Thank you for standing by, and welcome to the Seer Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. As a reminder, today's program is being recorded. And now, I'd like to introduce your host for today's program, Carrie Mendivil, Investor Relations.

Thank you. Earlier today, Seer released financial results for the quarter and year ended December 31, 2023. If you've 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 and Chair; and David Horn, Chief Financial Officer and President. 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 list and description, please see the Risk Factors section of the company's quarterly report on Form 10-K for the year ended December 31, 2023, and its 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 February 29, 2024. 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 by providing updates on our recent progress, including some exciting customer data. Looking ahead, we are laser focused on converting these incredible biological insights into accelerated commercial adoption. And I will share the actions were taking to make this happen. I will then turn the call over to David to provide more detail on our financial results for 2023 and the revenue outlook for 2024. In 2023, we grew revenue 8%, to $16.7 million and ended the year with over $373 million in cash, cash equivalents and investments. As the body of biological insights and data grows, I expect adoption and revenue will become more aligned with our expectations. Our mission at Seer is to bring the power of unbiased proteomics to researchers around the globe. To achieve this, we need to open up a new gateway to the proteome to enable the next frontier in biology to be explored. Changing the status quo in this way is an enormous undertaking. When we first introduced the Proteograph Product Suite for unbiased, deep proteomics at scale, there was a huge mountain to climb in terms of market development and education. Over the course of this past year, we made important progress in climbing this mountain. I'm deeply proud of our team's work, and yet there is still much work to be done to translate the incredible performance we're seeing from the Proteograph into widespread commercial adoption. Our customers have started to demonstrate the powerful biological insights from the Proteograph and this data is nothing short of incredible. Most recently, we saw our first customer study published in Nature Communications. Given the unique insights that Proteograph is enabling relative to other proteomics platform, we expect…

Thanks, Omid. Total revenue for the fourth quarter of 2023 was $4.4 million, representing a decrease of 4% compared to $4.6 million in the fourth quarter of 2022. The decrease is primarily due to a decrease in lease revenue related to SP100 instruments and partially offset by an increase in service revenue. Product revenue for the fourth quarter of 2023 was $3 million, including $366,000 of related party revenue and consisted of sales of SP100 instruments and consumable kits. Service revenue was $1.1 million in the fourth quarter of 2023, including $201,000 of related party revenue and primarily consisted of revenue related to STAC. As Omid mentioned, we are seeing good customer interest in our STAC program 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 $258,000 in the fourth quarter of 2023, largely related to our SBIR grant from the NIH. In the fourth quarter, we utilized the remaining funds available under the SBIR grant and do not anticipate booking any more revenue under this grant in 2024. Total gross profit was $2 million for the fourth quarter of 2023, representing a gross margin of 45.1%, compared to $2.3 million in the fourth quarter of 2022, representing a gross margin of 49.8%. We continue to expect variability in our overall gross margin on a quarter-by-quarter basis as a proportion of instrument, consumable and service revenue will fluctuate for any given quarter. Looking ahead to the full year 2024, we expect gross margins to be in the range of the mid-40s to 50%. Total operating expenses for the fourth quarter of 2023 were $24.2 million, including $7.6 million of stock-based compensation, a decrease of 11% compared to $27.2…

Thanks, David. I firmly believe that we have the technology that will transform our understanding of the proteome. Looking forward in 2024, we will continue to drive execution against our core strategies of driving evidence and publications, continuing to enhance access, innovating our products and expanding applications. I'm confident in the substantial long-term opportunity ahead, and I look forward to continuing to update you on our progress throughout the year. With that, we will now open it up to questions.

Certainly, one moment for our first question. And our first question comes from the line of Dan Brennan from TD Cowen. Your question, please.

Hey, guys. Congrats. Thanks for questions. Maybe first one just on the, the revenue in the fourth quarter, ex-PrognomIQ was actually better than we expected. Obviously, PrognomIQ is a critical customer, but it's nice to see some diversification. Just wondering how we think about implicit in the 2024 outlook. Are you seeing more traction ex- PrognomIQ? Can you just give us any color like what we're thinking PrognomIQ versus your other customers for 2024?

