I think that, the end of music is time to go? Time to go. I'm Dave Westenberg, the life science tools, diagnostics analyst here at Piper. Joining me is Brian, the CEO of Akoya, along with Johnny. So let's just actually start off on a high level. Yeah. You have two products, two product categories, PhenoCycler, PhenoImager. I think one of the things that probably catches people off guard is just how many placements you have. Yeah. But maybe you can talk about the number of placements you have, the market you serve, and some of the key features of the platform. Yeah, just at a high level, two things, just numerics. So we've got, you know, well over 1,000 placements in the field, similar number of publications. You know, guided this year, just south of $100 million. So, you know, we've kind of gotten to scale as a company, and obviously, the market that we're participating in, just to define, is this concept of spatial biology at the incident service. And spatial biology as a concept is pretty straightforward, which is analyze the tissue on a slide. Rather than these powerful technologies like NGS and Flow and mass spec, you have to destroy the sample to look at it. Spatial biology is about keeping the sample on the slide to understand not just what is present, but where, as a means to understand the tumor microenvironment, disease progression, response to therapy. So we have products that serve the market continuum. The PhenoCycler product that you spoke of, that's really designed to serve the discovery marketplace, where we really want to go high plex and really understand disease. We have the PhenoImager products that are downstream to serve the translational and clinical markets, where it's really about addressing true clinical questions. So I think what we're most excited about as a company is this concept of spatial biology is immediately relevant from discovery to translational to clinical, and we have products that serve that whole market segment. So that's a little bit of a definition of spatial, the company, and where those products- Got it. Bought in. Yeah. Yep. You have a services business as well, so how does that fit into the equation? So our services lab out of Marlborough was put in place really kind of as the tip of the spear to serve the translational and clinical markets, where we really have a specialty clinical market development commercial team that's targeting our biopharma partners. Mm-hmm. That's targeting those companion diagnostic and precision medicine groups to leverage our platform for their clinical studies. So we built out this CLIA lab really as a way to drive market penetration and market adoption in the clinical trial market. So that's the purpose that it serves. The secondary byproduct of that, in addition to the revenue, is it's enabled us to develop best practices that we're now pollinating across our CRO partners, really as a means to amplify the use of that service, the use of that technology in clinical trials. Lastly, you know, one of the great benefits that we've gotten out of that CLIA lab is signing our first companion diagnostic partnership. So much of that services revenue is driven by, you know, one of those projects, which is a partnership with Acrivon Therapeutics out of Boston. We can talk more about that if you need, but- You just had an update on that, so What's that? Well, you might as well. Might as well. You know, on Yeah Acrivon. As we look at our desires to take our PhenoImager HT product all the way through FDA, our goal to build out a menu of clinical assays on that platform, there's a lot of basics that you have to accomplish. Number one, you've got to prove that your system has clinical capabilities, and the CLIA lab helps us do that. And then, you know, number two is you actually have to prove that you can do it. And that's what the Acrivon partnerships helps us, too, helps us prove that we can do that. And that, a couple of recent milestones with that partnership, you know, first they've received fast track designation for their compound that they've in-licensed from Lilly. It's in Phase II. That really helps kind of move the process along. More recently, we've also received breakthrough device designation for the actual companion diagnostic assay. Mm-hmm. So as you look at that advancing program, you've got the fast track for the compound itself, and now you have a breakthrough device designation for the assay. And for us, that helps move that process forward in an accelerated manner. But what it also does for our work with biopharma is they look at that breakthrough device designation from FDA, and that's an endorsement might be a strong word, but that means that the FDA has looked at our technology, they've looked at our pre-sub, and they've determined that this technology, coupled to the drug itself, is of profound importance, and that's why we've gotten the breakthrough device designation. So it bodes well not just for that program, but also bodes well for other biopharma partners and, and the endorsement that comes with that breakthrough device designation. Gotcha. Yeah. Well, you had another good quarter. I think you're one of my only tools companies where you haven't missed or guided down. Yeah. I'm you're the only one. Any thoughts to what's working right now and- Well, just, we did it for you, Dave. I just think it's just execution. I think, number one, execution by the team, commercially, execution by the, you know, the finance team being able to put our numbers out and predict those. It's execution by the R&D team to deliver on those. So I think that is a core. It's a credit to the team. I think there's market dynamics that help us as well, which is this concept of spatial biology is really important and very transformative, and it's most utilized in the field of immuno-oncology, which is pretty well-funded. So I think the market segment that we're serving also helps. I think our geographical balance of revenue sources helps. I think, you know, we're serving discovery, translational, clinical. We're serving broad geography. We're