AKYA - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to the Akoya Biosciences First Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker, Priyam Shah, Head of Investor Relations. ahead. go Please

Priyam Shah

and today operator, of to who's everyone Relations Thank this thank call. us on Akoya Head I'm joining at you, Biosciences. you Priyam Investor Shah,

today, the Officer. Earlier release of Akoya Executive call On quarter McKelligon, the results the company's is today, have XXXX. ended Ek, Financial John press March released Chief XX, the website. Chief Officer; we for and on first financial available Brian copy A

make of remind of the Before this future the results statements which are we will like Any results that statements differ during a meaning provisions statements. to forward-looking performance Private statements may that events, the Actual in you factors. forward-looking to are due Reform Act begin, XXXX. the from variety implied federal that in forward-looking include of to contained of Litigation safe or predictions harbor call management I'd Securities those relate statements laws, expressed materially call or of or made within pursuant this securities to expectations

be December XX-K you urge to X, gross ended Form that to non-GAAP operating filed on including a Exchange non-GAAP as Risk for on future expense defines and our gross of the guarantee report statements with call, We'll XX, the and non-GAAP profit, these revenue. adjusted uncertainties as impairment U.S. Akoya's measures estimates and XXXX. with adjusted We for the from adjusted our in operating including to excesses only expense risks and restructuring please divided consider profit expense gross gross should loss XX, March Akoya non-GAAP of defines identified adjusted inventory and non-GAAP the today, adjusted and you this on of refer operating margin For non-GAAP operations. non-GAAP filed defines associated business, XXXX, margin adjusted filings total gross the Securities profit and Factors aware risks year gross a referring description are section be XXXX, margin, non-GAAP factors May not the Akoya Akoya and considered Commission, XX-Q list charges. are in annual adjusted charges. non-GAAP as profit obsolete and certain by performance. these for

defines disclaims revise projections this Akoya operations the charges, GAAP loss be over archived XXXX. press only Lastly, law, forward-looking today, inventory Investors of provided of excess for the will The the intention measures impairment I obsolete heading whether time-sensitive These financial generally most Reconciliation in audio information loss accounting contains any principles. comparable will Events. the from the and because and non-GAAP with with charges. call restructuring our turn to non-GAAP not now that, release. This call website section financial operations later is portion under of are call information, conference today new Brian. from as And directly and required Akoya statements, May on the live update measures in are adjusted accordance any accepted or except XX, prepared to the accurate as broadcast by table or in events to of as obligation, future or otherwise. or certain

Brian McKelligon

you, today. Thank Priyam, afternoon joining appreciate and everyone. us good you evening to or We

broad and in advancements overview quarter, partnerships. the call, of review conference business highlight our our begin first our performance by I recent a of few today's During will a giving

for provide our of an business. that, John key the outlook financials, will and go Following trends deeper future the into

PhenoImager now approximately strong by application phenocyclers and largely paired to short total the achieved growing to and we X/X attributed quarter realized of the services fusion and The primarily objectives, desire made $XX.X strategically lab our for our reagents aligning of with and in We advancing a annualized base meaningful first While we in remaining with With a and HT. on system pull-through on with clinical X.X bolstered place a the million, our million development sales workflow our by $X upgrade, phenocyclar are fell both of of first business. capabilities panels. our of to XXXX. poultry. on instruments increase our capitalize totaled driven incentives as high X,XXX fusion XX,XXX Reagent for and breadth plex enhanced $XX,XXX units our in revenue industry-leading HT the be prior now progress system operational the PhenoCyclers The continued increase our pull-through installed releases revenue, PhenoCyclers customers' can is year, and efforts strong results expectations. XX% fusion the quarter from

was placements services instrument revenue year. $X.X weakness in the from quarter. by quarter, Three our instrument growth reached million, revenue. the placed factors X% main instruments Additionally, Despite the a in primarily strength XX in prior driven shortfall contributing underperformance. We first contributed million $X.X reagents services, in and revenue to the in revenue the

The throughout incremental elongation on delays in budget purchases, NIH systemic reassessments expanding the expenditures capital uncertainty First, capital of key on sales their of include pressure capacity, and cycles, drivers and inflationary quarter. persisted increased labs scrutiny pressures. is

on dedicated endometrial to FarmTech foundation, the acting ease diagnostic with will across U.S. platform approval of the along Shanghai into key be KR secure ovarian technology Akoya China. the The Class patients partnership China II pathology solutions broad establish serve biomarker needs KR approval this specific workflows designation bring clinical including with for for next-generation instrument. precision significant HT in XXX,XXX our device along the KR-HTX we tumors in as options ACR-XXX a KR announced a markets. of clinical potential team the excited Akoya and with to codeveloped designation and KR-HTX a progress, NMPA, PharmTech the partnership and as and pressure the to China's this usher network National and ACR-XXX Track to utilizing cancer. approval Akoya over downward new CeraFharmTec in to treatment also III indications, unmet and recently companion diagnosed premarket as leaders believe we the an to assays. this ovarian advancing treatment also known progress strategic NMPA Akoya for deliver breakthrough diagnostic continue core significant opinion Europe. within settings a we'll in with scientific, capabilities limited Fast market regulatory Class to Medical and significant exclusive Products XXXX.Building are for We partner as and the multiplex expect with designation hospital Pharmtech the range from for with the therapy We through with to with against address validation a Administration, entirely technology that clinical has and its working is PhenoImager Akoya's experienced has oncosignature

