Nautilus Biotechnology, Inc. (NAUT) Q4 2021 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by and welcome to Nautilus Biotechnology Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker host, [Alex Scott] of Investor Relations.

Thank you. Earlier today, Nautilus released financial results for the quarter and full year ended December 31, 2021. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to Investor Relations at nautilus.bio. Joining me today from Nautilus are Sujal Patel, Co-Founder and CEO; Parag Mallick, Co-Founder and Chief Scientist; and Anna Mowry, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking within the meaning of the 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 Nautilus issued today. Except as required by law, Nautilus disclaims any intention or obligation to update or revise any financial or product pipeline projections or other 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 24, 2022. With that, I'll turn the call over to Sujal.

Thanks, Alex. Good morning and thank you to everyone for joining us on the call. Today, we will review our results for the fourth quarter and full year 2021 and provide an update on a range of recent activities. Since our last call, we've continued to make strong progress against our key scientific and business goals due to the efforts of our incredible teams in the Bay Area and Seattle. Bringing any game-changing innovation to the market requires not just a great idea, but a team willing to do what it takes to succeed. I'm very proud of the way our team has risen to the challenge and embraced the opportunity through focus, intensity and a deep sense of scientific curiosity to provide ubiquitous access to the proteome for every lab, researcher and clinician around the world. To begin, I want to take a moment to remind everyone of our broader mission. When I speak with potential customers, partners and key opinion leaders, I continue to hear an increasingly common refrain. The primary role they see for innovative next-gen proteomics is to drive revolutionary improvements in drug discovery, diagnostics and human health in the decades to come. There's no doubt in my mind that Nautilus will be a leader in this vibrant and valued space. For many years, we've been told that a wave of precision and personalized medicines based on the intricate details of each patient's biology is just over the horizon. Unfortunately, except for niche cases like drugs targeting specific mutations in cancer cells or genome editing for rare diseases, this wave has not come. This is perhaps because our hopes for personalized medicine has been primarily tied to advances in genetics and genomics. Yet, as we all know, while genomes help us understand general susceptibilities they do little to inform people about the state of their current health or if their lifestyle choices or environmental factors have increased or decreased their disease risk. Proteomics technologies like Nautilus on the other hand, aim to reveal stateful information telling us what's happening right now. As proteins carry out the majority of cellular function, the dynamic patterns of these ever-changing proteomic profiles, comprising thousands to millions of protein variations, can reveal whether we are healthy, sick or have greater potential to become sick. These same proteins can help us individualize our treatments based on what's happening in our body today and what has been happening throughout our lifetime. We fully believe that proteomics is a critical ingredient in making personalized medicine a reality. The reach and impact of Nautilus' innovation is potentially immense. Recent estimates are that the proteomics market is approximately $25 billion and growing at a 12% CAGR. While this opportunity is an immediate and exciting area of focus for us, we believe that technologies that improve accessibility and reproducibility and deliver faster turnaround time with reduced complexity like Nautilus, will be the catalyst to expand this market opportunity. Simply put, our goal is to democratize proteomics and in doing so, revolutionize biological science. We expect that researchers in biomedicine regardless of their background, will be able to use our technologies. And as Parag and I have both said before, we hope to make it possible for anyone who wants a proteome to get a proteome. Nautilus' widely accessible proteomics platform aims to dramatically accelerate target identification and drug development. Using it, we expect researchers will be able to establish proteomes for any sample they wish, ranging from tissue culture model systems to preclinical [indiscernible] tissues to human clinical samples. With these in hand, it will be easier to figure out how disease processes have impacted our body and to create drugs that target the molecular underpinnings of each disease and with fewer side effects. We continue to see a broad array of users for our instrument. From researchers in biopharma and academic institutions to clinical practitioners, we believe our instrument will fit the needs of a wide range of proteomics users. Among those groups, the common thread will be their need to dig deeper and more quickly into proteins and proteoforms of interest. We believe that Nautilus will enable them to develop more effective therapeutics to build more precise diagnostics and to pick the best therapy for a particular patient. As we start 2022, we are more confident than ever that the single molecule protein measurement platform that we're building will deliver value to biological researchers in a way that's simply not possible through any other method. We are excited to have you along on this journey and look forward to updating you on our progress along the way. I'll now turn the call over to Parag for an update on our research and development and partnership activities. Parag?

