Good day, thank you for standing by, and welcome to the Q4 2022 Telesis Bio Earnings conference call. At this time, all participants are in listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star, one, one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jen Carroll, Telesis Vice President of Investor Relations. You may begin. Thank you, Dustin. Good afternoon, thanks for joining us for Telesis Bio's Q4 and year-end 2022 earnings call. With me on the call today are Telesis Bio founder and Chief Executive Officer, Todd Nelson, Chief Operating Officer Eric Esser, and Becky Goodrich, Senior Vice President of Commercial Operations. Our Q4 and full year 2022 financial results press release is now available on the investors section of our website. Before we begin, I would like to inform you that certain statements we make during the call will be forward-looking statements that involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. Such factors include those referenced in the safe harbor statement included in our earnings release and in our filings with the SEC. This conference call contains time-sensitive information and is accurate only as of the live broadcast on March 21st, 2023. Finally, any percentage changes we discuss will be on a year-over-year basis unless otherwise noted. With that, I will hand the call over to our CEO, and we can get started. Thanks, Jen. Welcome, everyone. Thank you for joining today's call. First, I would like to thank our entire Telesis Bio team for their tremendous efforts resulting in a stellar 2022, where we exceeded revenue expectations, delivered meaningful expansion of gross margin, and in recognition of the current macroeconomic environment, delivered on reducing our operating expenses as a measure to extend our cash reserves. We have done this at the same time as funding our growth initiatives and executing commercially. Our overall plan this year is to continue to expand our BioXp customer base and drive the adoption of new BioXp kits. To do this, we'll be focused on three things. First, expanding access to the synthetic biology market. We will do this by introducing our Select Kit line of BioXp products that will allow customers to use their own DNA as a starting point. We'll be entering a new market for NGS library prep. We will launch an NGS library prep kit that will run on our existing BioXp install base, and later in the year, we will launch a 9600 version for high throughput NGS sample prep. Third, we will expand in the Q4 our genome engineering workflow applications through the launch of CRISPR guide RNAs based upon our proprietary enzymatic DNA synthesis chemistry referred to as SOLA. Telesis Bio is a leader in automated multi-omic and synthetic biology solutions. At our heart, we are an instrumentation company offering unique first to market benchtop automation platforms that are driving production of DNA, mRNA, and protein to the benchtop for a global customer base. Our systems enable decentralization of rapid, accurate, and reproducible writing of biology. Our vision at Telesis Bio has always been to provide researchers with the tools to build biology in their own laboratory without any constraints. The ability to create novel synthetic biology-enabled solutions allows us to address large unmet needs in our targeted markets. Scientists around the world are using our comprehensive solutions to accelerate the design build test paradigm for novel high-value products for biologics and vaccine discovery, genome editing, and cell and gene therapies, just to name a few. Moving on to our Q4 and year-end results. I'd like to remind everyone that our detailed financial results for the Q4 were also included in today's press release. Total revenue for the Q4 and full year 2022 was $9.5 million and $27.4 million, representing growth of 208% and 148% for the respective periods. Notably, our core BioXp revenue, which consists of instruments and kits, grew at 158% and 67% for the Q4 and full year respectively. This strong growth was the direct result of demand for both the BioXp 3250 and our recently launched BioXp 9600 systems and increased utilization resulting from new kits launched during the year. In the Q4, we sold a total of 19 BioXp units, representing a 138% increase over Q4 of 2021. Similarly, for the year, we sold 66 additional instruments, representing 32% growth, which brings the total installed base to in excess of 250 instruments. Overall, we continue to be very pleased with the demand for the 3250 and the initial uptake within the market of the 9600. The launch of the BioXp 9600 system brings significant revenue potential stemming from higher instrument ASPs, higher BioXp kit utilization rates, and an ability to expand into new and adjacent markets. Gross margins came in at 68% for the Q4 and 57% for the full year of 2022, reflecting positive mix shift in revenue towards higher-priced BioXp kits launched