serving a market segment that's pretty strong. I think we're executing. I think it's just there's a lot of base hits. I don't know. Yeah, not a lot more to add. I think the geography is an important one. You know, others are facing impacts, you know, around the world, and North America's been a strong grower for us in the 40%+, and that's where, you know, a lot of our business is. So it buffers a little bit from what others might be facing, but we think, you know, just continued execution as Brian laid out, with a strong sales team that knows how to move the product forward. Yeah. And I think it helps that you're in a growth market. Yeah. So let's maybe talk about the spatial market. Yeah Because it's, it's probably done a lot better than genomics in general. I mean, it's not that it's not a genomics market, but- Yeah . when I'm talking about, you know, relative to sequencing or single cell or what or those. What's the growth over the next couple of years in spatial? I think it continues. I think the concepts that we talked about at the opening of just fundamentally obvious, which is, would you prefer to look at your biomarkers in intact tissue or not? Because it's- they're gonna be more predictive. So I think it continues to grow at a similar rate. I think we're gonna see translational really as the largest part of that core market. I think the largest opportunities in the out years are, without a doubt, in the clinical market. The scale that can be accomplished commercially on the clinical side are larger than the discovery and translational combined. So I think in the near term, our growth vectors in the discovery and translational market for us and others is gonna continue. But I think as we get into the out years, I think for us, the clinical market becomes a real significant upside to the Akoya story. Gotcha. So I'll have a follow-up on IP, but first let's talk about competition versus complementarity. Yeah Versus the spatial transcriptomic technologies, namely like 10x NanoString. Yeah Et cetera. Yeah, I think it's right. It's more complementary than competitive, where there's really a desire for groups to look at spatial RNA and spatial protein. And I think as you look at the user base, there's a Venn diagram where there's a group of users that's really focused on spatial transcriptomics. That's largely an extension of microarrays to RNA-seq, to Chromium, to spatial transcriptomics. That's the vector of that early discovery market segment. Our market segment is really, on the discovery side, is really those groups that have some experience with flow, with imaging. Mm-hmm. Or more importantly, these are your PIs that are focused on disease areas. So there's not a lot of direct competitive overlap with us. It's still complementary except for you've got maybe a core that's got to make decisions around limited dollars. So that's the competitive landscape and how it kind of plays out with 10x and NanoString on the discovery side. But to reiterate, in the sort of late translational clinical, that's not really... They're not really participating with us downstream. Gotcha. You know, we should probably talk about ongoing IP challenges in the industry. You know, it definitely does seem to be a pretty litigious industry. How confident are you and able to defend against challenges to your IP? Yeah, we're not. The current ongoing battles really are not at all relevant to Akoya. Our IP around our spatial proteomics technologies are issued, a kind of rich body of issued IP, come out of both Stanford, where the PhenoCycler CODEX technology was invented, but also a lot of the imaging technology come out of the acquisition of the division from PerkinElmer in 2018. So it's an incredibly robust IP portfolio that is quite distinct and different than the current ongoing battles between our peer companies. Got it. And then back to just the spatial market as a whole, and then maybe you specifically, how are you defining your TAM, and what are all the puts and takes as we're trying to think about the overall penetration you can get? Yeah. I think in the past, you know, you used, you know, slide stainers, or Yeah sometimes people use quantities of Fisher IHC. What are the different frameworks for getting to your TAM? Yeah, I think, I think there's a couple of ways to approach it. There's, you know, your, your quantifiable TAMs of the, you know, the $10-$15 billion. I think, as you're alluding to in your question, it's, it's a lot more practical to think about corollary install user bases Mm-hmm and where we think spatial biology will end up. As we look at the different market segments, from discovery to translational and clinical, I think on the discovery side, I think some very decent examples of where I think the spatial install base will ultimately be are, you know, flow cytometers, 8,000-10,000 out there. I think what 10x has done with the Chromium is another example of where I think the discovery install base of spatial can end up in the next, you know, 3-5 years, which is, you know, 5,000 or so. So that's how I would look at the install bases on the discovery side. As you get to the translational, late translational clinical markets, I think there's a different corollary. I think in that case, as you look at classic immunohistochemistry, the instruments that are out there that are upfront of the imaging, these auto stainers, where you load up your slides and they stain the slides, those auto stainers made by Agilent, made by Leica, and made by Roche, there's about 13,000 of those. I think that's a good TAM example for our HT system that's in those downstream markets, because we actually sit right downstream of those, and we use those same systems in our workflow. I'm just doing the math right now. Yeah. With those two, you know, that's 20,000+. You're at 1,000, so 5% penetration? Yeah, I mean, I think that's right. I mean, realized TAM versus TAM are always Yes different addresses, but I think that is at least a decent benchmark. Got it. Let's get Johnny involved here. Let's talk about the margin improvements