Thanks, Dan, it's David. Appreciate the question. Yeah. So PrognomIQ just to update you on where they are, they completed their 3,000 sample study and so they're moving in very successfully, I might add and they published their data or posted it on medRxiv. They are moving quite to the development phase. So they're still using the product and but they're doing less discovery work now. So we do it, which is why you saw a little bit lower revenue in the fourth quarter. And looking to the 2024, we also expect them to be significantly lower percentage of our overall revenue in 2024, as a result of that. And again we continue to see good interest from other parties. So, again, that's kind of how we're viewing 2024, from a PrognomIQ perspective.

And then obviously you talked a lot about some of the exciting publications and clinical evidence or kind of research evidence building. Just wondering, could you spell out a little bit like as we sit here today and the February, if we're sitting here I don't know September how many of these I know you can't really kind of guess the exact timing, but you kind of see the funnel of these third party publications which have been viewed to be an important driver for uptake. So kind of where do you think we are in six months from now? And how do you think about, again, the confidence level like is David, you talked about this being a second half weighted year. Could you actually see some real traction as two or three or four of these hit? And customers who you believe have been waiting can kind of see what the evidence and customer trends look like. You've really seen uptick by the end of the year. Just any color on that would be helpful.

Great. This is Omid, and thank you for the question. So we're aware of approximately 180 public presentations, and that includes just around 50 posters presentation by customers. In total there has been nine preprints, five peer-reviewed publications, four of it was ours. The first customer peer-reviewed paper came out that was the Karsten Suhre nature communication paper. I know at least two more papers that are forthcoming this quarter that will be published. I expect another nature communication paper which has been accepted and that should be published and then one more coming in nature. So the quality of the papers that are coming are quite high. But on the back of that we also have visibility to several more papers that are either being submitted on bioRxiv or some of the bioRxiv papers moving through the peer-review process and coming as peer-reviewed publications. Again, the exciting part of it is that these initial, if you would cohort up publications that are coming or all coming in great journals. And I think that's in part because they represent a data package that was previously not possible to achieve without using the Proteograph, meaning the kinds of body of data that is being seen the proteins that are being identified that may be important in health or disease are either not entirely present on the high-plex panels. So if you use those as an option, you would not see them or alternatively, if you went down an unbiased approach without the Proteograph, you could never get to the depth of the study to see some of those proteins and you certainly couldn't scale them to the degree where the study was powered enough to see some of those differences. Consequently, these initial cohort of papers are all coming out in great journals, and it's really exciting to see. I do expect that this is going to help with traction, but I really want to temper the enthusiasm in that I'm not expecting a hockey stick. I mean, this is literally a brick-by-brick building. But what's coming is very exciting and the data is very compelling.

Great. Okay. Thanks Omid, thanks David.

Thanks, Dan.

Thank you. One moment for our next question. And our next question comes from the line of Tejas Savant from Morgan Stanley. Your question, please.

Hey, guys. Good afternoon, Omid, David. Maybe just to kick things off, can you share a little bit of color on just the length of the sales cycle as you see it today for the CapEx sales versus what it was last year? And on a related note, David, could you help parse out those 23 placements this year or I guess instruments, shipments this year between SIP versus outright purchases? I think in the past you talked about a 50/50 split. Is that what we should be expecting for 2024 as well?

Hey, Tejas. Omid here. Look, I think there is a -- there are a number of factors playing into the whole sale cycle. I mean, I think the macro-economic environment is certainly playing a role. We have seen a slowdown in China, and that is and the biopharma spending in terms of the CapEx budget is constrained specifically for these new technology platforms like Seer. But that uncertainty isn't because of a lack of desire to acquire. It's just cautiousness that goes into getting over a threshold before you go, before they bring it in. Now, that's the case with the -- with bringing the platform in-house. It's almost an entirely different world. Tejas, if you look at the STAC where we have seen a robust pipeline, a lot of interest repeat business and quarter-over-quarter, very significant growth in terms of the STAC demand and the STAC pipeline. In fact, we have a backlog in that now that said, we don't expect for that quarter-over-quarter revenue doubling in the case of STAC to continue because for better or for worse Tejas it's a business decision. I am capping capacity for STAC and I don't want to build capacity because I'm not interested in becoming a service business. We want to keep capacity as is, but there's a lot of demand in STAC as customers come into this STAC, they've got data, they generate some exciting data. If they wanted to remain on a service model, then I rather if they work with our center of excellence, our COEs with the COEs buy consumable from us. And again, we're in the business of selling consumable. We've obviously sold the platform to the COEs already and rather STAC continues verses Seer building and infrastructure to progressively grow and extend our service model. I don't want to do that. And my expectation by the way, Tejas that with the data that comes from the STAC together with the growing body of evidence in terms of the publication that is going to help us in terms of decreasing the sub cycle time for the platforms and the consumable. David, do you want to tackle the second half?