Thanks, Sujal. I want to start by echoing Sujal's comments about the remarkable team we've assembled. When you have a purpose as audacious as ours, you need a team of people capable of embracing a vision, dreaming a very big dream and then applying everything they have to help make that dream a reality. I'm very proud to say that we've built such a team and want to personally thank them for their extraordinary efforts last quarter and throughout last year. We continue to make solid progress against our scientific goals and have rapidly matured our development processes for both our consumables and our instruments through a mix of internal and external efforts. We note that our consumables include the reagents for mobilizing proteins on our nano pattern chips, the chips on flow cells, the labels we use to detect our probes, the probes themselves and the various buffers and chemical agents used for sample preparation and for on-platform detection. As part of these development efforts, we are focused on our verification and validation tools and the underlying analytical techniques required for assessing the quality of our consumables. In the past year, dozens of metrics and assays have been developed and optimized to assess the quality of every step in our process from reagent creation all the way through to on-platform performance. We are additionally focused on methods to significantly increase production scale and decrease process costs. These steps are critical for ensuring a successful transition to a manufacturing operation fully capable of supporting our commercialization objectives. One such recent effort reduced the time of reagent creation by a factor of 10 with an additional improvement in yield by a factor of 2. Lastly, we are focused on improving our processes for instrument assembly, integration and execution. These efforts are close collaborations amongst our system integration, software and engineering teams. As we continue to mature our development efforts, we are also being intentional about working with a range of partners across our instrument and consumable ecosystem to both derisk our time lines and ensure we have sufficient supplier diversification. For example, we now have 4 separate partners working with us on chip fabrication and functionalization efforts. Several partners working with us on instrument design and build and test framework and have begun outsourced manufacturing of key reagent components. Our efforts in probe development have been augmented by our relationships with external probe development and supply partners like Abcam, which Sujal will comment on further in just a few minutes. We've also begun supply chain exercises to ensure a diversification of suppliers for key components. Overall, we continue to successfully transition to a manufacturing posture as we build towards full commercial availability. In late December, Nautilus was awarded our fourth U.S. patent. The patent covers methods for making single molecule protein arrays using structured nucleic acid particles, which we refer to as SNAPs. This latest patent complements our 3 existing granted patents and focuses on more general processes and methods associated with our platform. We expect this latest patent with our 3 other issued patents to be just the tip of the iceberg as we continue to significantly expand the scope of our intellectual property portfolio. The hard work of our R&D team has also manifested itself in a number of important scientific papers over the last few months. Building on that momentum, we began editor outreach for a paper with Genentech that demonstrates our platform's ability to detect and measure the molecular heterogeneity of proteoforms of an important drug target through serial interrogation of individual protein molecules. We are incredibly excited by the work we're doing with Genentech, and I look forward to sharing details regarding our results when I present at the US Human Proteome Organization, HUPO's, annual meeting later this month. This work with Genentech also reflects the experimental research being done with our other announced collaborators, Amgen and the University of Texas MD Anderson Cancer Center. The initiation of these relationships is a clear and unambiguous indication of a growing understanding that proteoforms will be an important driver of high-value next-gen biological research in the future. Proteoforms, the different forms of a protein produced from the genome with a variety of sequence variations, splice isoforms and post-translational modifications despite their clear value represents an area of biology with an underserved and unmet need, which we believe the Nautilus platform is in a unique position to support. Posttranslational modifications, PTMs, contribute to the vast diversity of proteoforms that drive biological processes. Currently, very little is known about the molecular heterogeneity of proteoforms. This gap can be primarily attributed to a lack of methods to analyze at massive scale PTMs on intact single protein molecules. A better understanding of proteoforms through the work we're doing with Amgen, Genentech and MD Anderson holds the potential to expand our collective thinking about cell signaling pathways, development of companion diagnostics, epigenetic regulation biomarker identification, drug staging, target discovery and candidate discovery as well as characterizing disease mechanisms and understanding mechanisms of action for candidate therapeutics. Single molecule proteomic approaches, like Nautilus', are an emerging complement to existing approaches that we believe will allow interrogation of proteoforms at a greater sensitivity and at a greater detail than is currently possible. We continue to repeatedly hear that the market is excited about single molecule protein analysis methods. We additionally hear that the market is less focused on a target number of ratings measured, but instead is excited about novel approaches that can unlock new biology. My enthusiasm about our platform's ability to unlock the value of proteoform detection and identification has deepened as we've leaned in with our research collaborators and we've seen their excitement about proteoform biology and about our platform. That enthusiasm in no way diminishes our excitement about our ongoing broad scale decoding work. Both areas represent high-value uses of the Nautilus platform, and we will continue to pursue each with vigor. With that, I'll hand the call back to Sujal.