during the year for mRNA, long fragment builds, cell-free DNA scale-up, as well as the receipt of Pfizer technical milestone payment resulting from the successful achievement of our first of four milestones. Operating expenses were $14.3 million for the Q4 of 2022 compared to $13 million for the same period in the prior year. For the full year, operating expenses, including non-cash charges, totaled $62 million, reflecting prudent efforts in the Q2 to reduce our annual run rate expenses. This increase in operating expenses was driven by personnel costs and expansion across our business, primarily our commercial organization, to support our increased revenues. Net loss was $8.1 million for the Q4 2022 compared to $12.5 million in the same period the prior year. The net loss per share was $0.27 for the Q4 compared to $0.43 for the corresponding year and for the full year period, $8 million compared to $39 million during the prior period. Cash and cash equivalents were $43.8 million as of December 31st, 2022. Noting also that the company has approximately $20 million worth of debt outstanding as of the end of the year. In summary, during 2022, we believe that we assembled the right executive team that can drive revenues, increase gross margin, and stabilize base operating costs so that we can become a profitable company in the second half of 2024 and deliver value to our shareholders. I'd like to briefly cover our financial guidance for the full year 2023, which will be back-end weighted in the second half of the year due to our 2023 new product launches throughout the year. For the full year 2023, we're issuing the following guidance. Total revenue is greater than $45 million. Gross margin is expected to be in the mid to high 50s on a percentage basis. Operating expenses, including one-time and non-cash charges, are expected to be approximately $62 millio to $64 million. Let's walk through the things that will help us achieve this plan. First of all, on revenue growth, we have a robust series of BioXp product launches, including the launch of approximately 11 additional BioXp kits and two new BioXp systems for NGS library prep and the SOLA-powered system that will, for the first time, allow customers to achieve same-day turnaround results for CRISPR guide RNAs. The combination of our new product launches when layered onto our historical growth should, in our view, generate significant continued revenue growth in the next couple of years. Now some details on our commercial strategy. We anticipate launching several select kits for both mRNA and cell-free DNA scale-up. These kits will add to the value proposition offered by our de novo gene synthesis kits, and for the first time, as mentioned, will allow scientists to use their own DNA as a starting point in experiments. We believe these make-to-stock kits will allow our current and future customers to use their BioXp systems more frequently, thus driving up recurring revenue growth rates. These kits should help us unlock the remainder of the synbio TAM of approximately $2.6 billion, which is estimated to be growing at a rate of 27%. By opening up our system for customers to use their own DNA as a starting point, we're providing scientists with further flexibility. In addition to the BioXp select kit, we anticipate launching an additional BioXp platform focused on NGS library prep, which gives us access to an additional market opportunity of $1.6 billion growing at 25%. One final note on product revenue, we anticipate launching the first-ever version of the BioXp 9600 that will have our proprietary enzymatic DNA synthesis technology referred to as SOLA as a reagent platform. The system will be the first to market product for CRISPR guide RNAs, enabling same-day turnaround. This too is a new market for us and represents an opportunity of approximately $1.5 billion growing at 25%. Collaboration revenue, we anticipate continuing success with our partner Pfizer, and we anticipate we will successfully achieve two additional milestones during the year. Moving on now to gross margins, we have a three point plan for achieving our targets, which include, number one, contributions from a favorable mix of higher-margin products like the 9600 and select kits. Number two, insourcing initiatives related to raw materials. And three, similar insourcing initiatives related to the vertical integration of our instrument manufacturing. To this end, during the course of 2023, we anticipate further establishing an oligo production operation built around a fleet of proprietary oligo synthesis systems. When at full capacity, this operation will produce sufficient oligo volumes to meet our raw material needs, allowing us to effectively place existing supply from outside vendors. Additionally, we intend to internalize both the 3250 and 9600 instrument production lines throughout the year, which will also improve not only our supply chain