laboratory protection last our NaraCare, individualized a Finally, with of melanoma developer tests we survival and for with partnership offices States. patients in Germany of announced Thursday, the United

for available significant and of globally challenge cancer-related every exclusive is therapies therapy, risk personalized have its focus agreement patients. for the of to therapies a melanoma clinical to new treatment remain patients. but deaths for primarily disease. patients early-stage without enable We access targeted early-stage early-stage with is Melanoma and late-stage adjuant to approvals the of year. expanded selection XXX,XXX to options have that melanoma to on at Recent life-saving The data increasing and CLIA NaraCare therapies. leverage best-in-class is skin an for entered over access relapse The immuno diagnoses PhenoImager the aim high therapy lab cause number our immune test of into leading mortality greatly melanoma such and HT,

As the on treatments since preferentially in the unequivocal melanoma awareness and multiple retrospective agents. momentum have the patient as in addressed only closing, analysis are discovery consistent patients developing NeraCare's immunoprint at-risk for late-stage confident life-saving In of that demonstrated administered melanoma. opportunity companies performance quarter's majority market potentially that to biopharmaceutical risk clinical diagnosed Immunoprint and data early-stage is studies. stratification issues and primary and potentially usually later identifying therapeutic methodology driving in patient robust emerge high April would the from are of underlying clinical partnerships clinical those has NeraCare demonstrates performance. through to our options market need the in we is with tissue patients enable high-risk in at earlier stages. to focus access enable the that melanoma relapse IPO grow unmet is The identify Assay those and performance has above-plan suited approved biology be with therapeutic to The Akoya in at Akoya early-stage exponentially. -- leading ideally for we already a to continues early-stage disease, prospective patients will melanoma group benefit to historically, there this from therapy selection risk critical for independent spatial to to demonstrated patients XXXX,

installed our Akoya industry-leading and clinic. believe evidenced the discovery As efficiencies base, demand new biology to systems, scalability for growing meet capabilities to by spatial the and operational has we from the

drive for in drive manufacturing and clinical facility applications Akoya center strong best-in-class to considerable and expand addressable with manufacturing of value enhanced excellence product our growing recently team our and platforms. opportunities to We is our reagents. previously thank capabilities, now to Marlboro, of shareholder will barcode significant the our to that focus realization a and that, meet of your and the our catalog Ek? now goal the primary financial antibody facility over results. Massachusetts. support. turn discuss for I of total demands as And new John will margins poised fully We operational molecular in the you time Ek our increased market. substantial this announced, available completed is the The and John with the also commercial believe reagents, our manufacturing efficient portfolio, on of newly supporting call accelerating Second, we launch accompanying This

felt times to from material temporarily was third-party reagent acutely in and This and CROs. instrument away transition delayed labs Our purchases. impacted opportunities, most outsourced fulfillment internally core suppliers, reference-driven manufactured

complete, product have foreseeable margin. while With gross for We realizing impacting to activities and we and this also availability experience reduction our provide our customer are an enhanced challenges. future strategic excited year, ensure resolved positively took the these set reagent to quality throughout we believe now the availability ramp-up benefits aiming cost

trial XXXX pharmaceutical shift milestone clinical lab a revenue Third, recognition deferred of partner time certain the to in lines. services to second half due was

objectives. new year, lead will initiatives complete XXXX. we us clinical improvement in We to and revenue on is now our in in the growth excellence these With revenue the half, and trial deferred second of reagent top this of second environment half resolution center part recognition our to issues this our are back but manufacturing year, latter temporary achievement to milestones the optimism through to line of well availability track the foundational macro that are shift service of profitability the our growing the for confident solid of

Our fundamentals. first initiatives our several enhancing aimed financial highlight have quarter that results we important also implemented at core

Let briefly these. through walk me

in Turning margins quarter, instrument Imager to the of with completed that HT and write-off million the reductions PerkinElmer portfolio instruments. earlier division our part legacy we inventory the the now were a These were Pheno instruments expense discontinued Revit from acquired in from versions we historical Panoptic $X of XXXX.

impairment the of were center XXXX, and $XX.X expense million the operating GAAP quarter. totaling $X.X in reported efficiency, now will were our with of margin and the and For In force reduction This period. and of restructuring charge we Marlboro our the going to our GAAP non-GAAP consolidation excluding resulted manufacturing XX% this operating clean million. cost restructuring XX% into addition gross balance to XX%. management a this new and To impairment inventory Reported quarter million. an XXXX, $XX.X facility expenses further in excellence compares drive in first XX%. were of in simplify step This non-GAAP in a sheet gross and quarter year of charges adjusted while the XXXX, completed non-GAAP in adjusted Taking million in first When forward. these our gross our controls write-off, up excluded. prior margin expenses our operating expenses margin first non-GAAP first was $XX was quarter help

period. Agroman and shortfall million and simultaneously improve ability a NeraCare. our growth cash partnership Therapeutics and new by had year line Excluding behind pivot and primary charges, goal we meeting now prior efficiency believe impairment restructuring advancing summary, top solid operational flow operating on Tech have our our to recently the operating the basis diagnostic targeted return with companion to year. committed the KR provide Farm with implementing by exciting In strategies to the to expenses and achieving breakeven end the on drivers decrease revenue addressing to I profitability, announced enhance a update $X.X are XX% in to of and Shanghai we we effectively non-GAAP reviewed like of our an partnerships compared the would to X

