Welcome. Day two of the TD Cowen Global Healthcare Conference. Wrapping up the day, terrific speaker here. We've got Jacob Thaysen, CEO of Illumina. Jacob, welcome, and thank you for being here. For sure. Thanks for inviting me. Awesome. A lot to talk about. You know, I certainly think coming off of an eventful AGBT, I think it kinda makes sense probably to start there. I'm sure there's a lot of inbounds and questions you guys have been fielding as have we had. Maybe just, you know, high level for yourself, what was the message coming out of AGBT in terms of your own product roadmap? Also, if you wanna begin to speak to a little bit about Roche and the competitive landscape, then we'll dig in. Yeah, that's certainly a lot to cover. We felt it was a really good conference. It was a really good show. We had been very much looking forward to show our roadmap at AGBT. What our focus were for our customers was to show that if they invest in Illumina, we'll make sure that we'll continue to innovate for them to be successful. How that is translated in is that we showed different elements of our roadmap, particularly on the NovaSeq X, that it's been a tremendous success so far, but we also showed our customers we will come out with more flow cells to both address higher capacity applications but also lower capacity applications. Different customer segments look for different things. We also came out and showed that we will get to a Q70 scores on the quality, which is opening up for especially high sensitivity MRD. In the fact nobody can do this today, but with the Q70 that we're gonna present, we are opening up for very high performance MRD that where the whole market is moving right now. We also showed that we can do faster turnaround time with the NovaSeq X platform. I think that was very well received, especially in the research academic environment, where today there is, as you know, not a lot of funding. They really appreciate that we continue to extend the opportunities with the X. What they've invested in, we continue to make them successful. We also launched the, what we now call the TruPath, which we had under code name Constellation before. It's a technology that essentially eliminate library prep for whole genomes. It's not only that you can do library prep in 10 minutes, you also get extended insights from your genome. It's really a technology that combines short and long read, all the power of the short read, but also all the power of the long read. You can imagine for germline application, for hematology cancers, that this is gonna be the new standard of the genome. We come out and presented this at this point for a price point of $395, which is the absolute lowest and highest quality, but the lowest cost of that type of genome. We also showed a roadmap that we'll do multiplexing on it later. Right now you can run 16 samples on a run, and we'll get up to approximately likely around 96 samples over the next 18 months, which will also drive down a price point that is gonna be very, very attractive. We saw a lot of customers that are very delighted about that. Effectively, if you have a NovaSeq X, you can get started immediately using our TruPath genome. Those were, then we also showed a lot, there was a lot happening on our spatial technology that we again are showing that the spatial that we are coming out with is gonna be where you can actually look at very large tissue. So you instead of looking at a very small tissue, which you can't really do biology on, we can now look at actually a whole slide tissues that will open up again. We're gonna price that to a point where we're starting to open up really applications and a lot of excitement. In fact, we were overwhelmed with the interest that were in spatial. It's still in early access, but we see a lot of interest in that so excited to get that out here during the next six months. That was a lot of the things we presented. We saw a lot of positive feedback from customers. They really loved actually the fact that we're not launching an instrument, that what they have invested in, that they can continue to, and we continue to innovate on that. That was a big part of our conference, of course. Of course, this is also a conference where every competitor is putting their best foot forward, and we definitely saw that. Most of our competitors are excited about coming with new instrument launches. A key again, a key signal we wanna send is not about only sequencing anymore. It's about the highest quality with the lowest end-to-end. Roche came out, we actually have a good relationship with the Roche people also, so we're gonna compete with them, of course, going forward. We were, I think Roche have done a great job of going out over the last 12 months to present all the good things and all the promises around the technology. I think we're now starting to get more of the details about all the consequences of that technology, which appears to be a very, very different workflow, appears to have some challenges in how you actually have to do library prep, and of course, also the pricing model requires you to do high throughput. It kind of limit the applications that we at least see for now. I'm sure there will be more coming out with Roche, but, at this time we feel very good about how we're gonna compete against Roche, both short term and long term. Okay. Yeah, maybe we'll kind of unpack a lot of that. Yeah. I had the second question on Roche