Thanks, Parag. Since we became a public company in June, we've significantly scaled our team and product development activities. As you heard from Parag, we're very excited about the progress we've made since then. But despite that progress, we have not yet achieved our first broad scale proteomic profiling milestone. That said, we still anticipate reaching comprehensive coverage of the human proteome in the middle of 2023, and we remain confident in an end of 2023 commercial launch. The root of our confidence in our commercial launch schedule requires a bit of explanation. As a reminder, and as described in the foundational manuscript we made available on BioArchive in Q3, the Nautilus platform is based on an integrated computational experimental method that's capable of identifying 95% of the proteome, roughly 19,000 gene encoded proteins. This method serially interrogates the single molecule binding of a collection of several hundred reagents that we call multi-affinity probes. Each of these probes are first discovered through methods like SELEX or phage display. Then prior to use within our platform, they undergo extensive characterization and are coupled to our proprietary fluorescent labels, which enable detection. As described in the manuscript, the number of probes is not linearly correlated with the percent of the proteome that can be identified. Let me explain. Roughly speaking, the first 1/3 of our probe set will only be able to decode a small percentage of the proteome. From there, the second 1/3 of our probe set exponentially increases the percentage of the proteome that's identifiable approaching 60% to 80% of the proteome. Finally, the last 1/3 of the probe set gets us to a comprehensive identification and provides more confidence around protein identification. Additional probes increased confidence in identification and enable more detailed detection of mutations and proteoforms, but do not substantially increase the percentage of the overall proteome that can be identified. Last year, we planned to begin the scale development of the multi-affinity probes as soon as the capital from our public offering was in hand. That scale development entails both internal and external efforts focused on developing aptamers and antibodies via standard and proprietary methods. When we announced our strategic partnership with Abcam on our last quarterly call, I mentioned the likelihood that we'd be signing similar agreements with other partners in an effort to derisk our platform development pipelines. To that end, we've signed agreements with 3 additional strategic partners. These relationships will not only help us most efficiently achieve broad-scale proteomic profiling, but we also anticipate they will enable us to effectively scale reagent production as demand for our platform grows. While the scale-up of our internal and external probe development strategies is exciting, both our internal and external efforts began later than anticipated. Now that we've begun, we are pleased with the development and supply strategies that we have in place, the significant number of planned probe deliveries from these strategies and the early data that we're seeing. With all of this, our probe delivery schedule is compressed into a shorter time period, which is good from the perspective of reaching our commercial launch goal, but it also puts a lot of pressure on our probe characterization and integration efforts, which sit downstream from probe discovery. Recognizing that compression, it no longer makes sense for us to articulate a firm schedule for milestones like when we'll reach 2,000 proteins identified. Indeed, with our probe delivery schedule being compressed in this way, we're unsure whether our first step will be able to identify 1,700 proteins per sample or 5,000 proteins per sample or something in between. Beyond the platform development efforts I've just described, in 2021, we significantly increased the number of detailed conversations we had with customers across biopharma, academic and research and diagnostics. We heard from these customers significant excitement about getting early access to single molecule data, single protein molecule data. These customers are aware, just like we are, that there are many assays out there that perform bulk measurements, which are limited in terms of sensitivity. There are also several newer companies working on early development efforts towards peptide sequencing, which is limited in its dynamic range and ability to accurately map the proteoform landscape. And of course, there is mass spectrometry-based proteomics, which entails a complex workflow and is limited in both sensitivity and dynamic range. We believe more strongly than ever that Nautilus has the potential to provide complete identification and detailed proteoform mapping at the intact protein level, outperforming existing methods and those currently in development elsewhere. Customer conversations in conjunction with a significant amount of market research have increased our conviction that customers are eager to run samples on our platform. We're energized by this feedback and motivated by the chance to make a difference in how biological research is conducted. Hopefully, all of that gives you some additional color around our development path and our confidence in a commercial launch at the end of 2023. We look forward to updating you regularly on our progress and on our product development milestones and publications. In the meantime, we believe that all of the necessary components are in place and everyone at Nautilus is heads down focused on execution. Let me turn the call over to Anna for an update on our financials. Anna?

