit in our newly launched SEER Technology Access Center, or SAC. I have never been more bullish about our opportunities than I am today. While much work remains, we're continuing to put the pieces in place to build a foundation for long-term growth. On our call this afternoon, I will walk through the near-term challenges to commercial adoption that we're experiencing and the actions we're taking to overcome them. Then I will share more detail about our new product, as well as some exciting new data we're seeing from our partners and customers, which further validates my conviction for what becomes possible using the ProteoGraph product suite. Finally, I will turn the call over to David to provide more details on our second quarter financial results and our recent actions to further reduce our cash burn to preserve our robust balance sheet which includes approximately 396 million in cash, cash equivalents, and investments. As we have long said, we believe the ability to generate vast amounts of proteomic content leveraging our technology will open up a new frontier in proteomics discovery. Prior to the proteograph, unbiased proteomic studies were very small and therefore underpowered. versus large-scale and adequately powered studies to fuel discovery. That said, we believe there is currently a disconnect between our differentiated and high-performance product and the commercial adoption that we're experiencing. Similar to other new disruptive technologies preceding us, our commercial progress will not always be linear. As we're developing the market, we're learning quickly and optimizing our approach to make sure efforts and focus are going to result in the highest return over time. While we see many tailwinds in this market over the coming months and years that would accelerate commercial adoption, in the current market, we also see some temporary headwinds. These headwinds are interrelated, and we're tackling them in a way that we can most directly and quickly impact them. Most notably, these are First, the acquisition and use of mass spec instruments can be seen as a barrier to adoption for a segment of customers that are new to mass spec, namely the biologists and the genomicists. Second, there's a need for more publicly available data and publications demonstrating the biological value of decoding the complex of the proteome in an unbiased manner at scale in order to shorten our sales cycle. And finally, a challenging macro environment has created additional barriers in terms of the availability of capital for new disruptive technology. We're taking steps to address these temporary headwinds and to work to lower the barriers to commercial adoption. So what are we doing? First, we're making changes to enable easier access to mass spec proteomics data. This is especially important for biologists and genomicists. We've always said that the addressable market for our technology will be across both proteomics and genomics market. While this remains the case, there are some nuanced behavioral differences between genomics and proteomics customers that requires us to refine our approach to drive market development adoption. Proteomics or mass spec expert customers previously had technological barriers that limited the scale of the deep unbiased studies. Consequently, they did not have a need to store or maintain large cores of samples. Additionally, prior to the protograph, the investments and operations involved large capital expenditures for the acquisition of the mass spectrometers and relatively small expenditures on consumables. As a result, we're finding that the traditional mass spec technologies performing proteomic research readily recognize the value proposition or product suite. However, on average, they're slower to ramp up large scale unbiased proteomic studies since they need to secure the funding and samples to pursue large scale studies. To remove the barrier of capital investment for the mass spec experts, We have introduced a Strategic Instrument Placement Program, or SIPP, S-I-P-P, to allow them to begin using the proteograph right away by utilizing available operating budgets. This will help them generate the data needed to secure funding and samples to conduct larger studies. Conversely, biologists and genomicists generally have access to biological samples. are very familiar with consumable expenditures for generating omics data for their research, and are better positioned to conduct large-scale studies. These customers are almost universally recognized the value of unbiased approaches, given their experience with the discovery potential of unbiased genomes and exomes relative to targeted microarray approaches. We're finding that many of these new-to-mass spec potential customers view the acquisition and use of a mass spec instrument as a barrier to adoption, yet they appreciate the discovery potential of the Protegraph's powerful and scalable unbiased approach. For these customers, we have now introduced the SEER Technology Access Center, or STAC, S-T-A-C, which allows a Protegraph user to run samples in their own lab and have SEER run the mass spec or alternatively provide end-to-end study services from sample to data. We believe that as these important customers gain access to and validate and apply the biological insights provided by the Portugal product suite, they will over time add mass spec technologies to their labs. Importantly, as I mentioned at the top of the call, we have expanded our collaboration with Thermo Fisher Scientific to develop and optimize proteomics and proteogenomic workflows. As part of this program, STAC will provide mass spec services by primarily leveraging Thermo Fisher Scientific's Orbitrap Astral Mass Spectrometer, along with our new proteograph XT assay. While it is still very early, we're already seeing positive traction in the initial stages of our STAC launch and believe that this fact will increase the velocity at which customers can access unbiased proteomics data at depth and scale and improve the rate that customers can adopt and ramp the use of the Protograph product suite. This will simulate publicly available data and publications demonstrating the power of our technology. Second, we're taking initiatives to shorten the sales cycle. The sales cycle is generally inversely correlated with customers' comfort to adopt technology. In the absence of third-party publication, the sales cycle is protracted because proof of principle studies are needed and it takes time to establish credibility and build relationships with new accounts while the publication base is still growing. There are four customer papers currently under peer review and we're aware of several additional ones that will be submitted by the end of the year. We continue to see strong interest in the Portugal product suite and a growing number of opportunities available to us. As we wait for more third-party publications to enter the public domain, we're building market awareness of the Portugal product suite and educating potential customers on the breakthrough nature of our technology and its unique capabilities. We're doing this by doubling down on creating in-person opportunities for customers to get to know us, our KOLs, and our technology through increasing meetings and seminars. In addition, we're continuing to support potential customers with proof of principle studies, help them understand and analyze these robust datasets, and support our existing customers with publishing papers and the development of