Yes. On your question on the SIP program, Tejas. So of the '23, about a third were loaners. So it was actually a little bit less than the 50. And that's kind of I think where we may said a lot. I mean, the good news is we shipped, a high single digit number of instruments in the fourth quarter. The majority of those were actually purchased, which is great, but we continue to see interest in that program. So overall, for the year, we landed at about a third. And that's kind of what we're anticipating we'll see in 2024 as well.

Got it.

And Tejas let me also just add -- Tejas let me just add to the STAC comment. I mean, as you can imagine, we know we have customers globally. We have customers in Europe, we have customers in US and because of GDPR rules, the STAC is largely servicing our US customer base. You can imagine that, well, I'm not interested in the service business. I do want to have a similar kind of business model outside of the US. So we are considering options to be able to offer STAC like services outside of US. And so I don't consider that really an expansion of the business model in terms of services. It's just how do we capitalize on a broader geography in what is arguably a very, very successful strategy in terms of providing access to the Proteograph. And as I know more about that, I will share that with you.

Got it. Super helpful. So changing gears a little bit. Omid, I think in the past you've talked about upgrading your Proteographs XT by year end. Just wanted to confirm that, the 62 instruments out that have most of them now essentially been upgraded. And then on a related note, there's been a lot of buzz around the Orbitrap Astral from Thermo and how that launch has gone for them. Can you just remind us, how many Astrals' out there are now paired with the Proteograph or perhaps if it's too early to ask that question, what is the funnel look like for the combination and how do you see that sort of driving placements of ‘24?

Tejas, so the first part is an easy one because I follow that almost daily, which is approximately 75%, of our installed base has now been upgraded to the Proteograph XT Assay. And your comment about the Astral performance being very well received by the market, I shared that with you and as exemplified by the combination of the XT Astral really demonstrating unprecedented performance complex matrices like plasma, for example, or other complex matrices where the dynamic range is quite wide. I don't have a sense, Tejas of the number of Astrals out there and in terms of either exceed upstream to them or in discussions with that. I will have clarity that tells us more, I would say, over the next quarter or two, and we can have those discussions, but the combination of the two is quite powerful. I would also say that we're seeing also extremely good results with the Bruker HD and that is an exceptional instrument and that you can get really, really great data. Of course, the Astral provides a level of data that is that exceeds the other available options.

Got it. Very helpful, Omid. Last question for me. You talked about, I think, 10,000 samples per year on XT plus, some of these next gen mass-specs. Can you sort of translate those numbers in terms of what they mean on a price per sample basis? And if, is a combination now essentially in your mind starting to be viewed as competitive by some of these larger population scale projects where, any work that's happened of that scale so far has been more in a targeted approach.

Tejas, I think we are moving in the direction because remember, the unique thing about the Proteograph is when you think about the cost, it's not only the consumable cost that you need to pay Seer, but there's also the depreciation and the instrument and the FDE cost that you need to pay to run that mass-spec, right? So what the XT did was it materially decreased the use of the mass-specs, therefore decreasing both the portion that you would have decided the depreciation for that assay and also the FDE costs. We are absolutely Tejas approaching price points where population scales deep, unbiased Proteomic, are doable and look, I put myself, I think, on the hot seat when I said my prediction is that sometime in 2024, such large studies will get initiated. Now, we've been in discussion by a number of parties to do that. I was actually really, really hoping that the UKB (ph) project would have kicked off. We wanted to participate in that project. I would have expected the data to really have catalyzed a very, very large scale study at UKB level in terms of mass proteomic. Of course, as they pulled the plug on that. But I do think Tejas, we are now in the zip code where deep unmet proteomic not only is feasible in terms of throughput, but it's also feasible in terms of cost and very comparable, if you would, to doing it in a targeted way.

