All right, blue skies, so hey, everyone, I'm Tejas Savant, and I cover the Life Sciences Tools and Diagnostics sector here at Morgan Stanley. Before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, do reach out to your Morgan Stanley sales rep. It's my pleasure this morning to host Akoya, and speaking on behalf of the company, we have Brian McKelligon, CEO, and Johnny Ek, CFO. Thank you both, gents, for doing this. Thanks for having us. Maybe, Brian, you know, just to set the stage, you know, you recently achieved the thousandth instrument milestone. Yeah. Can you take a few minutes to just recap, you know, your approach to spatial biology? How does it differ from other players in the market and why that's a good thing? And highlight some of the achievements that you're most proud of? Yeah. In the last 12 months. I appreciate the question. So maybe just first, kind of back to basics, Spatial 101. You know, the value of spatial and why we're here, and why Akoya is here is that, you know, fundamentally and scientifically, incredible, powerful technologies have served patients in Life Sciences market, incredible sequencing, Mass Spec, flow. But inherently, those technologies have to destroy the tissue- Mm-hmm. to look at it. And spatial came about because of an absolute need to better understand that tumor and that tissue microenvironment. And to do so, you want to analyze that tissue while keeping it intact, and that's essentially what spatial is. And our approach to the market is, we recognize that there's incredible opportunity in the Discovery market and the Translational market and in the Clinical market right now. And so what we embarked on five years ago was building a portfolio that served each of those market segments simultaneously, 'cause the demand was there simultaneously for all markets. And so I think what we're most proud of over the last five years, you know, we've gone from five or eight people to 300 people, no revenue to almost $100 million in revenue for this year. No publications to 1,000, and now 1,000 installs. So as we sort of reflect back on what we're most proud of over the last five years, it's really been this consistent high growth and now at scale. And now our greatest opportunity is to look at those, you know, 1,000 instruments in the field and figure out how we can best continue to catalyze that growth and leverage that Install Base. Got it. Yeah. I wanna talk a little bit about the competitive landscape, and then we'll get into, you know, some of the macro stuff. Mm-hmm. But, you know, on the transcriptomics side, you know, aside from some of the litigation going back and forth, we've had a few announcements around 5,000- and 6,000- plex next year. On the proteomics side of things as well, you know, Bruker, but CellScape, you know, is making a harder push. You know, Tecan recently acquired Lunaphore as well. How does that sort of like, you know, change your view, if it does at all, on the competitive landscape? Yeah, it's really interesting. You know, we've been doing this for a little while. What's really interesting in spatial, and I'll try to be a little bit muted, is that we've seen this, I think, this growing gap between what the products are doing and what people are talking about- Mm-hmm. ... externally. So what we understand is what our customers actually need on the Discovery side is: I've got 50, 100 samples- Mm-hmm. And I need to get through that study. Mm-hmm. So scale and speed really matter simultaneously. What we see on the Translational side is quality really matters to be Clinical. So I think what Akoya is trying to do is not necessarily try to get embroiled into these discussions about future products- Mm-hmm. ... 'cause it doesn't matter. What matters is what our customers actually want. And what we think our customers want is a workable plex and a throughput in the scale that matters to get through 30, 40, 50 samples. So this high plex is really interesting for Discovery, but I think practically, you're gonna be doing a sample a week. Mm-hmm. And so that may, you know, that may help with an individual study, but if I'm doing a retrospective study across 50 patient samples, and I wanna better understand metastatic melanoma, and I've got a grant to file, a sample every four days isn't gonna help me. So what we're really focused on is taking our system and having a very practical deliverable that a technician can run, that has the throughput and a workflow that's simple and easy to use. And I, and I think that's how we've gotten to 1,000 systems, is that we're really trying to focus on practical deliverables that our customers need. Mm-hmm. Um, so- Got it. Again, there's been a lot of talk around- Right. ... specs. Right. I think it's difficult- Right. ... in conferences like this to take, you know, understand the wheat from- Right. ... the chaff, in terms