Good day. Thank you for standing by. Welcome to the Seer, Inc. Third 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] Please be advised, today's conference maybe recorded. [Operator Instructions] I would now like to hand the conference over to your host today, Carrie Mendivil, Investor Relations. Please go ahead.

Thank you. Earlier today, Seer released financial results for the quarter ended September 30, 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@seer.bio. Joining me today from Seer are Omid Farokhzad, Chairman, Chief Executive Officer and Founder; Omead Ostadan, 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 Seer issued today. For a more complete listing and description, please see the Risk Factors section in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2021 and in it's other filings with the Securities and Exchange Commission. Except as required by law, Seer disclaims any intention or obligation to update or revise any financial projects 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, November 9, 2021. With that, I'd like to turn the call to Omid.

Thanks, Carrie. We're continuing to make outstanding progress and I could not be more pleased with the momentum as we approach the close of 2021 and prepare for broad commercial release in early 2022. Coming into 2021, we were focused on four key areas; first, setting the pace for innovation in the proteomic 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, as always and most importantly, we're focused on continuing to grow our incredibly talented team. Now 10 months into the year, we have demonstrated tangible progress across all four areas. On innovation, our team has continued to push the boundaries of our technology at the interface of nanotechnology, biology and machine learning to deepen our access to the proteome and it's variants. On our unique capabilities; the power of this technology is it's ability to enable highly robust, deep unbiased proteomics at-scale. As we progress through limited release, we're seeing an increasing number of customers planning at-scale studies of thousand samples or more. This is fundamentally transformative as prior to SEER, the most deep unbiased plasma proteomics studies that were done were in the size range of tens of samples. With regard to the customer experience; the Proteograph has been performing exceptionally well in the hands of customers. Customers are extremely pleased with the entire spectrum of the experience from the efficiency of stall and validation, to training, to ease-of-use and quality of data that they're generating. We're really excited to see several abstracts being presented in the fall conferences. And notably, these data were generated within just a few months following access to the Proteograph for most of these customers. On strategic relationships; we're making…

Thank you. I'm excited by our strong commercial progress as we execute against our objectives for the year and I believe that our measured approach to commercialization is paving the way for broad release customers to seamlessly adopt the Proteograph suite and scale their studies. We are already seeing increasing momentum at customer sites as they experience the power of our technology firsthand in their pilot studies, present on those studies and reimagine what they can do in scalable future studies. We saw the first of these customer presentations at ASMS last week. Starting with Oregon Health Sciences University Knight Cancer Institute, one of our collaboration sites. As we previously shared, following their pilot study, OHSU has obtained funding and is in the process of receiving samples to initiate a large-scale prostate cancer study that will include at least 500 and possibly up to 1,000 serum samples. This study would be the largest unbiased deep serum proteomics effort ever undertaken at the Institute and potentially ever anywhere. At ASMS, they share the poster that documents results from a smaller pilot scale study. These results and their very positive experience with the Proteograph set this stage for their follow-on study which will be highly scaled and carefully designed to a defined clinical end point. Their thoughtful and thorough plan for this scaled study will provide a blueprint that others can follow in tackling projects of similar size and complexity. Another collaboration customer, The Broad Institute, shared a poster using the Proteograph to look at the plasma proteome of patients undergoing therapeutic ablation and monitoring the result in tissue damage on a time course as a model for myocardial infarction. This data was compared with the Broad's previous method which used extensive depletion and fractionation on similar samples and was published in…

Thanks, Omead. Total revenue for the third quarter of 2021 was $2.2 million compared to $72,000 in the third quarter of 2020. The increase in revenue was primarily due to sales of products related to our Proteograph product suite. Revenue consisted of sales of Proteograph SP100 instruments, assay kits, platform evaluations, services and grant revenue. Product-related revenue for the third quarter of 2021 was $1.6 million, including related product revenue of $787,000 and consisted of sales of SP100 instruments, assay kits and platform evaluations. Related party revenue of $787,000 represents product sales to PrognomIQ. As we expected and have described previously, PrognomIQ is ramping faster than other limited release customers, primarily due to their deep familiarity with the technology which has allowed them to scale quickly as they interrogate hundreds and soon thousands of carefully collected and curated clinical samples. Service revenue was $500,000 and represents the completion of a project under an agreement with a large pharmaceutical company. While we have no plans to enter into the service business as a normal course offering to our customers, we will continue to deploy our capabilities in unique strategically important situations where; one, we want to catalyze adoption of our Proteograph product suite to develop a specific market; or two, we partner with large institutions that have significant clinical assets to jointly undertake an important study. As such, you may see us recognize service revenue on an intermittent basis rather than consistently quarter-to-quarter. Grant revenue from our SBIR grant from the NIH was $10,000 in the third quarter of 2021, representing a decrease in activity related to this grant from the third quarter of 2020. Total gross profit inclusive of grant revenue was $1.2 million for the third quarter of 2021, representing a gross margin of 54%. Gross margin was driven…

Thanks, David. I'm incredibly proud of our team at Seer and the progress we're making to transform proteomics and empower the scientific community. We continue to execute on our key objectives and look forward to updating you on our progress as we continue to open up a new gateway to the proteome. With that, we will now open it up to questions.