Thanks, Sujal. Total operating expenses for the fourth quarter of 2021 were $16.8 million compared to $5.3 million in the fourth quarter of last year. Overall, that growth in spending was primarily a result of scaling up our team to a head count of 113, roughly doubling our size year-over-year. Research and development expenses for the fourth quarter of 2021 were $9.9 million compared to $3.9 million in the fourth quarter of last year. That increase was primarily driven by growth in personnel costs as well as spending related to scaling up our development pipeline and our experimental capacity. We also expanded the development services supporting the continued development of our platform. General and administrative expenses for the fourth quarter of 2021 were $6.9 million compared to $1.4 million in the fourth quarter of last year. That increase was primarily driven by growth in personnel costs and professional services related to operating as a public company. Overall, net loss for the fourth quarter of 2021 was $16.7 million compared to $5.4 million in the fourth quarter of last year. Turning to the balance sheet. We ended the year with approximately $362 million in cash, cash equivalents and investments. In terms of how we plan to allocate our capital, we estimate that spending will grow roughly 75% this year as we continue to invest in research and development personnel and development pipeline, both internal and external. In G&A, we will be absorbing the full year cost of being public. We will also be making initial investments in commercial teams and activities to support our early customer engagement and in preparation for our commercial launch by the end of 2023. Our near-term capital investment needs remain modest and are focused on building our inventory of completed instruments. Our pace of investment, combined with our limited capital needs, gives us confidence that we have the cash we need to get through commercialization. With that, I'll turn it back to Sujal.

Thanks, Anna. We're pleased to be hosting our inaugural Analyst Day in late September at our R&D headquarters in San Carlos, California. We'll have a full agenda that day, including a preview of our planned pricing model. While I'm not going to let the cat out of the bag just yet, I will share that the recent in-depth market analysis that I mentioned earlier, along with deep internal pricing studies and a significant amount of feedback from potential customers has increased our confidence in the pricing estimates we've previously shared with you. We now believe even more firmly that our anticipated pricing will be supported by the extraordinarily valuable data that users will be able to derive from the platform and its ongoing use. We're excited about what lies ahead for Nautilus and the difference we plan to make in biological science. Our mission to positively impact the health and lives of people around the world remains our north star. I'm grateful to our investors, our strategic partners, our research collaborators and our team for joining us on this journey to transform proteomics and empower the scientific community in ways never before thought possible. We continue to make good progress and look forward to updating you all along the way as we continue towards commercialization of our platform and beyond. With that, I'll turn the call back to the operator. Operator?