just because it has been such a focus for investors. You know, you kinda mentioned some of the drawbacks there, but maybe can you just unpack a little bit more when you think about where NovaSeq X sits? Yeah. Obviously clinical is very entrenched, and that could take time, but even on the research side, maybe where they're gonna start. Yeah. The profile, like where you think ALX Oncology will compete, where do you think they won't compete, and, you know, we can go from there. Yeah, I think, I mean, there's many details here on the complexity of sequencing. This notion about that sequencing and becoming commodity is not true at all. I mean... I would say I've been in the life science industry a long time enough that commoditization in life science tools is not really true. It's very few areas you see commoditization. Sequencing is definitely far away to that. Of course, you have to go into the details to really understand it. There's a lot of complexity on how you run, you know, you have one flow cell or one chip with one lane on. You have to think about how you mix and match your different applications. I think there are some challenges on how you do panels, which is especially in the clinical space, very important. Where we definitely saw them put a strong foot forward, it was in the what we call the counting application, where the Simplex read is able to address that market segment. From what we can see and when we understand the market and we see that that is around probably around less than $100 million of the space that we participate in. We feel good about that. I think the more important part of that market is less about the cost of sequencing. Really, the cost of these experiments in the counting application that is sitting between the single cell, the bulk RNA obviously also, and of course, the affinity protein part, which is probably the majority of the counting applications, is that the library prep is much more expensive than the sequencing. Thereby, you're not really getting a lot of benefit from a customer perspective to drive down the price of sequencing. Yeah, of course, you save money, but it's not like you suddenly can do if you drive down the price of sequencing a factor of 2, that you get 2 times as big experiments. You might be able to do 20% more. The notion of just driving one parameter in that experiment is not helping for any elasticity conversation anymore. That's what researchers wanna do. They wanna go from 10,000 single-cell to 100,000, from 100,000 to 1 million. Therefore, that's the reason we acquired Fluent, we acquired SomaLogic, and other elements to really address the end-to-end application. We can drive down the cost of the whole workflows to really make sure that elasticity is working. We feel good about our position in that space, even though the headline is a very lower cost, you know, cost per million read. Okay. Well, we can come back. I mean, we'll have some more questions on that. Yeah. I don't wanna spend the first 10 minutes or 15 minutes on that, but we'll circle back a little bit more. Maybe just kinda switching over to the key tenets of your guidance this year, right? 1% to 3% organic growth, ex China. Maybe from a high level, what would you characterize as some of the levers that take you outside the range, either on the upside or the downside? You know, would you view that, you know, the way you set the guide? Like some companies will set the guide, and they'll say, "The midpoint's at the low end or the midpoint's at the high end." Would you view that 1% to 3% fair, conservative, or, you know, maybe on the aggressive side? Yeah. I would start by saying that, you know, it's interesting how the conversations are evolving, where we, of course, a year ago, had a very different conversation about NIH funding, our chances in China, tariffs and so on. Today we have a conversation about, well, you're conservative in your growth rate. Yeah. I like that. That's a much better conversation to have than what we had last year. I appreciate that. We also saw momentum through 25, where, of course, the first part of the year was challenging with everything that was hit from a macro perspective, and the second half, we started to see momentum in the business. The way we have thought about 26 is to look at the second half of 25 and see that's probably a good proxy for how 26 is gonna look like. There is momentum in the clinical business, but there's still some challenges in the research business. That's how we have modeled 25, and that's how we have guided, excuse me, 26. If you think about it right now, we have said that our guide for 2026 is right now we call rest of world outside of China, is between 2% to 4%. With China, it's 1% to 3%. At this point, we believe we are always guiding for the midpoint of that. We still believe there should help clinical grow faster, which it could be. We don't see any reason why clinical shouldn't continue to be in a very strong trajectory. Should the research space actually become better than what we are anticipating, that's definitely upside to our guide as we see it right now. If you look at the bottom line, we also continue to expand the, both the operating margin and also the EPS growth. On the operating margin, we are on the core basis before the SomaLogic acquisition. We were guiding for approximately 150 basis point improvement, which would actually translate into if we do another 150 basis point next year, we