Acrovon. Assay ovarian on in Phase versus On p-value and positive ACR-XXX patients R&D agent, presented in ACR-XXX response X% the after IIb in XX% Oncosignature the virtual update for to patients the positive data an event, endometrial monotherapy respond clinical in rate XX, OncoSignature corporate identify ongoing patients Acravon assay prospective with initial clinical This First, therapeutic the patients statistically for to cancer Akoya's Massachusetts. to out cancer. April their is our confirmed ACR-XXX positive specifically, assay patients Acrobond's and ovarian the assay More OncoSignature of Marlboro, trial run of initial a endometrial of a This at in PhenoImager objective whose treatment. lab aquasignature sensitive platform HT ACR-XXX prospective significant demonstrated in negative its to ability likely on Akoya ACR-XXX effectively ACR-XXX OncoSignature X.XXXX%. tumors monotherapy patient of approach the to ability identify selection are validation demonstrates validation via

John Ek

Thanks, Brian.

the The an base combination increase and in instruments, totals Brian pull-through XXXX $XX.X instrument to period. the totaled primary of now of the decline combined now totals industry-leading an infusion was across quarter, the $X.X installed PhenoCycler-Fusion revenue $XX,XXX PhenoCycler annualized the the climb first year instrument of of reagents quarter of XXX As annualized the instrument. PhenoCyclers now Product delivered are average XX% revenue, for was as of the has PhenoImages. including as reagent $X which including in prior a continues The our our and in compared the We $XX,XXX the Phenolmager year XXX the and per average period. pull-through HT payer. which quarter million, first pull-through first Total instruments, and first quarter. in XX% the reagent first a software million XXX from XXX PhenoImager has of The the for reflecting to HT, revenue total annualized and portfolio, million of are $XX.X revenue highlighted, prior field instrument million, and there PhenoCycler-Fusion, quarter per contributors. field X,XXX

we Going reporting portfolio. Based dynamics, with vector pull-through have the majority forward, Pheno PhenoCyclers paired focus the fusion of mantra and to field, we will the discontinued under expect the line PhenoCycler-Fusion metrics a these be we the on the for Imager phenomager-HT in and only on and moving forward.

through systems installed rapidly maintain our We and increase partnerships. legacy the new totaled HT. segment prior of for large million in the those base field over studies PhenoCycler, the lab Services period. services other our those growth to been year and biopharma Fusion higher-value business service as and will a us continue support and revenue addition but for instrument service have to have first legacy driving coupled -- will for warranty the our $X.X to field, expanded, sales existing X% on Services in instrument revenue focus only existing an quarter, efforts

The prior mantra write-down compared discontinuation our inventory noted, vector a impacted and XX% million, shifted adjusted expected pharma XXXX, to first Brian was first drove $X margin service be and partner a As line revenue noncash contracted the quarter half XX% is from the cost of in quarter. year. in gross Gross was recognized of to of non-GAAP period. in non-GAAP of of the while the margin second gross XX% GAAP the which in quarter the year and goods margin portion the first of

mix, couple leverage GAAP to expect capacity XX% year quarter our $XX.X a the million recent expenses we non-GAAP Operating the and XXXX compared the our of operating first million million operating basis efforts optimization hundred in investments, basis. prior XXXX, non-GAAP were we expansion period, decrease in a in As further the annually. $XX.X expenses points for increases identified manufacturing on of revenue and non-GAAP margin our a of the execute beyond on $XX propel were our expenses of reagents of operations of and while in to reagent drive gross range through

Brian achieving R&D the included expenses XXXX. our operating quality our of of exit Marlboro. quarter As goal actions consolidation as This first in to operations took operating into of we in and we noted, of flow cash reduce the manufacturing, pursuit breakeven our center manufacturing in excellence

a related As charge recorded result, exiting activities. facility the we impairment an million of $X to

unvested reduction expenses. operating from XX% a this operating breakeven January March $XX.X options recorded ended and expect approximately in XX, resulting we balance implemented our In this charge advantages. as to million and cost of streamline diluted $XX.X restricted headcount are We and of of cash, non-GAAP equivalents and and business our investments achieve efficiency, the in summary, our outstanding efforts, achieve million improvements to strategic focus XXXX. the changes important stock in of fully flow including operational $X.X cash as year. enhance our to also shares, impact has gross similar supporting drive shares Through a charge addition, Common sheet cash for and we and outstanding on we margin gross awards This balance is million these completed further of securities. excluded exit delivering operating marketable costs year goal ongoing Akoya In XXXX. the margins, quarter with restructuring improvement

the shortfall of first addressed proactively the in revenue also our have We drivers quarter.

a cash of breakeven important beyond, to Back focus operating XXXX. million XXXX, exit sustained year full recovery and to XXXX updating At year-end. time, we flow while measured very achieving The of growth on to As revenue this company cash by Akoya maintaining its and continue we in the $XXX million. XXXX its to we flow goal year as to anticipate throughout such, you, revenue our operating full $XXX Brian. expects be breakeven range the outlook for now to commitment is

