Good day. And thank you for standing by. Welcome to the Seer First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today, Carrie Mendivil, Investor Relations. Please go ahead.

Thank you. Earlier today, Seer, released financial results for the quarter ended March 31, 2023. 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 e-mail to investor@seer.bio. Joining me today from Seer is Omid Farokhzad, Chief Executive Officer, President and Chair; 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 were issued today. For a more complete list and description, please see the Risk Factors section of the company's quarterly report on Form 10-Q for the quarter ended March 31, 2023, and in the 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 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 9, 2023. With that, I'd like to turn the call over to Omid.

Thanks, Carrie, and thank you, everyone, for joining us this afternoon. I will begin our call today with a review of our first quarter results as well as the progress we're making across our core focus areas to drive growth, then I will turn the call over to David to provide more detail on our financial results. Thanks to the tremendous effort of the entire team at Seer, we had a solid start to the year and ended the first quarter with $4.1 million in revenue and continued growth in our installed base. Even more importantly, we're increasingly seeing more and more data being shared by our customers, the initiation of larger studies with a growing interest in population-scale studies, and the first customer publications making their way through the peer review process. We have consistently said that the increased publication of customers and third-party data will be critical to developing the market, and this is exactly what we're seeing. We now have more than 150 public presentation on Seer's Technology to date with the additional data expected at the American Society of Mass Spectrometry, or ASMS, annual conference in early June. With this solid start, we're reiterating our 2023 guidance and continue to expect revenue in the range of $23 million to $25 million for 2023, representing significant year-over-year growth of 48% to 61%. While we continue to drive top line growth, we're taking a very disciplined approach with our operating expenses in order to protect a robust balance sheet. With over $410 million cash, we're well positioned to execute on our multiyear strategic plan and are building a resilient organization that can make a meaningful impact on the advancement of science and medicine. We're committed leveraging our resources to drive innovation, creating value for our customers and investors…

Thanks, Omid. Total revenue for the first quarter of 2023 was $4.1 million, representing an increase of 22% compared to the $3.3 million in the first quarter of 2022. The increase in first quarter revenue was primarily due to increased consumable kit sales related to the Proteograph Product Suite. Revenue recognized primarily consisted of sales of Proteograph SP100 instruments and consumable kits. Additional sources of revenue include platform evaluation, service, grant and lease revenue. Product-related revenue for the first quarter of 2023 was $3.6 million, including related party revenue of $1.3 million and consisted of sales of SP100 instruments, consumable kits and platform evaluations. Service revenue was $69,000 in the first quarter of 2023 and was primarily derived from the completion of a customer service project. As we have mentioned previously, we will continue to be strategic in undertaking certain service projects for customers that we ultimately believe will lead to purchases of the Proteograph. Grant and other revenue was $335,000 in the first quarter of 2023. As discussed last quarter, contributions from grant and research-related collaborations will resume beginning in the fourth quarter of 2022 related to our SBIR grant from the NIH. The grant period will run through May of this year. In addition, we placed some instruments with key accounts that also require these customers to purchase consumables. We recognized a portion of this revenue as lease revenue. Total gross profit was $2.1 million for the first quarter of 2023, representing a gross margin of 51%. Gross margins were aided by the mix of consumable versus instrument revenue and additional grant revenue in the first quarter. This was offset by overhead expenses and other cost of revenue. We expect to see variability in our overall gross margin on a quarter-by-quarter basis as the proportion of instrument and…

Thanks, David. We started the year off with a good momentum as more and more customers generated data using the Proteograph, further solidifying the need for large field unbiased deep proteomic studies. It is exciting to see the Proteograph enabling breakthrough science as shown through its power extensibility and ability to catalyze new applications and markets. I have never been more excited about the opportunities ahead. With that, we will now open it up to questions.

[Operator Instructions] Our first question comes from TJ Savant from Morgan Stanley.

This is Gabby on for Tejas. So, maybe just to start with what you're seeing right now with your customer base. What impact are you seeing currently from elongated sales cycles in academic versus biopharma customers? And are you seeing any constrained spending from Chinese CDMO customers?

Yes. Thanks, Gabby, it's David. In terms of the customer base, we are continuing to see a somewhat elongated sales cycle. Again, I think the environment continues to be cautious, but at the same time, we are seeing capital being deployed. It's just, I think, as we've said historically that for a new disruptive technology, it is just a little bit of a longer sales cycle for us in terms of the data coming out and the proof points and a lot of customers choose to run a proof of principle study with us. And so that's really what's creating some of the elongated sales cycle. But I'll note that we have had some publications that we met during his remarks, one from Dr.Suhre and another one coming out. So we're excited about those presentations. We're also excited about what's coming up at the ASMS conference in June to kind of continue to have those customer proof points, but again, we are continuing to see, it just takes some time for people to get comfortable with the technology and ultimately decide to bring it in-house. In terms of China, we do feel like the market has been -- has opened up. We still -- in terms of working with our distribution partner over there, we are still seeing, again, some kind of ramping back up and getting back up to speed. But certainly, the access over there has certainly improved.

Great. And then just on your plans to further build your commercial org, could you share maybe progress on that and how many reps you're planning to add before year-end?

Gabby, this is Omid. So we've said that we're not going to be disclosing the specifics of the size of our commercial organization. That said, in terms of the number of sales, that's the [indiscernible] organization right now that includes sales support marketing is around 50 people. We think that's the right size. We're going to continue to scale commensurate to demand and revenue coming in, trying to stay about 1 to 2 quarters ahead of it. And I think we're well in that place right now.