would actually be at a 26% operating margin. Now with SomaLogic, we are within 50 basis point of that. You've seen how we operate. We'll work a lot to see if we can close that gap also. EPS, we guided at least before acquisition to a double-digit growth, 10%. With, of course, with the headwind from the SomaLogic, a little bit lower than that. We feel really good that we can continue to grow the EPS also double digit to teens going forward. On the consumable guide for clinical, I mean, you get this question, Conrad gets this question. Yeah. Coming off such a strong back half of the year, 20% growth in the fourth quarter. Yeah. You're guiding to a healthy growth, you know, call it like low double digit to mid-teen, you know, call it 11% to 15%, at least what we have. You're coming off such a strong growth rate, just conservatism, just don't wanna get ahead of yourselves or listen, you've got this transition ongoing, so maybe that truly is gonna be where you land. It just feels like it might, it might be biased to the lower end, just given where you exited. Yeah, I think, I mean, the transition is still gonna happen here in 2026. There's definitely still some pricing headwind. It should start to dissipate throughout the year. It shouldn't be worse than 2025. You know, the accuracy in how we can predict the growth in clinical is still, I would say, you know, I can't predict it more than within a few basis or within% growth points. I think that's why we have said this is probably from a guide perspective, could that be a little bit higher? Potentially. We are of course, very dependent on how the whole environment continues to evolve. Mm-hmm ...how the funding is happening, the macro environment is happening. You know, just last week we had another big macro event. I think that's just why we wanna keep some prudency into our guidance at this point. Mm-hmm. In terms of the application, obviously oncology, women's health, you know, you got screenings, you know, kicking in now, but what application would you say is the most exciting when we think about the next couple years for NGS consumable on the clinical side? Oh, there's a lot to be excited about. I think that's the. I'm asking you to pick your favorite child. I know. No, no. I'll come back into some of the thing, the dynamic here. I think the point is still that we are still early in the early stages of the opportunity for sequencing, especially in the clinical and the healthcare. Sequencing is far from of standard of care in healthcare, and eventually we get there. We also see, both the, many physicians are getting more comfortable of using, of course, genomic insights to make the right decision in their practices. We're starting to see that reimbursement is starting to more solidified, so you can actually get predictability on reimbursement. You see also the more comfortable clinician and physician are getting around using sequencing, the more insights they're looking for. When you previously wanted to have 20 genes looking at, now you wanna have 500 genes, and eventually wanna look at the whole genome. You're also seeing that happening. We see a lot of growth in the clinical space for many quarters, if not years to come. If I look at the dynamic is that oncology will still be the main growth driver in this space, at least for the foreseeable future. Where, of course, most of the business today is still in therapy selection. We now shifting ourself into the new type of detections like minimal residual disease and of course also early detection of cancers. Over the next few years, it will still or least year 2. It will still be the therapy selection that will be the main part of the business and thereby also dollar-wise, the main growth. Percentage growth, the MRD and early detection is definitely starting to kick in here over the next period of time. You know, maybe just on the research side of the equation, just maybe, and we'll kind of loop it back to some of the new competitors. Yeah. Like you've got the ongoing pressure in the U.S., but hopefully not getting worse, right? Yeah. When you think about the guide, like is anything incorporated for some of these other, you know, really Roche would be the main one, but you know, like even if, you know, they're not doing panels, they're so excited on their whole genome. Yeah. Could that free some of the market? Like have you tried to think about that when you've kind of set the guide? Yeah. We of course think a lot about that we are in a very competitive space and we think about a lot how we can continue to compete and out-compete and I feel really good about where we are from both where we are from a commercial execution perspective, but as importantly also our innovation pipeline that continues to very strong, and I think AGBT was a good showing of that, but much more to come. When we guide, we try to take as much insight in that we have around what we know about the competitive space. That's also what is reflected in our expectations. We do believe that even in a highly competitive space, we should easily be able to grow with high single-digit growth over the next period of time, as our goal is in 2027. We don't see the market freeze right now. We see that many of the placements we do in NovaSeq X is into the clinical. They have made their decisions. They're gonna expand their fleet on this. There will be of course, the individual call lab and others that will test technology, but