[Operator Instructions] And our first question coming from the line of Max Masucci with Cowen.

Just a big picture one here. Just curious where you stand from a headcount perspective compared to the Q3 call. And where the head count stands in some key functions, key roles and if there's any where you're still looking to add?

I can start with that. We ended the year at 113, which is continued progress over Q3 and doubling year-over-year. We expect we'll continue to invest in growing our headcount. That's one of the primary drivers of the OpEx spend growing by 75% this year. We are continuing to invest in R&D. We're innovative -- developing an innovative product that's going to be our focus in this coming year. And as we get closer to launch, we'll be making some early investments in the commercial team and beyond that, those trends will continue.

Okay. Great. And then I just want to clarify on the point Parag made. I think there was a comment that we could see an update from the Genentech collaboration. Was that later this month or next month? I just wanted to clarify what exactly we should be looking for.

Sure. I'll take that. What I was commenting on is that the US HUPO meeting is this weekend and we'll be presenting some of the work from that collaboration there.

Okay. Great. And then maybe just one final one from my end. If we just turn to the MD Anderson-Amgen partnerships, yes, I know -- understanding it's still early. Just curious if there's any updates you can provide in terms of how that's going in the early days or even -- if there's any way we can think about the timing of any updates that could come out of those partnerships?

Max, this is Sujal. I'll take this one. Those agreements were recently signed. And once we sign these agreements, we go through a process of understanding what exactly are the questions that we want to answer in terms of biological insight. We have to figure out what affinity reagents we want to use, where we're going to source them from integrate them into the platform and then we can go and run the experiments and share the data with our collaborator and so forth. So there's a good bit of process there, in particular, because we're at the very early stages of putting our platform to use with collaborators and partners. And in this early stage, all of the reagents that our customers want us to use are new to us. And so we don't have an update for you on an exact timing of when we will announce some results out of those partnerships. We're still in the early stages of those scoping activities and getting the reagents and getting ready for those experiments.

Makes sense. And then any other detail you could share on the agreements with the 3 new partners during the quarter? Just maybe in terms of how it's additive to your internal reagent strategy, but -- and also how it could be complementary or different from the deal you've previously signed with Abcam.

Yes. Why don't I take this one? So one of the most important things that we wanted to tackle once we closed our public offering and had the capital in hand was to increase the number of probe development strategies that we had and increase the diversity of those strategies. And so in terms of the types of strategies, both internally and externally, we are now leveraging [indiscernible] based probe discovery strategies and antibody-based probe discovery strategies. And on the antibody side, we're using traditional antibody development and proprietary methods as well as using phage display. And so we've got a lot more diversity in there. The 3 additional external partners are a mix of those strategies, and they're complementary to Abcam. One of the big things that we did in 2021 was that we focused on trying to figure out for which types of probes and which epitopes we were going to distribute to which partner and which strategy to create an optimal probe mix to get the product out. And -- so with all that work in hand, each of the partners is focused on a piece of the job and then there's a significant amount of overlap as well so that we have additional margin and cover to be sure that we get to the final 300 -- approximately 300 probes that we need to reach comprehensive proteomic profiling by the middle of 2023.

Great. And good luck this weekend.

Thanks, Max.

And our next question coming from the line of Matt Sykes with Goldman Sachs.

Maybe just, Sujal, on the comments you made about the compression of the probe schedule. Could you just maybe talk about some of the drivers of that? And it doesn't sound like it's got any impact on commercial launch timing and things like that. But just maybe just a little bit more color on that on the causes and drivers of that.