this year. Can you quantify what those margin improvements were from both, like, OpEx, I mean, operating improvements and in the gross margin side? How should we think about the, the moves into, into next year and the current run rate we're at? Yeah, sure. So, you know, Brian's shared this in the past, that really from the IPO, the company had a few phases it was planning to execute on. First was the commercial buildup, really to build the market, to take space on the bench to really drive that commercial execution. With the focus shifting in the next years, the next phase of the project, into driving gross margin, taking more ownership and control of the supply chain, all those sort of normal progression of a growing business that you would do. That started this year, really taking, like, taking more control of that supply chain, bringing in-house things that were manufactured externally. Historically, we're bringing some of those in-house, some of our high dollar, high moving reagents and antibodies we can bring in-house and start some of that manufacturing. What that does is that it drives increased yields, it reduces scrap, because you have full control of the supply chain as it relates to expiration or you know, dating on the shelf. All those things you get to control a little bit more, and that allows you to move margin up. And so what we've. You know, as you saw last quarter, call it a 61% gross margin last quarter. We think that shows the meaningful movement we saw from the beginning of the year, and we think we'll sort of exit in that range. Then we've communicated a couple hundred basis points improvements in 2024 and then more beyond in 2025 and beyond. Because we'll be able to leverage the investment in that operational effort into 2024 and 2025. Then on the OpEx side, you know, again, last quarter, we burned or we spent $26 and change in OpEx, and we think that's a pretty good view to where we'll burn next year. We were able to take some cost initiatives in sort of the middle part of the year that brought OpEx in line with what we think we should be and what we think supports the continued growth of the business. And you take those forward, and you start to see, you know, you start to see the right cash numbers into 2025. You start to see positive EBITDA and cash flow positivity in 2025. So that's really our focus, keep that growing, that top line of that 20%-30%, call it, drive margin expansion and level out that OpEx, and you really start to see, the operating leverage come through the business in phase, kind of phase two of what the company initiated after the IPO. Got it. So, you know, across the board, I took down a lot of the life science tools, numbers and as we go into 2024. Mm-hmm. Just given what we're seeing in end markets, academic, commercial, both are quite tough. You're seeing inventory levels kind of lower. Just how do we think about 2024 as a whole? And can you flag some of the broader market trends that could be a headwind to the industry? And, you know, when do you think we see the kind of the light at the end of the tunnel in terms of pharma spending and academic spending, and well? Yeah, I think... It's sort of an extension of what Johnny just talked about. I think as you go into 2024, you have to have a bit of a guarded eye on your top line. And you've got to be very strong and very intentional around proving a path to profitability. If you're a company like ours that historically been focused on growth, as we go into 2024, it's equal attention to the top and the bottom line. So as we think about our priorities into 2024, it's gonna be, you know, continuing a growth trajectory, but also ensuring that we're taking the right measures so that we have a proven and predictable path to profitability. So, you know, in terms of the, you know, the market dynamics that externally, you know, I think what we're seeing right now is probably gonna continue through kind of most of next year. Again, but again, thankfully, I think we're in a market segment in spatial and discovery and translational and clinical, where we're not as exposed. So I don't know if you want to add anything. No, I think what you outlined early on, that our exposure, because we're geographically or product diverse, we're customer diverse, that really helps to ensure we can hit the targets which we will set for ourselves and have set for ourselves in 2024. Yeah. Oh, maybe, like, we could talk about those individual drivers of growth. Yeah. I mean, are we expecting new products, new content? Can you move into new geography? Are there customers you had been targeting? What about the recent Breakthrough device designation, does that do anything for 2024? Yeah. Can you go over all those different drivers? So I think as we look about our NPI, new product introductions, it's really continuing to focus on incremental workflow improvements, because when you've got 1,200 customers, they're your greatest asset. They're your greatest asset to invest in, to drive top-line growth on the reagents. They're your greatest asset to prove that your technology is good, to get publications out. So our focus is more on reagents and workflow as it has been in the second half of 2023. That'll continue into 2024. You know, in terms of geographies, I think we're pretty well situated with our commercial scale to continue to meet all the geographies. In terms of new markets, you know, the third part of the question, I think it's gonna continue as is, with the exception of we really feel like we're gaining a lot more, a lot of momentum in the late stage clinical markets. So I think that for us, longer term, while we're not gonna rely on large-scale companion diagnostic deals to meet our financial goals, those will be upside. We do see that really maturing, and part of the driver for that maturation includes the expansion and value in the antibody drug conjugate world. You saw the Akoya announcement this morning that those types of activities are actually impacting our product portfolio. The antibody drug conjugates really are begging is a