of practically, what can your platform do today? Mm-hmm. ... and practically, what customers need, versus what, you know, seems to be a little bit of a spec war- Got it. ... in press releases. Got it. So that's actually a perfect segue into my next question, something that, you know, we can all understand on Wall Street. How often in your RFPs do you run into some of these peers, and who do they tend to be? Because- Yeah. ... you know, a lot of times it feels like there's not that much overlap, actually. Yeah, it's really interesting. I think if we were sitting here a year, certainly two years ago, it would—everybody would have sounded like they were going to the same place in terms of specs. Mm-hmm. But I think what we've seen is, we've seen growing specialization with our friends at 10x and NanoString, really doubling down on the opportunity with high-plex spatial transcriptomics. And we really continue to solidify around the spatial proteomics side, using RNA as complementary. So on the RFP side, we are, we, it's really not necessarily a head-to-head with our colleagues at 10x and NanoString. On the Translational side and Clinical side, it's more about either classic immunohistochemistry, or it's about evaluating multiplex tissue analysis versus NGS or with NGS. So a lot of cooperation still. So no direct head-to-heads, I think, as we look across all market segments. Got it. Let's get the macro out of the way- Yeah. And then we'll talk about the tech stuff. Okay. You know? So on, on China, can you just remind us what your exposure to the region is? You've noted seeing sort of some pain there, you know, with the pullback in interest-free loans. Yeah. What are you seeing there in July and August, and are there sort of areas in APAC showing better growth? Yeah, I'll let Johnny speak to the actuals in terms of the revenue, and then I can speak to- Sure. So... Yeah, I mean, we have some exposure, obviously, to China, but it's not a meaningful portion of our, of our, Mm-hmm. Revenue mix. We see 25% or so as Asia Pac, and then a subset being China. So certainly we're aware of it, we see it, but it's not meaningful to our top line as we see others. In addition, just the exposure we do have, we try to be as geographically diverse and then customer base diverse as we can to ensure we're not subject to those concentrated risks with the large biopharma that we have- Mm-hmm. -across academia. We don't see the same exposure maybe the others are seeing from a macro perspective. Mm-hmm. But we're aware of it, and, you know, we don't want to downplay it, but it's- Sure. ... it's out there, and- Yeah. And, um. The pullback on the interest-free loans did kill opportunities. Hmm. It most certainly did. But as Johnny alluded to it, you know, there's some areas to recover in other geographies. So you know, it certainly is impactful, but again, as Johnny noted, not to the extent where it's gonna affect our overall number. Got it. So on the flip side of that, then, Brian, is it fair to say that if there were to be another round of stimulus, that could actually be meaningful upside for you in China? Yeah, absolutely. Got it. Yeah. Got it. Any signs of, you know, early contagion in Europe, I mean, particularly the export-oriented economies like Germany, et c.? No. I mean, as we look at our North America and EMEA growth, it's pretty solid. I mean, I think what we've been able to do, we've got a solidified... So coming out of the IPO in 2021- Mm-hmm. We built a scaled commercial organization that is pretty solid in terms of the personnel. So what they've been able to do, really over the last two years is build, two plus years, is build a really thick pipeline. Though that's something that you continue to foster, so I think we're in a solid position in North America and EMEA. Got it. On biopharma and academic funding- Yeah. ... any signs? I mean, I know you've talked about the majority of your business being with larger players- Yeah. -on the pharma side. Any shift in spending patterns or decision-making delays there? No, it's ironically a little bit of the opposite, given our platform's strong utility in oncology, in immuno-oncology, you know, in the material expansion of antibody- drug conjugates and bispecifics, where more biomarkers are needed. You know, those, particularly again, in the Large Biopharma, those are fairly well-funded programs, and that's where our technology is pretty strong. So ironically, we've had really strong partnerships with CROs that wanna leverage our platform as a business driver, but also with the large multinational biopharmas, for the very reason of kind of where our technology works the best. Got it. And on the academic budget side, Brian, I mean- Yeah. ... this year seems to be, you know, in good shape. Yeah. Next year, I mean, if there were to be a, you know, low to mid-single-digit cut in NIH funding, do