That's great color, Omid. Thanks appreciate the time.

Thanks, Tejas.

Thank you. One moment for our next question. And our next question comes from the line of Rachel Vatnsdal from JPMorgan Chase. Your question, please.

I want to thank you for taking the question. This is Marta Nazarovets on for Rachel. I just wanted to follow up on your prior questions for guidance. So what are your assumptions for the China macro for 2024? Are you pretty much assuming no improvement? And then as you think about the guidance, what do you think are the biggest potential swing factors? Thank you.

Sorry. The last part of your question that it was being a swing factors is that was that correct.

Yes. Your guidance, like upside downside. Thank you.

Got it. Sure. So on the China macro we are in, we are we still don't have a lot of visibility in terms of an improvement there. And so as we look at 2024, we're essentially assuming, flat kind of as is we're not assuming any real improvement relative to what we're already doing there. So it's something where just given the lack of visibility and in given the continued challenges that we see in terms of adopting a new technology, we certainly just wanted to be mindful of that as we look forward to this year. There have been some great developments. The Chinese government's obviously putting a lot of money into proteomics, into building kind of a large proteomics database. So, we're certainly hopeful, but it's really too early to have any visibility to that. So I think that's something that that we are being mindful of in terms of the -- in terms of the swing factors for this year. I think, one is certainly the impact of the publications. We certainly feel like, there's a nice, robust pipeline of publications coming and we hope that will certainly help to drive things. And so but again, we've tried to be mindful of the timing of those. And as Omid said, the ultimate impact of those, I think it's the larger body of clinical evidence that needs to mount to be more robust and to grow to really drive that adoption. But again, we're hopeful that and again, the other areas that we see good potential, obviously, STAC, we've got a backlog there, which is great. But as Omid also said, we're going to have, a finite capacity there. So at some point, will -- we'll reach that and, kind of stay there. And the good news is we do want to work with our centers of excellence and, push any recurrent service business to them, and allow them to take that. And that will certainly result in in some kit sales to us. And then finally, PrognomIQ again, they will be a smaller portion of revenue for this year. But the good news is, is that they're moving into their discovery phase for their LDT test and they're using the Proteograph platform to do some of that development work. And they'll also continue their discovery work on some of their other programs. So again, we're trying to be mindful there. But again, they've been a great partner and they're having great success with the data they're generating. So I would highlight those as the areas.

Thank you. That was helpful and actually good segway to my next question. So can you discuss your overall visibility for the business as you move into 2024? You already touched on China, so I guess ex-China. And then can you also touch on pricing expectations? Thanks.

Yes. So in terms of visibility, again, I think we've got a healthy pipeline in North America. It's certainly an area where, we do have pretty good visibility on that. I will say, there is a strong interest. People are excited about the technology and so we feel good about it. It's really a function of having the budget dollars to go ahead and acquire the technology or to participate in the STAC program. Europe, -- Europe also feels pretty good, but again, it's -- it be a little bit more cautious on Europe, relatively speaking. Again, we have pretty good visibility, but again, they are much more price and budget conscious there in terms of in terms of what they see or what we see. So again, I think the visibility is a little bit less. And then I, as I discussed, China is probably we have the least visibility there. But again, remain hopeful. In terms of pricing again, I think we continue to see the solution is price competitive and something where we're people can certainly access the technology, whether that's, buying an instrument or participating in our SIP program where you get a loaner and you make some upfront kit purchases or consuming through STAC. In terms of just the price per sample for either the mass-spec work or for the full workflow. So again, we feel pretty good about it. Obviously, people always want a lower price. There's no doubt about that. But again, I think we're as Omid mentioned, I think we're getting to the right zip code, certainly comparable to where some of the targeted technologies are, even though we offer a very different value proposition and you're answering fundamentally different biological questions. Again, I think we're certainly cost competitive such that you can do a large scale study on a time frame and with a price point that makes sense.

Great. Thank you for your time.

Thank you.

Thank you. And this does conclude the question-and-answer session, as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.