and quality, but our margins. Moving on to base costs or OpEx. We anticipate base costs will remain relatively flat during the year as we're able to backfill growth in this category resulting from several large one-time charges we experienced in 2022. As a reminder, as we continue to execute against our strategic plan, we continue to see a path to achieving profitability during 2024, but anticipate that we will seek access to additional capital during 2023 to further solidify our cash position. Strong revenue growth and expanding gross margins when combined with stabilizing operating costs and an experienced execution-oriented management team provide us with a potential path to profitability within a 12- to 18-month window based on timing at year-end of 2022. We are extremely pleased with the Q4 and full year results, and we remain encouraged by strong commercial execution and progress in our product pipeline. We are focused on executing against our near-term commercial goals, launching new products into two new markets, improving profit margins, and decreasing costs, furthering new and existing partnerships, and growing market share. We continue to stabilize operating expenses and make strategic and measured investments to drive long-term sustainable growth and a path toward profitability. With that, I will thank you for joining our call and ask the operator to open the call for questions. Thank you. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from Brandon Gilliard from Jefferies. Your line is now open. Hey, good afternoon, Todd and team. Hey, maybe just starting with guidance, Todd, can you give us a sense of, you know, what that embeds for new BioXp instrument, placements? Any color on the mix between the 3250 and the 9600? Maybe an update on just kinda how the 9600 order book is developing. Any color in terms of new versus existing customers now that we're kind of six months into that rollout. Thanks, Brandon. Appreciate the question. Let me start with the latter, first. On the 9600, we launched that effectively, I think, the last day of September, so in the Q4, and I would say we sold nine or 10 last year, and we disclosed that. We think the initial uptake is good. We're, you know, we're happy with the uptake of the 9600, and I think that's ramping up consistent with our expectations for this year. Getting to the first part of your question on what are we looking at for unit volumes, I would say that we sold approximately 66 units or we sold 66 units in 2022, and we would expect that to just about double from a unit volume perspective. On the mix, I think it's early to tell, but I, you know, I think that we sold about nine in the Q4. There was some pent-up demand, I'd expect that to, you know, the year will be back end weighted for both the BioXp 3250s and the BioXp 9600 due to the kit launches. I'd expect that to maybe not be nine, necessarily in the Q1 or Q2, but ramping up after that. Yeah, that was my second question. You mentioned kind of a back-end loaded year. Any more, you know, I guess, color on how to expect maybe the first half versus the second half in terms of the full year waiting? Yeah. I mean, I think we had a solid Q4. I think during the first half of the year, we're launching a number of BioXp Select kits. Those need to get out in the market. We're getting the 9600 out there. We're getting utilization up. I'd say from a cadence perspective, I, you know, I don't wanna guide on cadence, but I think, you know, the rationale here is that we'll have a full year of 9600, ramping up into the second half. I'd expect the unit volumes to have a much higher cadence, I guess, in the second half of the year. We'll get the benefit of the product launches on the BioXp kit line in the first half and the second half. I don't know how helpful that is. I think from a cadence perspective, we'd expect more than half of the revenue for sure to be in the second half of the year. Gotcha. Okay. In terms of your, insourcing some raw material, production, you know, what% of oligos supply needs do you expect to be making in-house, you know, by the end of the year? You know, what impact will that ongoing shift have on gross margins as we look out into 2024? I'll get started on this. We're fortunate to have Eric here, so I'll hand it over to him after I give you some high-level color. This is just the continued execution against something that was really important for the company, and that was to, you know, gain control over our supply chain, better control our quality, and improve gross margins at the same time. We've endeavored to build our own systems. We've invested significantly in that in the last few years. We now have a handful of those systems Eric can walk through. Those are coming online throughout the course of 2023, and they will ramp up production throughout that time period. Overall, the accretion of gross margin will be mostly felt in 2024, where