you think that would be impactful for you guys? Yeah, it would certainly inform our guidance for 2024. But again, we've got... I think what's nice about where we are as a company- Mm-hmm. ... is we have a really good diversity of revenue sources. Geographically, product mix, from instruments to reagents, and services. And, you know, reagents are generally more immune to these kind of things, and that's a big focus for us. Right. But also across different market segments, from Discovery to Translation to Clinical. And that diversity of geographical product, and market segment revenue sources allows us to buffer against some of these- Hmm. ... swings, whether it's China or NIH or others. Got it. Turning to the PhenoCycler-Fusion, you know, you've seen some really strong demand there. Yeah. In terms of the Fusion combo, what are attach rate expectations at the moment? Yeah. What about the product is really resonating with customers? Yeah. So just by background, historically, the cycler was sold with a third-party microscope. The cyclers move the reagents, and the microscope takes the picture. So with the launch of the Fusion, which was really a byproduct of the technology out of PerkinElmer, you know, customers have the opportunity to buy the Fusion with the cycler or to buy the cycler with a third-party scope. So, you know, 80% + are opting to get the Fusion. I think it's gonna maintain at that attach rate going forward, because the performance capabilities with the Fusion and the cycler, in terms of, like the first thing we talked about, the number of samples per unit time, it's about an order of magnitude better. I think going into 2024 and beyond, it's gonna be 80% + in terms of people that are, that are preferring to use the Fusion as the imaging tool. Got it. And so what are the niche applications where folks still prefer a third-party microscope? And, you know, over what time frame do you expect to convert, you know, I guess, the 80% of your 300-odd customers? The third-party scope is generally, if you're an imaging core and you are really desiring a single vendor- Mm. Like, I'm all ZEISS scopes. Right. That, that is really not a dynamic that we're running into anymore. Got it. What's the second part of your question? Oh, it was just around over what time frame do you expect, you know, the conversion of the- Yeah, I think, you know, right now, about 60% of our cyclers are with Fusion. Yeah. I think, you know, by the time we get towards the end of next year, you know, I'm not going to give a number, but it's probably gonna be the tail that'll persist- Got it. ... with the third-party scopes, you know, kind of a, you know, a low double-digit percentage, while we continue to sell, you know, 20-30 PhenoCycler-Fusions per quarter. Got it. Switching to the 2.0 rollout- Yeah. You know, started in the second quarter here. Can you just speak about your experience upgrading the first customers in July and August? Were there any sort of unexpected hiccups that you ran into? Coming into 2023, given that we had a full instrument portfolio from Discovery to Clinical, our focus was really on workflow improvements. Mm-hmm ... and pull-through improvements. And one of the things that we did mid-year was we did pretty significant upgrades to both platforms, the 2.0 for the Fusion and the PhenoCycler, but also an upgrade on the HT as well. Mm-hmm. Both of those had really two- to five-fold improvements in terms of the workflow sample to answer. Mm-hmm. So nothing unexpected, in fact, really, really positive feedback for both of the upgrades, and that sort of feeds into our strategy of really driving pull-through. So simplifying the workflow, so it's tech-friendly- Mm-hmm. ... not PhD required. When you get to about customer 1,001, it's got to be a technician that runs it. Right. Right? Right. Right. So coupled to these improvements in the workflow on the instrument is improvements in the content and improvements in software. So as you look at our strategic plan, it's around better content and panels upfront, it's around simplifying that workflow, and it's around software partners to get the sample answer. So that's sort of the, the product strategy. Mm-hmm. Yeah. Got it. Makes sense. Is scheduling still really the primary barrier in terms of rolling out field upgrades? And where do you expect to be, you know, when the rollout is completed versus, you know, let's say, year-end 2023? I'd say probably this year we get to maybe, you know, half of the upgrades. Okay. So, you know, it's that effectively doubles the throughput on the Discovery side. Mm-hmm. The upgrade to the higher throughput Translational system, that's not as much kind of a field service engineer going in and doing- Right. ... hardware. That's more of a software upgrade. Right. So that can be done with a sort of a larger step function. So I think you'll see us get through most of those- Sure. ... over the next, you know, six-12 months. And that, and that's gonna obviously help drive in both systems on the pull-through as well. Got it. In terms of just, you know, the customer feedback in transitioning their work, has that gone sort of smoothly for the ones who already made the switch? Yeah, it's actually been pretty profound. On the HT side, you know, for the translation on Clinical customers, it's removed a significant amount of post-processing work- Mm-hmm. ... 