Brian McKelligon

to and our objectives we partnerships throughout year the We remainder the business drive the Ek. you, Thank as John strategic forward. look executing forward of

call deliver We And dedicated from ahead continued support of all and thank opportunities for growth, support. and we're that Akoya for new well the [indiscernible] the discovery excited point, our about positioned the from as questions. well the markets. are the open fellow for to Operator? our we hard and will as you lie We work solutions for for time up your as we this clinical at spatial thankful shareholders. customers remains

Operator

[Operator first be Certainly. excuse Ball And of our Instructions]. Jacob Karen from will question coming Stephens. me,

Our next of Kyle Canaccord. question Mikson will be coming from

Kyle Mikson

year. But there's And that XX% half. to a basically that can the year? what's impacted kind to outlook the lot just That's Maybe I think I towards year-over-year accelerates in of it growth it's one-timers run growth of how rate quarter. you important end I of remaining wanted place. how quarter think It nuts. understand second for not terribly the in that parse like second by the maybe out. sounds Like of like we the seems should sort in is context assume like that understand shifting and of the and first about this

Brian McKelligon

the So ask second that biopharma to about side. revenue wanted I first, could half Yes. at the you qualitatively to quantify us shipped help questions the of or was least think some about financial if the

So maybe lot to a unpack there.

partner we in shifting of a of half. on a shift single the of CDx millions milestones, was noted shift of second impact in clinical the digits was the resulting think half. low a shift, on I recognition really into second it first, in as And revenue that call, terms in the sort slight So the byproduct revenue trial the the in

color terms looked end manufacturing instrument the side, So that, high to relative give and quarter. And that, the on instrument on of around some the provide timing example, that's of was The the the ability single and the of contribution getting the for necessary us of operational placements, think as impact digits. reagents to on Kyle, the probably we fully I gap PCF third fusion, towards at of of you of basically in that. impact similarly parties the the

reagents. growth you we'll return to give to push. So that the as X of for those a can terms I kind think sequentially the of contributors revenue continue year, the in look kind to to of historically between the we you that both our look expected remainder sense instruments saw And of of and

Kyle Mikson

more obvious line Got that about that imager you're one talk if had you And PhenoImager, just in marketplace is HG pushing the like PCF of compared maybe something did there's at if what as underperformed can maybe as to a bit the could But in and is we they that's the better. maybe because not harder. talk much little you why just about least it. feels -- kind Maybe demand was?

Brian McKelligon

more No, it's I dynamic think of a focus. to

customers those the serving PCF transitions that on challenges in is and had we focus Our through QX. the

So balanced external remainder transition. you a the through could focus our of the into I can of as than the see go commercial more kind customers execution commercial focus be more rather think the we a where on year supporting

Kyle Mikson

ask a I let Okay. then just me off. hop quick one And before

On partnerships. the clinical

look a XXX,X,X,that of that or sort or plus like about you could way like now. have again, maybe Is opportunity of TAM quantify time few there have. opportunity us any that you the help X maybe You for could, What or partnerships in these market frame? revenue the think them

Brian McKelligon

which from significant latter progress their is a -- of what to to transitioning Well, these in of in market, would clinical ways on very each Akoya for to CDx clinical X opportunity top solid term company, terms a potentially One encourage as the their kind line Akoya individually to they Akoya deliverables. different our I development the their is that us near you is Kyle. Day of and to the R&D parse get longer there's on as stages of sense of the work hopeful a of provides go clinical contributions think a and qualitatively, event. That on Bio pace for listen continued term I the progress veracity their be for to progress. largely will progress for

where several that would patient that to therapeutics So in that they catalyst clinical the real is very different its have in on-market very NeraCare to mid- of in terms that potential a upsides provided a their a therapeutic. is success different dynamic tied near-term be have to continued test impact for a dynamic Akoya hundred thousand patients a of patient that there's identified the be or are diagnosed way risk in -- recurrence current melanoma mortality, high population applied need. at population this essentially to to wait. have are They that's early-stage no with for on-market effective to and

opportunity established So in panel leveraging those to NeraCare with much are stage, along the opportunity. larger melanoma and with be transitioned early of the to intense market a market and is off that going serving their capitalize to clinical therapeutics clinical them initiate that studies existing data so to growing are interest late-stage serve

Akoya, are to partner for projects, companion existing catalyze to -- So have diagnostic with large-scale existing on-market have. in ability and an means therapeutics an for data revenue that that melanoma development and what clinically of revenue buttress which biopharma is significant validated us we assay the attract terms that CDx

for that network utility. KR establish KR Systems their and of Now clinic that that Class place all is again, assays. new we now within HT the us the struggling not to clinical And we represents China, to will working Class leverage KR which that entirely clinical is And validity an an establish what now III a just for to them in market new, II market that, is over network with know market, us, system but PharmaTech, opportunity in entirely bit. time, it with approved have powerful

to KR clinically into us giving new serve. clinical entirely headwinds, test. China test clinical much the the stays a Akoya, market, potentially that So individually of all And is biopharma then but expeditiously. we opportunity is to in them of But of expanding balance really a you the can validated secure of see later again, those opportunity. contribute commercial partners us give case a vein with headway new our advancement have against to to NeraCare market the finally,

Operator

our And Piper be Westenberg from question coming of next Sandler. will David

David Westenberg

usual, you Just this that are could the of that maybe us the with of reiteration last we cuts I you lower cash you ensure talk can if year, remind being the Can where impact. cost a breakeven just some of subtracting guidance of QX in guide. breakeven and end still this as But is that by light kind just kind seems it year of reminder out flow get I wanted a the the the this maybe about of cost of lower just target kind reasonable some made of not so happens of cash us impacting cuts you're the just some of plan flow of kind you're matching you And why growth? year.