[Operator Instructions] And our first question comes from the line of Derik De Bruin with Bank of America. Your line is open. Please go ahead.

Hello and good afternoon. David, can you -- I know it's a little bit early but any idea on the run rate pull-throughs on the instruments? And also, just some color on what were implements in consumables in terms of the product revenues.

Yes, Derik, it is a little too early to talk about pull-through. I think, again, given where we are in terms of folks getting the instrument and ramping up, it's really just too early. What I can tell you on product revenue and instrument versus consumable, I think the way to think about it this quarter is this product revenue, as we -- as you'll see in the 10-Q, as you break it out, is primarily instrument revenue. And then related party revenue which is PrognomIQ revenue, is primarily consumable revenue. And this is exactly what we kind of expected to see at this point given that PrognomIQs roughly kind of two to three quarters ahead in terms of their familiarity with the technology which allows them to get to the point of scale projects faster than others have simply because they've had a head start just given their familiarity here. But the instrumentation is the leading indicator of a growing installed base we have and the customer breadth. And so we do expect to see that be a lead to expanding consumable revenue ramp as those customers get up to speed with the technology and the projects they're working on.

Great. And the related party revenue was quite a bit higher than what we thought it was going to be. Is that a good run rate for going forward? I'm just trying to put -- happy to understand the importance of it but just would like to sort of get a better sense on just how to model it.

Yes. I think the way to think about that, Derik, at least in the short term, is we expect PrognomIQ, again which is related party revenue, to be a similar percentage in terms of overall revenue quarter-to-quarter. I think you'll -- as the other customer base broadens out and that revenue ramps, I think we'll start to see that decline a little bit as we move throughout 2022 and 2023. But in the short term, I think about it in kind of a similar ZIP code in terms of percent of revenue.

Got it. And just one question on some of the post which you presented. I noticed that on the Sanford Brose poster, the CVs were about 15%. On the Broad, it was around 25% on the CVs. What -- I'm just sort of curious, is like, can you just help me understand the comparison between the labs is like why one would have such a better reproducibility in one versus the other? I just -- as I said, with just license or like understanding what's the specific experiments and sort of doing with that. And I guess are those 25% levels, is that a good range as we think about what your customers can use? Just trying to benchmark it towards other methods.

Derik, I think as you look at CVs, you have to also think about the depth of the protein coverage that folks are seeing, the number of samples that they are looking at. So for example, in the case of Broad, it was three samples over five time course. And then the protein sample the cost side of protein I across those samples approach 4,000. Individually, it was north of 2,000. So that's a different kind of a readout that the burner folks get. And again, it's just a function of the samples that they use. It's also a function of the detection and the gradient time that they use. So as you increase the depth, Derik, you would absolutely expect for that CV to widen; that is normal. So that's where we just think of it.

Okay, thanks. That helps. I'll get back in the queue. I don't want to hog all the questions. Thanks.

Thank you. And our next question comes from the line of Tejas Savant with Morgan Stanley. Your line is open. Please go ahead.

Hi, this is Neil [ph] on for Tejas. Could you give us a quick update on Enlight Medical and progress of the Proteograph in China? And any early color on what the order book looks like there?

Let me have Omead comment on where we are with the China and the Enlight experience. I think that may be more appropriate. If there is a need to kind of weigh in on a day we want well. Omead?

Thanks. So I think as we announced last quarter to you, we have signed a distribution deal with Enlight Medical. We're really excited about getting that relationship going. And so far, the progress we made with them has been really quite positive and strong. As we mentioned to you, our original strategy was to get -- go into China in the middle of 2022. So we pulled that strategy -- we pulled the execution of it about a year. And so the way I would think about that one is that we are just setting up as a distributor and we're doing it so that we can actually begin to expand on our book of business in China. And so, I think you can expect to see results of that play out over the course of time but primarily in 2022. But I'm really quite pleased with the way that the relationship is already gotten off the ground, the level of engagement buying like and the infrastructure and process we're putting in place to have a very successful business in China moving forward.