there should be significant accretion of gross margin as a result of that. I'll hand it over to Eric for some detailed comments. Yeah. I think you covered most of it, Todd. By the end of this year, in Q4, we would expect something approaching 100% offset of our external supply of oligos. Internally, we'll have the capacity that we need to offset the vast majority of our external of the needs today that we have for oligos that we currently purchase from outside vendors. As we look in 2024, most of our 2024 oligo supply will come from that internal capability. As Todd said, the margin impact will be mostly felt in 2024 because we are ramping up through this year. And I think we're, you know, on a total blended product basis, we'll be expanding pretty significantly multiple 100 basis points in 2024. Got it. Lastly, just to confirm in terms of the Pfizer technical milestones, so I think there's three left. How many have you contemplated in the guide? Just wanna confirm each of them are $ 2.5 million. Is that right? What's left to recognize in 2024 from that? Yeah. So in 2024 or 2023? That's right. I think there's another tranche in 2024. Yeah. Okay. Yeah, sorry, Brandon. I understand the question now. Yeah. We had an $8 million upfront technology access fee that will continue to be amortized throughout the course of 2023, but that'll go away at the end of the research period, which is, you know, the Q4 roughly of 2023. During 2023, we'd anticipate achieving two additional Pfizer milestones, they're all, to the best of my knowledge, priced about the same, if you will, from an accomplishment perspective, and the first one that we disclosed was about $2.5 million. There'll be another one that we'd anticipate achieving in 2024. It's typically a milestone and then a little bit of time to do the work and then another milestone. Just noting that we accomplished the first milestone in the Q4 of 2022. Very good. Thank you. Yep. Thank you. One moment for our next question. Our next question comes from Harrison Raj from KeyBanc Capital Markets. Your line is now open. Hi, Todd. Congrats on the great quarter. If I could just follow up on the Pfizer milestone payments. I think I understand generally what that's going to be here in FY 2023, but if you could just provide a little bit more detail into 2024 and 2025 on that. Yeah, Harrison, I don't know how much. We've disclosed, I think, publicly, generally at a high level, what those categories are. Just again, by way of review, the Pfizer deal had an upfront fee that we're amortizing, and I just mentioned that there are four milestones that need to be achieved during the research period. Then there are some pretty significant milestones in 2024 related to potentially exclusivity or non-exclusivity. Then after that, there are commercial milestones, as well as clinical milestones, and royalties on sales. The cadence of revenue from 2024 and 2025, you know, I think is we're anticipating the successful achievement of a milestone in 2024. Then, there's the opportunity for us to receive some additional large, one-time milestones related to the exercise of exclusivity, if appropriate. Then I would say for 2024, that's it, and then 2025 would kick in some commercial milestones and clinical milestones. I think what we disclosed also is that per exclusive product, it all adds up to about $280 million per product. Got it. Okay. That's helpful. Again, on the guide, I think we understand the systems outlook here pretty well, but it seems like your kits are certainly starting to gain some traction. If you could just kind of quantify what you're expecting in terms of kit revenue or kit growth in 2023 and then maybe directionally, how we should be thinking about kits into 2024 and beyond, and then, same with the services business as well. Yeah. Let me handle the products first, in the order that you've asked. On the BioXp kit side, and just by way of review, we've got right now, everything that we've done at the company has been built around de novo gene synthesis and eight or so kits that do that. We're now adding, beginning in the Q1 of this year to that, the select kits, which will allow customers to use their own DNA as a starting point, including NGS, and we expect to launch about 11 kits during the course of this year, that being 2023. I believe revenue for kits grew at approximately 64%-67% for, you know, a year-on-year period. We'd expect that category to continue to grow, being the de novo gene synthesis category at about that same rate or higher, and would layer on top of that, you know, the additional revenue from the select kits. You know, overall revenue guide of $45 million, I think you can back into a product number that's kind of in the. You can get there by backing out the Pfizer milestones and the royalties. On services, that business, the plan for the Eton business is to grow that business in the Sanger sequencing business