new studies. We have also made recent changes to the commercial team, both in terms of leadership and regional business managers. While it's going to take some time to see the impact from these changes in aggregate, I'm confident in the team and the strategy we have in place to deliver on our commercial opportunity ahead. Finally, amidst this challenging macro environment, we're providing creative solutions for customers to obtain the prototype product suite. We're hearing from prospective customers that they're especially cautious purchasing a new disruptive technology whose value proposition is not yet widely demonstrated through peer review publications. To address this, we're offering creative solutions for customers to access the biological insights from the Protograph product suite, either through accelerating the utilization through SIP or accelerating the data acquisition through stack. Through SIPP, we loan an instrument to the customer for a period of time, typically less than a year, when coupled with an initial significant purchase of consumable kits. This program is also aided by the fact that many potential customers may have more readily available access to funds through operating budgets rather than capital budgets. We've already seen some good success with the SIPP since its launch earlier this year. Reducing these barriers to adoption will also help us accelerate the generation of use cases and data sets to exemplify the power of the Portagraph product suite and unbiased proteomics at scale. These presentations and peer-reviewed publications will thereby provide proof to other potential customers of the value of our solution and its unique ability to provide insights at scale. As I mentioned at the top of the call, we made two important announcements at the American Society for Mass Bacteriometry Conference in early June. First, the launch of the Proteograph XT assay kit. And second, the launch of this stack and expansion of our collaboration with Thermo Fisher Scientific. The Proteograph XT assay workflow allows customers to design large-scale unbiased proteomic studies with an unprecedented combination of site, scope, speed, and scale. The ProteoGraph XT assay uniquely provides high resolution insights into the proteome at the peptide level, enabling access to the diversity of species and sample types, more than doubling sample throughput without compromising performance, all with less than one hour of mass spec time further enabling studies to scale to power discovery. The Proteograph XT Assay Kit makes the proteome even more accessible for both proteomics and genomics researchers as they deepen their biological insights and characterize genomic variants with functional proteomics information. And a single operator can access hundreds of samples per week. This is incredibly exciting since there is a vast amount of proteomic content yet to be discovered with enormous untapped potential to make an impact on our understanding of health and disease. At ASMS, Thermo Fisher Scientific highlighted the exceptional performance of the Orbitrap Astral Mass Spectrometer in combination of the Proteograph XT for deep unbiased proteomics at an unprecedented scale and speed. The combination of the fully automated workflow of the Proteograph XT And the Orbitrap Astral produces over 6,000 protein IDs and over 54,000 peptide IDs per plasma sample with a 1% false discovery rate. The demonstration of this unprecedented depth, scale, and speed has paved the way for multiple discussions regarding population scale unbiased proteomic studies, which were impossible to contemplate prior to the proteograph XT. As prospective customers will readily access studies, we believe the unparalleled value of the depth and breadth of this unbiased content will be demonstrated and the flywheel will begin to accelerate. The level of information we have today in the proteomic space is just at the tip of the iceberg compared to what we think will be possible ten, five, or even two years from now. We're beginning to see signs of these customer studies starting to accelerate. The number of customer driven studies we saw in the first half of this year has doubled from what we saw in the same period last year. Importantly, we're seeing some incredible insights, including the impact of the expanded capabilities with the Protograph XT in early customer data. In June, We held a KOL panel meeting where investors had the opportunity to hear from four researchers representing different customer types and applications under use on the photographs. These customers included Steve Carr of the Broad Institute of MIT and Harvard, Josh Kuhn of University of Wisconsin, Philip Ma of Prognomic, and Chris Mason of Weill Cornell Medical. This event showcased strong enthusiasm for the power of unbiased proteomics and what the Portograph product suite and XT assay kit will uniquely enable, which was not possible before. Dr. Chris Mason, who is a professor of physiology, biophysics, computational genomics, and neuroscience at Weill Cornell Medicine, has utilized the combination of the Portograph XT and Orbitrap Astral in his longitudinal plasma samples of seven astronauts pre-flight and post-flight and identified over 7,500 proteins in his study in an unbiased way. This formed the basis for the identification of new biomarkers that are up and down regulated during space flight. These results demonstrate the step function change in performance of the combination of the Protograph XT and the Orbiter of Astral for unbiased proteomics. Dr. Mason plans to publish these results as part of the broader multi-omic study of the impact of spaceflight on astronaut physiology. In June, another pre-print was published in BioRxiv by researchers at Auburn University that showcases the power of the Proterograph product suite beyond plasma or biofluid samples that was exemplified in our applications lab. This paper shows how the Protograph product suite enables deep proteomic analysis of highly complex tissue, such as skeletal muscle. This tissue type has a wide dynamic range of protein expression levels similar to plasma and has been previously difficult to access. This paper provides yet another example of the flexibility and the power of the Protograph product suite to analyze novel sample types and provide differentiated And we're confident than ever in the long-term opportunity ahead of us. That said, until we have more third-party data in the public domain, we have some temporary headwinds impacting our commercial adoption, which are amplified by a challenging macro environment. We're confident that the actions we're taking will begin to accelerate the pace of data acquisition customer publications. As we continue these market development efforts, we have taken action to reduce our headcount to streamline our organization across our business areas. While it is never easy to say goodbye to valued members of our team, the right sizing of the organization will better match our cash burn with our revenue. With these changes, We're preserving our ability to execute against our commercial opportunities while pushing the boundaries of what's possible in proteomics. I want to thank all of our SEER employees for their dedication and hard work every single day to help realize our vision of unlocking the power of the proteome. I truly believe that we have the technology, the team, and the strategy to bring the next phase in omics to labs globally. With that, I will now turn the call over to David.