Okay. Great. And then you had mentioned at a conference recently that you believe other omic integration will be in Seer's future. So what is your next focus for enhancing the Proteograph Suite and moving towards achieving that? And I guess just what is the latest feedback you received from your customers? And how are you thinking about improvements to the platform based on the customer feedback.

Sure. Yes, we released the Proteograph Analysis Suite 2.0, PAS 2.0. That was last August. That software allows a user customer to integrate genomic information and proteomic information as part of the analysis. It was the first step to help the customer achieve proteogenomics look at a particular subject that they're looking at. We're going to continue to innovate in that space. That looks at genomic information, but we can bring it into transcriptomic information as well on top of that. And so those innovations in terms of analysis is forthcoming. With regards to feedback from customers, look, feedback in terms of product, one, has been fantastic. We made some claims in terms of how you would see the ecosystem develop the product to be used and it's playing out exactly as we have predicted. If you look at the paper that Professor KarstenSuhre has under review and he was time enough to put it on BioRxiv, which is now available that you want to look at it. That paper has generated incoming interest from genomic scientists. I personally view that paper to be a watershed moment, a the moment where it becomes clear that can time genomic information at the nucleotide level to proteomic information at amino acid and peptide level. And when you do that, you begin to look at changes that happened in terms of protein up and down regulation in response to genetic barriers at the population, at the protein various level, fundamentally disruptive. I think that's the way these carriers study should be. So we're beginning to see customers publish papers that validate that we need to look at the proteome at the level of the protein variant because the complexity of the proteome exists because it's biologically relevant. And, Seer, uniquely enables that to be done accurately, precisely and at scale. Now we released product one, and it was a step increase in terms of being able to go deep at a scale and throughput. The feedback that we got from customers was, look, can we go deeper? Can we go faster? And can we use smaller amount of sample volume because our biological samples are precious to us? And so we have product number two, that's now in the hands of our early access customers, the feedback has been fantastic. More to come on that. Suffice it to say that, that product, in my mind, is yet another step-wise increase in terms of what becomes possible with our product tool. It's certainly aggressive, some of the feedback that we had gotten from customers on product 1, and I'm super, super excited to be able to reveal more and tell you more about it in over the upcoming weeks and months as we put that product broadly in commercial -- in the hands of customers.

Our next question comes from Dan Brennan from TD Cowen.

This is Kyle on for Dan. So how meaningful will third-party publications be to your customer conversations? It is a notable pickup in customer interest/instrument purchases post these publications implied in the '23 guide. And then maybe just going off of that after the first quarter, what's your confidence and visibility into the back half ramp here?

Kyle, let me, I'll take a part of that, and I'll have maybe David answer a part of it as well. So we have visibility to at least a handful of customer papers that are on various stages of publications, including one that you saw is now publicly available on BioRxiv, but others that are in late-stage reviews that should be coming and then others that are being submitted. I had predicted late last year that we would see probably about 5 customer papers and kind of tilted toward the second half of the year. It may actually be more than that. And then interestingly and importantly, and related to this is also the number of presentations from customers. So we're now seeing customer presentations at conferences, where we weren't even aware of those studies being done or those studies being presented. That's exactly what you want to see, in that you put up the abstract book and you see one of your customer have something going on that they're sharing and they're talking about it. And I think we're also seeing that. So I'm super optimistic, Kyle, that the velocity of customer data presentation is going to be increasing at a progressively sharper slope as we head into the second half of 2023 and then kind of the balance of the year hitting into 2024 Kyle. So with that, let me turn it to David and he can give you additional color in terms of revenue. And before I do, I would say that, I reiterated the guidance, so I'm confident about the year being in that $23 million to $25 million that we have guided. So with that, let me pass it to David.

Yes, Kyle, just in terms of the 2023 guide, as I Omid said, we did reiterate guidance. And so we feel comfortable with that. And as Omid also mentioned, we did have some visibility into some of these papers coming when we did provide our initial guidance. So we certainly had some of those papers baked in. There are other papers that come out or presentation. Again, we feel like that could potentially be a benefit. But I think that will be a benefit in terms of just helping kind of shorten that sales cycle a little bit for us in terms of getting other folks interested in evaluating the technology. So I think we feel pretty good where we are, and we did have the fact that some of these papers would be out as part of our original guidance.

Got it. And then so how is customer interest in the lease program? Is that something you're actively offering to all potentials to your customers? Or is it just a select number of potentially more meaningful customers?

Yes, it's great question. So we -- what we've decided to do is we've rolled out what we call our strategic instrument placement program. And really, what we're looking to do is identify key parties, whether they be KOLs or large customers with large sample sets, people who can again help drive awareness of the technology and really just trying to lower barriers to accessing the technology in the short term. And so we did place some of the instruments we placed in the first quarter were part of that. And so essentially, what that program is it does require a consumable purchase. So there's a consumable purchase that goes along with that. And then they have, essentially, we replaced the instrument for a period of time. The customer has the option to purchase it at the end of that. And again, it just helps facilitate the getting up and using the technology and ultimately help drive a consumable revenue stream for us. I will say the amount of lease revenue that we recognize as part of that is pretty de minimis. And it's really about continuing to drive consumables and consumable revenue around that. But again, I think the overall objective is to find ways to improve access and help drive, again, presentations, paper publications with accounts that are going to be leaders, either thought leaders and others or large accounts that have large sample sets to help drive consumable volume over the long term. So it's been great -- it's been well received by customers. And so we, again, we'll see how it plays out over the balance of the year. But we're certainly feeling it's a good program that is helping us. But from a -- obviously, there's consumable revenues that is meaningful, but from overall lease revenue. It's not really significant.

[Operator Instructions] Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.