this year. With excess capacity that we have for oligo production off of our proprietary systems to give those systems then and any excess capacity to Eton to enter into the oligo market, and that'll happen in 2024. Got it. Okay. Then last one for me, just on the instruments and new systems outlook. I think you guys have previously talked about the BioXp Oligo Printer as well as the DBC platforms, and possibly delaying them in light of the cost-cutting measures. Could you just kind of refresh the timing and outlook of new systems to be released? Sure. Happy to. As far as systems go in 2023, we're looking at a Q3 launch of a proprietary 9600 based purpose-built system for NGS library prep. In the Q4, we pivoted our larger DBC program to CRISPR guide RNAs to get something onto the market, but with a limited scope, and that would be in the Q4. That product will have on board SOLA chemistry. That will enable same-day turnaround of CRISPR guides. Two systems this year, one in the Q3 for NGS, one for CRISPR guides based upon DBC technology and SOLA reagents in the Q4. Got it. And then Todd, I'm so sorry if I could just sneak one more in. On those new systems, I mean, would we expect that 9600 system in the Q3 to generally have a similar ASP to the regular 9600 that you launched during this last year as well as consumable pull-through? I mean, how should we think of ASPs and pull-throughs on these? You're talking about the system that we just called on the launch for NGS. I think we're working through price discovery there and the business model around that. We've got placeholders in there that I think are generally. I don't wanna misspeak actually, Harrison, I might have to get back to you on that, but I think they're generally in line with the current price of the 9600 to maintain market continuity. Got it. Thanks again. Thank you. Thank you. One moment for our next question. Our next question comes from Steven Ma from Cowen. Your line is now open. Great. Thanks, operator. Congrats on the quarter. Thanks, Steve. Yeah, a lot of ground already covered, so, just some follow-up questions, mostly on gross margin. I believe you said the gross margins in 2022 were 57%, and then the guide for 2023 is about around that range. Just trying to reconcile that, you know, 'cause, you know, given you're gonna be launching, you know, kind of the 11 kits, you know, the 9600, I believe has a better gross margin profile. Just trying to understand the gross margin guide for 2023. Is that just being conservative on your part? I think part of it's just related to the timing of the ramp up for the internal oligo production, which will predominantly have. You know, it's linear, but I think from a production perspective, let's say it's linear with respect to getting the systems up and going, but non-linear with respect to capacity and uptime and things like that. More of an emphasis on gross margin accretion later in the year from the oligo insourcing initiatives. Then I think on the mix, you know, we said like mid to high 50s% and I think that is generally a good place for us to be right now. I wouldn't say it's necessarily inconsistent. We're ramping up the sale of the 9600, and yes, that has a higher price point. We need to see how the mix between the 9600 and the 3250 works out. Our anticipation is that because it has higher margins, any contribution from that will be accretive to where we're at. On the kits, 11 kits throughout the year, but again, from a cadence perspective, a lot of them will be in the second half. That is all good stuff and headed in the right direction from margin perspective. That's also offset slightly at the same time by a very rapidly growing gene synthesis business from our de novo kits, which has generally a lower gross margin. As the company works to operationalize these systems for our own internal oligo production to accrete the gross margin, launches new kits throughout the course of the year. We're also, we need to recognize that we've got a very rapidly growing business. It's growing at in excess of 60%, which has a typically lower gross margin for gene fragments and gene synthesis products. Okay. That's helpful. Then on the cadence of these 11 kits, yeah, you said it's gonna be mostly, you know, second half, but, you know, within in the second half, should we be thinking it gonna be weighted more to Q4 or? You know, I'll hand it over to Eric. I think the peanut butter is pretty well spread between the year. I get the sense there's a lot going on in the Q2 and Q3 s. I'll hand it over to Eric. Yeah, that's right. Of the 11, let's see, we have a couple that are launching in Q1, the majority launch in late Q2 and Q3, and then one of those kits, the last one, launches together with the DBC in Q4. Okay, perfect. All right. Thanks for the questions. Yep. Thanks, Steve. Thank you. I'm showing no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you, everyone.