Brian McKelligon

as It's year. Dave. for Akoya pass I'll I hypothetical what to some example, think point at to to give And a prior great least to, question, on deliver would that in compared have to scenarios John for example, QX reach to

Johnny, scenario hypothetical color. provide little bit that to through a maybe walk So some

John Ek

to Yes, this a the we of note, a Thanks, David. is our for Sure, the how sure. QX exit use plug number to in year. real that of similar And of driver a kind sort a as could mid-XX% important QX normal if see growth XX% we you And give That at over hypothetical the revenue you that the margin, year. rate say. will is last the OpEx. looks of let's

to was items $XX through. for million OpEx $X.X million million flow but that $X.X QX, there of million, the of kind in were $XX Our onetime

truly, OpEx run $XX sort So rate that that million range. QX of was in

get at in noncash, of in it, And you you $XX to breakeven. then we've rate margin this if OpEx, that take QX sort that revenue you million million take highlighted. So gross a, of call that remove $X

our our OpEx. reasonable average our all on are scenarios -- rate it's of those run based gross assumptions current So and rates margin are that trajectory and and growth of

cash asked So breakeven you to with we flow go to on get taken. question to sort those, what of and we've another actions that back

benefit know, you It's took as manufacturing the reduce through to action we And to avoided we and non-GAAP that commercial head cut really similar employees. really QX. in start with we fully that that year see count, of view headcount revenue-generating OpEx did the a QX, that broad-based So an to a QX. cutting and the rate through importantly, run is in you'll and in that provides at QX flows

David Westenberg

Got it.

on of lost terms all do of temporarily Just up of kind already impact lost facility been terms you was in the the that kind to the addition have and good? manufacturing that in -- -- And on on, system. situation. know, this lost these second already a temporary some ensure context you sense not I -- the the of any there then in is to might using customer just some talk that attrition metrics lost you about This that what customers you more not than rather your of if us that, a were customers don't are opening any forever. just just sense instruments, that order maybe get for of had the But were

Brian McKelligon

It's a and a question, great question. fair it's

up routinely the a a to CROs on felt much I saw I to revenue horizons million QX QX, within think think reagent look or early QX so. at QX, and as growth which bounded as XX And strong to real we late incremental $X we acutely had that continued the or occurred those and higher David, desire, and noted running move I at mostly call, in plexes XX core flexes. have to this was labs to

the XX alerted those was of were and those, plexes to are we resurge and now when to of pause. reagent back a there them gap and run fulfillment this they communicated kinds to temporary We a of of the sort their XX so are as and bit things scenarios in inventory back desire recover. And to where scale and them begin of

we our those customers really are are were of example an drove those of of installed size kinds reference-driven given with that pause. temporary the that And customers, dealing lot opportunities a David, that's the of that So our -- base.

So really to needs, these this their attrition got we've to then the into opportunities do. as is it isn't much and about customer about those as supply that full which QX, customers meet QX proving shifting we

Operator

from will Massaro question next BTIG. our And Mark come of

Mark Massaro

the budgets issues QX. first year. I of QX is pressures your just inflationary on this obviously, quarter for just know is the throughout year. you revenue the capital your anyway. QX the any typically one for Maybe I is would lowest your guidance have I lowered macro think of imply your at pacing the time that of in and year, year the that, revenue But midpoint XX% revenue asked

think me you a with sort to about first can buckets. run XX-XX? the Maybe XX-XX your more how up bit Or back do just get this the is as a ordinary like as think rate? half? second it's of help of little potentially help shaping And Just you of I half, some think year,

Brian McKelligon

Yes.

into sort quarterly to of think the get think you kind sequential of to details from QX kind I the to think directionally, recoveries QX but about of miss QX I to QX. guide, not of as and QX

relative we about the we as As half, deferred on to think to recovery that's the bit magnified seasonality about second a half to clinical in instruments of a think continued those historicals. point second revenue and unlocking reagent been opportunity the all that's more of little

saw sort we of growth. at XX% now, a a reagent the right revenues in year-over-year I think QX

I to historical XX%. of get our we'll XX% think growth to back that numbers

sales get unit -- we'll back we'll to as instruments and I historical the think on well. our get

you We hopefully, I more on in color. you if don't to that? add gives anything So know that John, But enough certainly can detail. have talk

John Ek

with in moved back. remember our we truly from pharma partners No, year. It's the QX that full only revenue contracted is to that have our still

thinking there's half support in milestones. in instrument so important And so note, shifts that's run. that -- a We've the the additional some back those portion the by on reagent of to back simply you're that shift got that driven that not

Mark Massaro

That's us how sense And certainly you just the was in we a AcroVon should know regulatory exciting. CDx diagnostic? about of a a timing you're part but give partnership, approval from April super can that companion for then think I for the Okay. on update potential helpful. and