'cause it's now happening in parallel to the sample. And that's pretty significant when you're talking about a platform that does 1,000 samples per year on average. That's the median. So that was a really material change. And on the Fusion system, you're basically, you're doubling your capacity. So- Right. ... you know, the opportunity for Akoya is, particularly when you couple that to, to better content menu on the, on the, on the panel side and easier softwares, you know, you're gonna come in on a Monday, and you're gonna prep, you know, 10, 20, 30 samples instead of, you know, five to seven. Right. So, but really significantly... We took a very measured approach to make sure that when it rolls out, you're not actually creating field service engineer work- Mm. -right? You're creating pull-through opportunity. Got it. So. On that point, actually, on pull-through- Yeah. ... you've talked about sort of, you know, the top 15, 20 customers on the Fusion, you know, getting to maybe like 5x, the mid-30K range. Yeah. Any color on, you know, what kind of customers these folks are? What do the projects entail? And are any of them on the 2.0 just yet, and how has that changed, you know, consumable spending there? Well, we sort of preferentially did upgrades for the ones that had the- I see. ... highest pull-through. So a lot of those higher pull-through customers are ones that are focused on providing services. Mm-hmm. They could be lab services type CROs or more classic clinical trial CROs. So those are the ones that we went for first. Got it. And how has pull-through trended over there? It's a little early to tell, but we got some big POs for reagents. So I think it's going really well. We're, you know, as we kind of look at our strategy again, we have 1,000 boxes, really robust systems, and, you know, we're at a stage as a company where we can catalyze so much additional growth- Mm-hmm. ...by just really focusing on just the fundamentals and investing in our customers. In customers. In parallel while we do that, while we enable these top tiers to drive that pull-through, you know, we're investing internally, operationally, and in driving even better margins on those. So, that's sort of our pretty simple fundamental strategy as a company, where we are right now. Got it. Switching to the HT, it sounds like that's a, that's a far less involved- Yeah. -upgrade process. Yeah. By when do you expect to have this sort of rolled out to the installed base? And can you quantify the reductions in image processing and turnaround time for us? So, if you were doing 500 samples... Well, I can maybe do it this way. Once the sample comes off the imager, and it probably takes, you know, call it maybe an hour or so- Yeah. -for all the post-processing to be done. Some of that's intervention, and some of that is compute. So that's basically gone because it all happens in parallel. And so what that means for a customer is, generally what they do is they'll have an auto stainer, like a BOND or a, an Omnis from Agilent or a Ventana Ultra, and they'll, they'll do the auto staining up front, and then they'll put it on the HT. Mm-hmm. They'll run 25 samples, and then they'll do the post-processing. That latter step is all done now. It all happens in parallel. Mm-hmm. So the feedback... I spoke to one of our largest CROs last Friday, and she was ecstatic around the capability. So when we couple that workflow simplification with the panels that we have now, on the HT, the Signature Panels, particularly for the IO market, it makes us really bullish on our capabilities within that market. Got it. Switching to your panel development strategy, you know, with your Signature and Discovery panels, what's the feedback been so far? And as we think about the top-line impact- Yeah. ... how do those two differ? I mean, is Signature sort of much more important than and easy moving? I kind of picking between your kids. I think they're both really important. The impact, though, is different. On the Discovery Panels for our Discovery customer base, it's more sort of a gradual adoption- Mm-hmm. -where they're building it into their existing panels, or they're creating new panels. On the Translational side, with those panels, it's more of a step function, where these are built and designed for large-scale clinical trial studies. And so the process that we're