Thanks, Hamid. Total revenue for the second quarter of 2023 was $4 million, representing an increase of 11% compared to $3.6 million in the second quarter of 2022. The increase in second quarter revenue was primarily driven by increased consumable kit sales related to the Protograph product suite, service, and grant and other revenue, offset by lower instrument revenue. which is partially a function of the rollout of our SIP, whereby we loan an instrument to a customer if coupled with an upfront purchase of consumable kits. Product-related revenue for the second quarter of 2023 was $3 million, including related party revenue of $1.4 million and consisted of sales of SP-100 instruments, consumable kits, and platform evaluations. Service revenue was $467,000 in the second quarter of 2023, and was primarily derived from the completion of a customer service project. As Omid mentioned, we also announced the launch of STAC, where we will run mass spec for our customers, and in some cases provide a full workflow solution for customers who would like to access our technology. Grant and other revenue was $538,000 in the second quarter of 2023, largely related to our SBIR grant from the NIH. Our NIH grant expired in the second quarter, and we do not expect material grant revenue for the balance of 2023. Total gross profit was $2.3 million for the second quarter of 2023, representing a gross margin of 57%, compared to $1.6 million in the second quarter of 2022, representing a gross margin of 44%. Gross profit was driven by greater product revenue from higher margin consumable kits, service, and grant and other revenue. As we ramp commercial adoption, we continue to expect variability in our overall gross margin on a quarter-by-quarter basis as a proportion of instrument and consumable sales will fluctuate between any given quarter. Total operating expenses for the second quarter of 2023 were $30.2 million, including $9.8 million of stock-based compensation, an increase of 21% compared to $25 million, including $8.4 million of stock-based compensation in the second quarter of 2022. Research and development expenses for the second quarter of 2023 were $14.1 million, an increase of 30%, compared to $10.9 million in the second quarter of 2022. The increase in R&D expenses was primarily due to an increase in product development efforts related to the Protograph product suite, including employee compensation costs and other related expenses due to growth in R&D personnel and expenses associated with our facility, professional services, and depreciation of equipment. Selling general and administrative expenses for the second quarter of 2023, $16.1 million, an increase of 13% compared to $14.2 million in the second quarter of 2022. The increase in SG&A expense was primarily driven by greater employee compensation expenses and stock-based compensation. Net loss for the second quarter of 2023 was $23.4 million compared to $22.8 million in the second quarter of 2022. We ended the quarter with approximately $396 million in cash, cash equivalents, and investments. Turning to our outlook for the year, as Omid mentioned at the beginning of our call, we now expect revenue to be in the range of $16 to $18 million for 2023, representing year-over-year growth of 10% at the midpoint of the range. We are committed to maintaining our strong financial position and are continuing to take a very disciplined approach with our spend. Given that our revenue ramp is developing more slowly than anticipated, we feel it is necessary to reduce our operating expenses in order to align our cash burn with our revised revenue expectations. As Omid shared, we have implemented a reduction in force of approximately 12% of our workforce. We estimate that we will incur approximately $600,000 of costs consisting primarily of cash severance payments, which we expect to recognize in the third quarter of 2023. We have also taken measures to reduce our non-personnel operating expenses for the second half of 2023 to further reduce our expenses in cash burn. As a result of these actions, we estimate that our 2023 free cash flow burn will be less than our free cash flow burn in 2022. While it is always difficult to make these changes, we feel this is a necessary step for us to position the organization for success over the long term. At this point, I would like to turn the call back to Amid for closing comments.