Brian McKelligon

their that response significant confirmed made results they because we progress leads. timing I great in forecasts, virtual more was That's of respect can an that one indication question, objective the versus it's on the of because of hear really timing, optimism. sort of That to that sort their again, you event that data powerful and Akoya's with think, think to I the R&D markets, that's probably a of everybody's candidate said just those say signature of enthusiasm take communication can learning drug their positive to is kind XXth details I on And said, give their you it the to the and that recorded for rates their and regard of about, encourage that perhaps the suggests I sort for most sort terms I to presented, corporate I are would to that of that think like know lead in listen and negative. Kyle,

pretty powerful set. So a data

Mark Massaro

your think last Okay. availability, or if you just that the what that term? you opportunity long incremental even is bring to reagents. you remind Obviously, me. reagent is just typically term -- can we good opportunity then margin think margin able time like type for did be the long thing. I years, gross out us Great. resolve Can on in-house, might a say X of you manufacturing gross And what margin heard it's guys one benefit And I that, product achieve you the any confirming

Brian McKelligon

Yes.

really revenue everything -- to that suffered is completely that margins, product long-term are Johnny gaps growth. reverse to let resolved just availability and And order, to do and I'll fully But go. to in manufactured reagent that. yes, in high expect that confirm ready So in-house QX customers so the speak continued yes, expect and to see our take we

margin that really So gross guiding bringing And margins manufacturing we're key color internally driver that about in how of is that. quantifying coupled on improvements. more maybe a can improved and kind John for those getting speak to

John Ek

instrument move they're break margin would. we this with can And reagent performing we say in-house Yes. don't and where margin, while really hoped they out I

reagents. good margin So we're seeing instruments on from results and

lower first As costs with we revenue new you up that to imagine, facility wanted. quarter. than in can QX new the incurred set cover we naturally doesn't in have It that would these

the item. non-GAAP take puts you pressure out the that little on margin of after QX so And a bit

about excited confident of control the chain all a lot We components. that we're our like. we're availability product the the the them and ensure not really which So helps bringing destiny We've got run we facility supply changes It really we've more, we have in because to made looking in-house. in-house. then long into and

again, So on we're the horizon while I these, X- greater in would portion of mentioning. can we becomes -- of like guide X-year meaningful revenue say, from not but long-term expansion margin specifically don't we expect you're a total to perspective, a as revenue reagent

to we're instrument expected we on So seeing I reagent the good think which is and margins. see, what

Operator

coming be will Stanley. Tejas of question Savant next Morgan our from And

Tejas Savant

Thanks the time. for

sort of the it COE quarter, contract that the services can those because on just like missed macro and Brian, cut being essentially first kick of to disruption I placements, of the lab if here. sounds was the right to COE-related versus maybe bulk to interpret the in earnings then being trends So the and detractors call here opening the shortfall. same the the or the clear. fourth backdrop maybe things particularly want guide on better get so, the even it on out you weeks off share And the to any you thing the color of the X to one just miss? instrument instrument to on modestly Is quarter instruments second due

Brian McKelligon

the total the gap. then really we see low spoke in revenue, drivers was in then digits about the as sort clinical and if helps in I of in say Yes. of material the sort revenue as majority of miss, would the think driven instrument the to of And I was that last a impact that. digits to be single add us instrument of of terms that question, of about high the of deferred miss would contributions you majority instruments. kind say add we the kind total change there single that by the to you The of hesitant PhenoCycler-Fusions. macro miss to

In the as second these already of through numbers expect of the kind we kind to kind think of reagent we that expect terms spoke, of to to to reagent quarter, now return normalize we we're see continue I incremental issues. instrument

to quarterization to think similar we I we'll So historically. what saw that's get a

Tejas Savant

any think to efforts? wrap your end terms in hump of can more with to and as perhaps aggressive just macro revisit share rental Got it. are marketing and incremental any with pricing the maybe a part a year-end? related helping upgrade Or note, friction by track you color of get Any considering And evolving here especially Lunoforbeing hurdles on on on et the customer the those That's about or customers reagent model, push, TECH field on the I guess up helpful. even a you plans especially structure creating making right, or then piece over cetera? deal still the competition,

Brian McKelligon

Yes.

question. good So

answer -- in upgrades, the if on the macro your didn't. the to terms think is if I no, macro it respect impact, that of with had field of question an the

upgrades, that you to as specifically that QX saw upgrades, becomes think QX of you we progress I those and plus continues that pace field of think XX% as at impact, the don't you asymtotic on like you've saw instruments. sense a of got the confirm. acceleration the those really field with about a was if of your that then quick macro first think we the the get question in And sort through conversions I year. sort very a

Tejas Savant

piece. right, on second Brian. That's the Yes. then And

Brian McKelligon

Yes.

and supply are more prevalence pricing of competitive demo in particularly a your systems as of That arena, clinical reagent are and around revisiting reagent of as the agreement. is than publications. said, placements On sciences, these classically things you've life project diagnostic got with on in to committed rather increased competitive rentals, see Most routine. of landscape, the tough strategy where comment the we part of the not as sort relying driven. there revenue references evolving It's an common of instrument respect rentals a sort

So I of of that's we've got. that think kind the new age dawn a

units the those demo some what to marketplace placements we're in sales. that using of competing. of to as to of have growing going effectively prevalence in placing respond to participate to and seeing to be And we're have We a drive

Tejas Savant

the starting in ground quarter. And out on green fair. sort year then, on shoots so share the course the bank more are maybe China, you taking CapEx sales means, And the whether Brian, in And Got starting announcement? the that of to any in quarter over the for order as curious can cycles recent there? on by of it. sort to evolved there how then you'll trends last conversations inflection elongated pressures to talked April, the the Any and first That's back you're you on funnel, sort speak, you half back color any any of far see in perhaps? just think into be and of see about guide stimulus to don't the of only I to but China