going through with our customers right now is, they're doing an evaluation, they're gonna do a preliminary validation, and then they're gonna queue up for large-scale clinical studies. So to get ready for that, what we have to do is make sure that we have high-margin reagents, that we have inventory, and that we turn that inventory quickly. So as a company, until now, we've largely relied on external supply chain, chain of custody to build our reagents. Mm-hmm. Increasingly, we're bringing that internally for the very reasons we just spoke of, because content and pull-through is more of a focus. So we wanna own that part, rather than having that go out with third parties, so that we can build this stuff at scale, we can sell that at even higher margins- Right. and we can have larger inventory turns. Right. Pretty fundamental stuff, but it's, it's sort of an evolution of strategy, of build instruments, get in the market, sell boxes, get market share. Now, it's sort of, okay, simmer down. Mm. -drive margins, control your inventory. Really some basic fundamentals of how you get to cash flow positivity and profitability. Got it. Yeah. I want to turn to, you know, your RNA, sort of development efforts. Yeah. On the decision to stop the development of RNAscope on the Fusion- Yeah. ... how does that impact your, your roadmap for multiomics on the platform? And, you know, could this be impactful on the customers evaluating the platform in, in the near term? I think in the near term, our pipeline is largely built on the products we have today. Kind of my earlier grumpy comments around future. So largely, customers, they're buying the product based on its capabilities today, not on some projected capability tomorrow. Mm-hmm. So we, we've got some really exciting, you know, RNA strategies that we're talking about further. I think that, you know, our friends at, at Bio-Techne and the Lunaphore acquisition, I think we sort of mutually agreed there's some meaningful channel conflict there. Mm-hmm. So I think we both decided to take a different direction. So I think there's a lot more we're gonna be talking about in RNA in the latter part of this year, so stay tuned. Got it. Got it. Any sense of what plex could look like when you launch the product? And is the initial offering, do you expect it to be a standalone RNA offering, or would it be a sort of co-detection? I will... I think we'll get into the details, but I think just fundamentally, the way Akoya looks at RNA is as a complementary analyte- Mm-hmm. ... to the spatial proteomics platform- Mm-hmm. where RNA can get to analytes where protein is difficult. Mm-hmm. Chemokines, cytokines, or you want to look at- Mm. You know, co-expression of RNA and protein simultaneously. So it really is sort of science driven. Mm-hmm. I think the market, that's the market segment that we're going after, where there's very intentful design of experiments around 30, 50, 100 samples, as we talked earlier. Not necessarily where I think our colleagues at 10x and NanoString are going, which is kind of taking the baton from NGS, from single-cell RNA, and using spatial as an extension of genomics. Mm-hmm. I think we're hitting a different market segment. That's why, as we talked earlier, they're sort of, they're complementary. Got it. Yeah. Got it. Fair enough. And I think you just mentioned this, Brian, but you do expect to share some news there by your end- Yes. -on the RNA front? We do, yeah. Okay. Well, that's great. Switching to, you know, the clinical piece, meaningful progress there in terms of your ABS offering. You know, you've also got the AstraZeneca collaboration, Acrivon as well. All of this, you know, your Agilent collaboration, too. With all of this in place, plus, you know, the HT and the Signature Panels, have you noticed an uptick in bounds and just the velocity of it? What we've noticed is the pipeline of our directed market development efforts in late Translational and early Clinical. There are much later stage projects. Hmm. And that's a byproduct of everything you just mentioned. So as we look kind of going forward, I think we're increasingly confident that our Clinical opportunity, in addition to Acrivon, it's real. Mm-hmm. It's a real upside for Akoya as a company, really breaking through clinically. Because the top -line and bottom -line impact of additional Companion Diagnostic partnerships, even if they don't come to full on-market fruition, given that we have this infrastructure in place, it is really gonna be a meaningful driver for us as an upside opportunity in the coming years. Got it. Yeah. Got it. And are you seeing any sort of, you know, elongated decision sort of cycles or project pushouts in ABS at the moment, just given the macro? No, I think it's the opposite because of the maturity of our platform and of our CDx capabilities, but also the parallel evolution