Great. And how are you thinking about the sales force ramp ahead of Broader commercial launch in light of tighter labor market conditions right now?

Look, we're not disclosing the number of reps. Suffice it to say that we've substantially grown our commercial team in 2021, expect to do it in 2022. I have to say that we've probably attracted some of the best commercial lines at the senior level in this company and these are folks that have really decades of experience selling life science tools and the commercial model that they use, including, by the way, the way they stack their team. I expect we're going to be able to meet customer demand in a very efficient way. I think for me to comment but in general, even since day one where we started, we're always hiring about one to two quarters ahead so that folks are up and running and up to speed by the time the quarter comes that we need them to execute. I think that's been the plan. I'm very proud of the commercial team that we've built, Pinaki -- let me go to add to that?

Maybe just a couple of things. So totally acknowledging outside your labor market but I think to the point that Omid raised, given the range and caliber of people we have around the table and the commercial team already, the opportunity that the company represents, we haven't really had any complexity or difficulty either identifying, recruiting or bringing on board commercial staff it in sales, support or marketing. So I feel really good about where we are in terms of today, quite frankly and our preparation for 2022.

Got it. That's it for. Thank you for taking my questions.

Thank you. [Operator Instructions] And our next question comes from the line of Tycho Peterson with JPMorgan. Your line is open. Please go ahead.

Hi, this is Rachel [ph] on for Tycho. Thanks for taking the questions. So first off, could you just talk about if you face any supply chain or inflationary pressures this quarter? And then supply chain constraints have obviously gotten tighter in recent weeks and we've been hearing about it more. So could you talk about your confidence around ramping inventory ahead of the broader rollout in '22?

I'm sorry, the last question. Can you repeat your last question for me?

Yes. Just your confidence with the broader rollout in 2022 given the recent supply chain constraints that we've been hearing about across the industry.

Got it. Okay. So look, to date, our supply chain hasn't been affected by COVID as we had anticipated a lot of these potential shortages early and worked with our suppliers to ensure timely delivery of the components that we need to support our customer base. So based on what we know today, that's all I can speak about and also of the very close relationship that we have with our suppliers, we don't anticipate any supply to shortage but of course, COVID itself is unprecedentally fluid. So it's hard for me to anticipate what may be coming around the corner. But suffice it to say the visibility that we have is we're on the improving side of that curve and don't really anticipate any difficulties. Now, the one challenge I would say we have is with ex U.S. where we are actually seeing some difficulty just getting there in person just because of challenges that just international travel brings to our team in order to get there and then do install and really have a good customer experience. But again, we're managing those things. So in the U.S., we feel very good about where we are in terms of both the balance of 2021 and heading into broadly in 2022. And then as far as ex U.S., I think we'll have to see how that plays out. But certainly, it does create some complexity for us. Omead, do you want to add to that?

I think you got it.

Perfect. Okay. And then, last one for me. So I appreciate the commentary around that $500,000 of service revenue. Can you just give us some more color on that project with a large pharma company? How did that service product come to fruition? And then it sounds like that project is complete. So can you talk about any feedback that you received from that large pharma partner?

Yes. Let me -- so first of all, we're not talking much about the specifics of these projects but let me see if Omead feels comfortable giving as much color as we can.

Sure. I think -- so the specifics of this project is -- again, this is a customer. You are a customer to actually do a service project. It's really interested in getting going with a reasonable size project pretty quickly and getting results back in a relatively fast turnaround time. And as we've told you, we anticipated this which is why we're looking to actually set up and stand up these centers of excellence. And now we have potential candidates to centers of excellence among are actually existing early access as a rather limited release customers. But it is going to take us a little bit of time to get them all completely set up to the point that they can process these numbers of samples. And so this was really a temporal issue where the customer wanted to have data very quickly on a large sample study and we felt very comfortable that we could execute against that which is what we did. And as David mentioned, from time to time, there are going to be these types of projects where for strategic reasons, from a timing reason for perhaps confidentiality reasons on the part of the customer, we end up being the best executor of those types of projects for those customers. We'll be opportunistic in those instances because our primary business is not a services model. That is what we want other people to do. But from time to time, circumstances are going to put us in a position to be the best, if you will, side to take care on a project. But the way I think about these things are these are largely oftentimes four runners of future demand for similar type for larger scale projects.

That's great. Thank you.

Thank you. And I'm showing no further questions. And this does conclude today's question-and-answer session. Ladies and gentlemen, this also does conclude today's conference call. Thank you for participating. You may now disconnect. Everybody, have a great day.