Brian McKelligon

Yes.

change, full to respect China, no that there's the terms year say year-over-year the seeing from of trend with QX. in performance, in So it's QX, 'XX actual I whether would the material we're trends or

step bureaucratic that's those, forthcoming, been we our announced, I think of align out. sort for recognize fairly So consistent. end to respect and desire for qualitative to sort under we the segment distribute be then there's it's while of see to been but But pretty that those surge expectation in grant applications of a that support the sort will did to green with your those the all monies shoots, stimulus a market reasonable function

the green an support that uptick shoot, Tejas, point can to immediate call for supporting So I'd it grant in is we requested support really only think the I say applications.

sciences we're of HTX us while HD a avenue the this note, discovery markets potential Class our based translational not it, to midterm, partnership So another in side positive. And the potential sources CAR II that's our outside and KR the as clinical of with a does revenue I'd approved over with life as in for that's a and growth on system say device. market quantify going provide

Operator

question next Nambi Our of... come from Subhalaxmi will

Subhalaxmi Nambi

first, seems how ask preannouncing, much X Recognizing quarterly by guidance, than do forward. we I missed to about this full provide transitory so think you your can That that more you moving you've Nambi X is issue Guggenheim. we consensus said, year This Subhalaxmi your not given And million. practices understand from guidance. got

fact you enough? came does end And lower you we comfortable guidance quarter of that your down is where should the of short third, how manage expectations Second, the get indicate that you up didn't target? the that

Brian McKelligon

Yes.

that in more so and trends, you if it So correct the revenue was intra-quarter even you so -- look at backloaded it's QX extremely and are QX. our

macro We at looked to year. the in and we conversion those to in shortfall then look then the through the and to time X that decided finally as so velocity the the December that environment, of year instrument and talked delayed with Tejas year. the with our throughout but for and changes the rest -- we specifically, changing about energy we Kate forward recognize realized accounted and rest of of think front in instrument purchases reagents take of on the guide, sure those funnel quarters dynamics the our make we respect the that And will first to how more realized as recovery we be

around the process on given So and was look of how bit that's really preannouncement year going more account I that that the that half your process expectations. given we couple weighting. decision-making manage the it's while with a of as make little for to asking, informed understand to we a we sure rest And that wanted that, we pre-announce, to for desire a guide Mason question the at second through went

I your if to our sure, question And like want assessment of with make more anything see and got to Johnny there I pause the process the them up of add me do of on guide. I the let Subha So would that all financial coming addressed all. subcomponents and that

John Ek

Yes. little maybe I would bit. clarify a just

the Brian, load pattern. normal pretty to and the last point, capital of can more They give heavy It's reagents month when certainly are ordering quarter imagine, -- you view is through generally equipment the month the more much generally quarter. a right? as instruments made instruments, the You've have you're deal. of We falls last naturally closing a

meaningful what do make what sort is that to that total QX that, think, continue a And as revenue I to that amount but we the of miss And that in sort prior there's truly to Brian's a to was of in want the make enough there CDx. recollection I analysis of moving half. QX point, that related back was and so sure was spicks missed that this the to the back to not of with point. again, go to is

revenue And so the that instrument an was allows understand miss better perspective. you from to what

Subhalaxmi Nambi

macro us environment, none improve. have But as to the of going ball it's crystal a that

a missed guidance equal the less. is where that worried is you what or little I to more the lowering QX am of in that So

ways, anything sense. haven't I So heard Or tried up how do catch off-line. question we okay, then different the X this X, maybe everyone know but in that second ask I it recovers mean in can this makes felt, I half? we to

Brian McKelligon

Yes.

at we've shift due our were our embedded guide that those year I you say of miss, base the quantify shift, that miss, the the and -- those and in contributions the were So we contributions million, but dollars purchases in second guy QX as to the $X that point guide. -- some we've in believe full macro metrics the the terms the of CDx instrument continued to PhenoCyclers think that overwhelming of that account down. as to that we shifted. Subha, that the were was we can purchases for remainder the in revenue the quantify some to to majority nearly to initially and look single we in CDx delayed QX of in we call contributors effectively our half we've we of digits low fundamental QX, is, the sort determined the the the bring got macro contribution the Those But overall, that

Operator

Rachel question JPMorgan. Vedanta of next be will from Our coming

Racheal Vatnsdal

I to So just up, want ask on first academic.

so little And that outflow a wondering the us and government on a you're U.S. is as guidance unpack from through was for touched bit us could well? with conversations the and assumed budgets a customers. what Europe more. budget you in having You if bit, academic across I Walk standpoint then your

Brian McKelligon

Well, the flat the place EU a outflow academia essentially is is the put that was in then cut of and flat in year. this line Horizon assumption next and with in the budget budget NIH year

velocity revenue reagent revenue at side to of that's from segments. impact conversion how QX growth acute QX of pipeline, what conversion challenges on instrument funnel expansion opportunity that byproduct we changing that then rates, how we look QX and instrument So the funding funnel then respect these that's rates purchases and funding to our the the And detailed believe those to dynamics, exited on of a the analysis those with assumption of delayed. the within guide now overall our determine in that some QX, our knowing the we we given be that those market contemplate caused have the be

Racheal Vatnsdal

where as you're And And feeling the performance ramp? And any my follow-up. just in From you revenue or Great. the standpoint, wondering, better mentioned volatility us China can in clarify then base has XX terms was us then given at half a worse are much geographic back you by some of you tell trended months, region there how last this as of performed the quarter? how just I China terms the your well. could is in regions for point? in the [indiscernible] of China how

Brian McKelligon

Yes.

this year -- of full last historically about was is so in X-X, consistent China of quarter, APAC the total, was with sort So XX%, XXXX. and XX% that

think can of is XX% to XX% China You sort of that.