little bit dramatic, but kind of begging for platforms like ours, where you want kind of a multiplex tissue in situ-based biomarker approach. And that's in fact where a lot of our activity is in our services business and with our HT downstream. So in terms of new markets, I think we're gonna see a lot more activity in the late-stage clinical and translational markets in 2024 and beyond. Got it. Okay, let's maybe talk about your cash flow break-even. Yeah ... target. How much of it is 30% revenue dependent? If you know, what could you do in a maybe more neutral or slower market growth environment, macro-wise? Yeah. I would say historically it's been all about top line, like Brian said, that would have been our only factor. But now, as you factor in top line, gross margin improvements, and OpEx rationalization, you can get there, as we see it, in 2025, we start to see cash flow break even quarters and EBITDA positive quarters. And it's really within the framework of what we're already doing. You know, we've grown 30%, you know, the last several years, and if even if we grow in that 20%-30% for the next two years, with the margin expansion we expect to see and the flattening to down of OpEx, we get, we see that, that sort of break even in the, call it, a $140 million-$160 million revenue run rate with our margin improvements and our OpEx. We, we see that in, in 2025. I would say we have to make the assumption, just to manage the business. We have to make the assumption that the high growth is gonna be difficult. Mm-hmm. So you've got to invest below the top line in having a kind of a lean organization and looking at all your facilities and having dedicated, tractable, scored efforts on gross margin. You know, your KPIs internally now on margins, on operating plans, become as important as your sales forecast and its replacement. So I think that's the story for 2024. Not just for Akoya, but for most of the market. Gotcha. What kind of M&A strategies would you consider? Right now, there are a lot of what I would call 2020, 2021 overs spenders. They got way ahead of their skis. It does look like there's gonna be quite a bit of bankruptcies or potential companies that are gonna be in the scrap heap- Yeah in the next couple of years. Is there an opportunity for you to pick up new platforms? Is that something that you're already kind of evaluating? I mean, what's the overall strategy with that? Yeah, I would call it secondary to tertiary. I mean, everything we've just talked about in the first 22 minutes is really our priority one, two, and three. But, you know, we will obviously we explore, we engage in opportunities like that, but it cannot be disruptive because what we can't do, what we don't wanna afford ourselves the opportunity to do, is to get distracted and get ourselves into a position where we don't meet our targets. We don't achieve our goals of driving pull-through, of gaining operating leverage, of this path to profitability, of hitting our clinical goals. Anything would have to be additive to that. Gotcha. So then I'm just gonna ask him, you know, the year is 2028. You were back here at the Piper conference. What are you most proud of that you accomplished over the last five years? The headline would be the same. I think it would be that we're generating real cash flow, that we're a business that's driving cash flow creation, and we're investing back in the business. I think we have a robust clinical portfolio that's truly impacting patient care with a menu of high-valued reimbursed tests in oncology, period. I think those are the two. Everything else is really a fight along the way. Gotcha. Yeah. And then we're gonna go on to move on to the, what, what is the most misunderstood or, or the part of the story where you have to explain longer than, than you'd like? That's a good question. You know, historically, it's been around trying to articulate the longer-term clinical value while, by, while being careful not to get too far over your skis, to make it sound like it's a, you know, it's a Q4, Q1 deliverable. But that longer-term value statement that we just talked about, year 2028, is something that we wanna keep reiterating. I think we also, you know, particularly now, you know, we need to prove to ourselves, to the people in this room, to you, that we can meet our goals to cash flow positivity. I wouldn't say those things are misunderstood. I think it's more prove it, but I think those are things that we spend a decent amount of cycles on. No, I think that's exactly it. It's that the clinical upside, the contained execution on the existing business, and to Brian's point, showing that as we have last 10 quarters, hit, hit, hit measures we set for ourselves, continuing to do that, the proving it is always where the value is, right? Gotcha. We have time for one more. Let's maybe just get into what are the most recent... What are some of the most recent publications that you find exciting, that you think could lead to new uses of your technology that had not been done before? I think the most recent one was the 100-plex. What was the journal, Brian? Yeah, GEN Biotechnology. It's a new journal out of GEN. It was a 100-plex study that was done on head and neck cancer. And if you actually dig into the details, it was really interesting to look at the different areas of the tumor microenvironment, and why, for example, there was sort of postulated why there was partial response to immunotherapy. Because you had partial preparedness for the immune system in certain parts of that tumor to respond to the therapy. So I don't think it's necessarily about new markets. I think publications like that one really highlight the value of the high-plex PhenoCycler assay and how that can lead downstream to potential clinical uses. Because our overall goal is to try to own that biomarker journey on the same core platform from discovery to translational and clinical, and see discoveries like that flow all the way down to a clinical test. Thank you very, very much for your time, gentlemen. All right. Thank you. Thank you.