Sure. Matt, let me go and kind of walk through that a little bit. And I think that from a headline message perspective, if I look at the end, and then I'll explain, I think your view summed it up nicely, which is that we are behind. But with the strategies we have in place and the compression in the schedule, we feel like we will be able to achieve our comprehensive proteomic profiling milestone and full commercial launch by the end of '23 on time. I think that we're going to pose Parag some more stress along the way, but we feel good with the strategies that are in place. So if you think about what we did once we closed our public offering in the middle of last year, we went and had to scale up our internal headlines and we had to go and get our agreements in place with the external parties that were going to help us. And given that we ended up closing a little bit more capital than we had originally anticipated, we actually scaled up the plans to go and give us additional coverage and to make sure that we're going to be able to get to the number of probes that are needed to get the comprehensive proteomic profiling. On the internal side, our initiatives kind of scaled up a little bit later than we would have liked because, one, that transaction took a little bit longer to close than we wanted. It took us some time to hire the people and to scale up the teams that are necessary for our internal SELEX and phage display efforts. It took us a little bit of time to procure the equipment and reagents. There were some supplies tight. And so that stuff took a little bit of time, got our internal pipeline off the ground a little bit later than we had hoped, but we're really happy with what we're seeing in those internal pipelines today. On the external side, one, we had to negotiate deals with multiple parties. And [ that you've added ] them up, there's 4 of those that we've talked about externally here now who are helping us on the probe development front. And with each of those parties, we didn't want to just enter into a development agreement, but we wanted to make sure that we were covered for our long-term supply needs, both from a cost and manufacturing scale perspective. And being able to tackle that in conjunction with the development agreement took us a while longer than we had hoped. All of those agreements are now signed and up and running, and we're super happy with where they're going as well. And so in total, we feel good about all of the efforts that are in place. But what that means is that literally, if I look at our probe delivery, our anticipated probe delivery schedule, there are literally some quarters where we have 100 probes coming in at various [stages]. Now obviously, those go through a sophisticated characterization and integration process. There's fallout on that process, but not all 100 are going to make it into the product. But the downstream task for characterization and integration have a lot more pressure given that there's so many probes coming in a shorter time frame. And so a lot of the focus of our R&D organization under Parag and Subra Sankar, SVP of Product Development, a lot of their focus is on scaling our integration efforts and scaling our characterization efforts so that we can effectively deal with the scale of the product that's going to be coming into that pipeline.

Got it. That's really helpful color. And just -- maybe just one more for me. As you think about the end markets, and I know this is maybe getting ahead of myself, but I know you've got partnerships in the biopharma side and the academic side. But as you think about sort of the clinical diagnostics market and you kind of envision the value you provide to that end market, could you talk about where you see sort of the greatest value that you can add to that end market? And will this be an end market that probably will be later to develop post sort of biopharma academic being sort of the first 2 markets?

Parag, do you want to take the first stab at Matt's question and then I'll add some color?

I guess I'll just ask a clarifying question first. So when you think about the different phases and types of markets, Matt, you mentioned academic and biopharma. Outside of that, what are the specific markets you're thinking about?

More just in the sort of the clinical diagnostics use case.

Yes. So I think that the way that we think about that landscape is that we require the research use partners to first use the platform in their early-stage efforts in their finding of their novel targets, their finding of their novel biomarkers. And that lays a foundation for downstream clinical application because part of those drug discovery efforts, those target discovery efforts, those mechanism of action studies, they're going to say, "Oh, there's a great companion to my drug. You should measure this protein or this proteoform." For some of those things that are discovered, it will be natural to use existing platforms, Luminex, ELISA, et cetera, to measure them, particularly when they're low plex. However, over time, there are going to be molecules that are discovered, particular proteoforms, for instance, where our platform is really the only effective way to measure it or panels of dozens of markers that together create a signature that is more predictive and more specific. And again, scaling to typical targeted assays with that number of markers becomes challenging for existing platforms. And so that will encourage folks in the development side, saying instead of trying to make that ELISA, instead of trying to make that MRM assay, let's instead just use Nautilus, which was the discovery platform to begin with. And that will drive use, say, okay, there's a clear clinical need, there's a clear assay, let's do the work with the FDA to push this through to become a clinical test. And in that way, that will really accelerate our pull through the FDA approval process. And in particular, in orphan diseases, other areas like that, those are great early use cases as follow-on for the -- for more clinically targeted applications.