So China that is contribution. the

and sort challenged. in regional within challenge. fairly low of APAC the terms performance the single most digits, the And digits were the In was similar North EMEA quarter, single high year-over-year of America

Operator

will Mason Carrico Our next come of from question Stephens.

Mason Carrico

one. the keep earlier. issues a about the customers dynamic little in themselves, purchasing to your given A then their costs. and capital Could where talk you has instead deciding the increasingly of upfront lot to about growth seeing CROs you've their service bit seen samples And I'll network? to been it any you are or broadly, Sorry asked. outsource work are other instruments CRO

Brian McKelligon

Yes. question To last your first.

or network the are on increasingly XX highest or providers, they're our the -- HDs users, CRO whether or Our of our so PCF CRO those both. the

offering. true trend I do trend of plex an would have that So or routine working then lab. that think group you as that we is or is high group XX a flex consistent when large And groups, this biopharma I whether CRO and core And a build commercial plus they're academic growing growing a XX to of those particularly see say a deploy panels or a outsourcing. as are to

to dynamics, of base speak have a where and the that want offering. customer or plex XX do we to when XX so a standard nation And as our they

because routine take plus your Now of with just make with of fully and XX that broadly question, dynamic to XX wanting had reference-driven just for solving instrument to issues. fundamental which first delivering ability liberties of really some of commit was is recovering that the quarter kicked our problem, reagent throughout available, that but part to to opportunities to that enabling that deliver growth, not that, forward a sort offering we first the to were the a

that lab probability CRO internal is opportunities those dynamic. and clinical services, directly have turning to compete best with In a clinical our an we of significant trial try that partners on an really our study. So ongoing own a and absolute assay primarily large our focus not good into late-stage

that And great QX revenue, is but and astros our drive our see And bit lab think so momentum to services at NeraCare if I a example you that's that, it's look with continuing you of those. and a to of you slight can a is an with QX build. that, deferral, going a catalyst look at

Operator

be Capital will question Chiang of last One. our And coming Timothy from

Timothy Chiang

top for to expect Johnny, envelope, mean it the growth on year? quarter. you weighted quarter? last the of you guidance in second over Or quarter -- this sort heavily bit of obviously, more line. of assuming I And XX% to of little do occur the much is fourth the the more gave back growth half back a it's fourth the year

John Ek

sort QX. rate -- into I of look at Tim. up would I thanks, Yes. growth a that progression to would

year. expect each don't through expect quarter, don't be that -- roaring we direct be guidance to QX quarter without the So giving we a then at level and on again,

sort we have a in sort progressing the and sequential I of back seen as year get his towards through expect the of We back, remarks, rate growth prepared think, historically. that highlighted, Brian

Timothy Chiang

I I the to can will businesses the quarter, that quickly In that you have. high-margin you of XX% you again? growth mean, think get how reagent think do do even one XX%, more How important recover? but quickly you in revenue, mean you guys first obviously that's growth had

John Ek

Yes.

able to I is where visibility all need. supply think running, right the the reagents have and fully most reagent because customers cleanest we we the have that to they now probably facility

live And in a had granting still so quarter QX, of reagents that were good as we and you can QX. imagine, we in

relatively So growth through the normalized rest back expect that we to get of to rate the to quickly. our be able reagent year,

Timothy Chiang

achievable still year? the in this gross And margins of are sometime back XX% half

John Ek

Yes.

see that with we from. fruit kind of perspective, fixed in starting that that I reagents which some new and QX facility cost ensure cover think growth. from both matter It's we've we CDx sort we our a of I incurred of year earlier that have we gross already to sure As margin how of be a have the and we're mentioned initiatives a making to it. we our very nice on, standard we can total base started see that and But for margin the margin strong of support are comfortable that instruments that the revenue, margin full revenue, on based feel and the

Operator

I And I'm like would Brian closing showing remarks. turn no the to to now further for call questions. back

Brian McKelligon

the you Yes. questions all I those But instruments and driven that time. know the of temporary for by for challenging transition. Look, miss, proactively it we covered core unique quarter drivers on think a we your and your of firmly a top lot execution. believe line Akoya, have particularly I ground, manufacturing a thank given consistent historical the we addressed was very our and that

partnerships the showing high-value the core to emerging longer clinical on are And market half mid we've performance And I recovery X business revenue about our the really And improvements provide our and sequential late-stage and got see in really ability track pushed really so the ourselves we've catering we feel line we talked top on clinical program, to long-term the to well really with performance. current like with coupled side. are either of opportunity. that to opportunities, our think the recover year, which feel deliver margin us as these in term, value, second like that as continuous clinical

and we your time that. with forward to you So thank look for that, following

Operator

Ladies participating. and Thank gentlemen, for this you concludes today's conference.

You may now disconnect.

Akoya Biosciences (AKYA) 13 May 242024 Q1 Earnings call transcript