of IO to these immuno-oncology, to these antibody- drug conjugates and bispecifics, where more biomarkers are needed. Mm-hmm. Those two are converging to where the opposite is happening, that our opportunities in the Translational and Clinical market are growing. Got it. Yeah. And then, Johnny, on the guide, you know, $95 million-$98 million, what are some of the puts and takes there in terms of the low versus the high end of the range? And then, to what degree are you sort of embedding a normal budget flush into your sort of back half projections? Yeah. If you look at the first half of the year, so each of the quarters, it was about a 30% growth rate year over year. And really, that's how we see the back half as well. We think the guide is an appropriate, reasonable guide, given where we have seen the business for the first half and what we have visibility to in the back half. Naturally, Q4 is usually our bigger quarter. Yeah. There is a little bit of a lift there in Q4, but with those growth rates over prior year, we really get to write to our guide where we think we'll be. Got it. Same question on margins. I think you talked about, you know, 60%-ish as an exit rate in 2023. And as you look to, you know, perhaps bumping that by 200 basis points or so in 2024, how much of that is just a natural mix shift in the portfolio versus some of the more proactive stuff you're doing around, you know, scale, manufacturing, inventory management, et c.? Yeah, I would say for next year. Well, while not guiding necessarily specifics to next year, those are driven by the initiatives we're taking now as it relates to cost of goods and supply chain. As Brian mentioned, you know, we front-loaded our investment in R&D and commercial since the IPO. Mm-hmm. And so now, the natural pivot, this has always been part of kind of Brian's plan, is to make that shift towards profitability, and that's where the focus is now. We've got specifically identified initiatives as it relates to supply chain custody, and I'm looking at our high movers and seeing what we can bring in-house and building out the capability internally to start to drive some of that margin accretion. Mix shift is always a component of- Right. ... of margin, but that, as Brian has alluded to, with our Discovery Panels, it'll be more linear. And as we see some of the Signature Panels adopted, that naturally has a little bit more step, but that's more, as we've mentioned, sort of six-12 months. But the near-term, immediate impacts are more driven by our cost initiatives. Got it. You recently did a follow-on. Every time a company does a follow-on, you know, the question is, what's gonna happen to OpEx? You know, that was supposed to be flat next year. Is that still the plan? Yeah, absolutely. That's an important one. And again, that speaks back to the same point I just made, that we invested heavily post-IPO. And two or three years in, this allows us to look at the OpEx and say, "Okay, there's frankly some good housekeeping we can take across the org and make sure that the spend is appropriate. Mm-hmm. And so we took some action early in the year as part of that raise to really rightsize OpEx, and we'll see that flow through into the fourth quarter, and that fourth quarter rate really gives us a good view to what we think next year's OpEx looks like. Mm-hmm. So we're confident about, you know, kind of where, how our OpEx is being spent now. Yeah. Got it. Brian, last few seconds here. What is most underappreciated about Akoya, you know, heading into 2024? Is it sort of what you could do in RNA and co-detection? Is it sort of, you know, just the 2.0 rollout, like, really kicking into high gear and what that does to your pull-through, along with the HT upgrade? Yeah. So from the investor perspective versus customer- Mm-hmm. ... very different perspectives. I just, I think it's just the fundamental performance, the first, the question you asked, which is, you know, as a team, we've gone from zero to $100 million. Mm-hmm. Just a fundamentally strong business. And we're in a market segment that has a lot of noise in the Life Sciences Tools and Diagnostics generally. Mm-hmm. So, you know, we have had continued high growth at scale, and now we're pivoting to focus our efforts on getting to cash flow positivity and profitability. So just in terms of the life cycle of a company- Mm-hmm. ... getting to a scale and getting to cash flow positivity and profitability, I think just that fundamental story, and we look at our multiple, you grind your teeth a little bit, so. Mm-hmm. But we're just gonna keep our head down and keep grinding, and you know, that'll work itself out. Got it. Yeah. Well, that's a great place to leave it at. Not, not grinding your teeth... but grinding away at the market. All right, thanks, Brian. Thanks, Johnny. Thanks. ... for joining me. Thank you. Thank you.