And our next question coming from the line of Tejas Savant with Morgan Stanley.

This is [Hugo] on the call for Tejas. You touched on this in your opening remarks, but could you further elaborate on how you imagine Nautilus' platform to be positioned versus competitors developing protein sequencing platform? What are some pros and cons to your approach versus the sequencing approach?

Okay, Hugo, this is Sujal. I'll tackle this one. Thanks for the question. So when we think about the competitive landscape, there are a number of interesting things to think about. One is that we believe that the primary gold standard method for discovery proteomics today is leveraging workflows around the mass spectrometer. And relative to the mass spectrometer, the advantage that Nautilus provides is really a significant advantage in coverage, meaning we're getting to a high percentage of proteins identified being able to have greater sensitivity and a much wider dynamic range. If you look at us versus assays and it's really a lot of those same things, higher coverage, better sensitivity, better dynamic range. And then there's a new class of company. And you mentioned the protein sequences. Really all the companies that we see out there today are really peptide sequencers because they're all based on variants of Edman degradation, which is an old scheme to sequence peptides. And so the first step with all of those techniques is to -- I have to digest my proteins into peptides and then I go and try to analyze them. And I would characterize all of those efforts still in the early research phase, and all of the products that we've seen that are contemplated suffer from a dynamic range and sensitivity issue relative to what we expect our first product specifications to date. And so part of the sensitivity hit comes from the fact that even if you have a single molecule peptide sequencer, the molecules that you're talking about when you say single molecule, those are peptides. And if you sequence peptides as opposed to identify whole proteins, you lose [indiscernible] sensitivity right off the top because of that. On the other side, there's a question of dynamic range. And dynamic range is directly a result of how many molecules you can analyze. And so if you're only capable of analyzing say, a few million peptides in a single run, that leads you to an effective dynamic range of something that's pretty similar to what the mass spec can do today. And what we've heard loud and clear from customers in biopharma over the last 5 years is that there's a desire to be able to reach a dynamic range where we can see down to 1 protein molecule in 100 to 1,000 cells -- 100 to 1,000 cells at a very common sample type in pharma and being able to feed one protein molecule and 100 to 1,000 cells is going to require a dynamic range that is close to [ 10 of the 9 ] -- 10 to the 10 because there's about 1 million protein molecules per cell, so multiply that out, that's 10 billion per molecule. And so we've designed our system from day 1 to have a very wide [indiscernible] range enabled by this very large chip. And we think that fundamentally, that gives our platform a significant competitive advantage and a lot of flexibility. The customers can choose to use that whole chip for one sample and get extremely high dynamic range and single protein molecule sensitivity where they can choose to multiplex and have multiple samples run on that chip to increase the throughput in a single day and get more samples through the system at a slightly lower dynamic range, but still orders of magnitude better than any of the contemplated peptide sequencing companies out there.

That was super helpful. And then a quick separate follow-up. With wage and cost input inflation on top of mind right now, would you comment on what you're seeing along this front and any impact you anticipate to your business going forward?

Hugo, I'm happy to take that one, certainly top of mind for everyone out there, and we are experiencing the effects in both our hiring and supply chain. On the personnel side, it's an extremely competitive market, which means it's harder to find great people and the costs are -- labor costs are increasing overall. With that said, we've taken steps to remain competitive and the added visibility from being public has helped. On the supply chain side, we're navigating both higher costs and longer lead times, which, as Sujal mentioned, that's why we felt it was essential to negotiate supply agreements as we're signing on with these external development partners. We're also identifying long lead time components and are planning accordingly. In either case, we are anticipating those cost increases and are prioritizing our spending to ensure we can meet our objectives within our target spending envelope.

And that's all the time we have for the question and Q&A session. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.