that's the usual business. If they are not testing one technology, they're testing the other. We don't see that as a big dynamic change. I'm not seeing any freezing of the market at this point. Could that happen if something big... Who knows? That's also why we are not, we are not going out and talk about instruments in our roadmap definition, because we don't wanna freeze the market. Excuse me, is the 35B flow cell that you announced at AGBT, have you priced that yet? The. Yeah ...flow cell? No, we have not priced that yet. We will, as you have seen, we will talk about our roadmaps, and we have beyond those flow cells also, if we need to. We're not gonna price it before we are ready to launch it. As we did with the Constellation, now TruPath, we talked about that over the last nine to twelve months, we priced it when we were ready to launch it. We don't see any value in coming out too early with pricing. I don't think that benefits anyone. Kind of Q70, when is that available and what kind of uptake do you think that could be? Is there. Yeah. What's the financial impact from that? Right now we went out and saying, look, over the next 18 months, there's a lot of cool stuff coming out, including the Q70. We did not put a specific timeline on it, and don't take that means that everything is coming out in June 2027 or something like that. It means that over the next 18 months, things will come out. We think it's gonna be as everything, nothing is, you know, of these library preps, it's not a pop, meaning that it's not going from 0 to, you know, huge growth from 1 day to the other, especially the technology that addresses clinical application. It takes time, you know. The clinical customer wants to get access to it, build it into their applications, get the clinical validation on it, and so on and so forth. It will take a little bit of time to get growth, but it's something that can really change how you think about MRD going forward, and therefore we think it will be very attractive for many of our customers. Got it. Maybe just shifting over to some of the new products. You mentioned Protein Prep. Yeah. You and I were just discussing, you know, spatial and single-cell. Just on the Protein Prep side just kind of of the three. Yeah ... it feels like that one maybe is the biggest. You know, how do we think about... I think you've kind of lumped all three together and... Yeah ... an aggregate impact. How do we think about maybe the opportunity for Protein Prep now that you've enabled it on sequencing? Well, it certainly is the biggest now because we acquired SomaLogic, thereby in itself it comes with already a revenue base. Mm-hmm. That's a starting point that is different from the ones that comes organically. Yeah from within. We do think protein and using DNA sequencing for looking at proteins also is gonna be a big opportunity. We see a lot of interest, especially in pharma right now. For many studies where you wanna look at biology, you wanna look at different layers of biology. The opportunity for us is to continue to expand from now 9,500 proteins we can address to up to the whole proteome, which is around 20,000 proteins, no other technologies will be able to do that. Secondly, the workflow on the cost of running the experiments, as I told before, many of the counting the library prep is much more expensive than sequencing. So us driving down the cost of end-to-end solutions here, I think can open up for many, I mean, let's just say again, that is, that could really open up for many different applications. That's some of the things we wanna work on. We also see for, I think some early indication a few weeks ago is that when you look into early access of cancers, is that looking at one dimension might not be enough. You might have to look at both the genome, the methylome and maybe also the proteome at the same time to really get that enriched information. We see opportunities also for going smaller panels here and finally for the proteomics, combining that with spatial. Right now we look at the transcriptome. Eventually, we'll also look at the Proteome, and the Aptamer technology is very well suited for that. I'm very excited about the proteome and now, Illumina, together with our new team in Boulder, the former SomaLogic team, are super excited what we can do there. I mentioned also at the conference, I think we were a little bit overwhelmed with the interest there were in spatial and now where we are opening up that you can look at the tissue full on the slide, and also with the resolution we have and also that we will not go out there and come out with a 10% cheaper. We're gonna change the end-to-end cost of using these experiments. We talked at the conference around at least a 4x cheaper from an insight perspective, and I think we can do even better than that also going forward. We wanna really open up to these markets where we don't do one, just one tissue and two tissue, but you can look at hundreds, if not thousands of tissue. That's where science really steps in. That's where we need to bring this and we're gonna do this as we did with sequencing. We're gonna do that also for spatial and for proteomics. Have you sized like of the Illumina install base, how many you think could adopt Protein Prep? Like have you done any color on that? Yeah. I mean, Yeah. Not at this. I mean, we still think the workflow is a little too complicated- Mm-hmm ... to really open up for the huge opportunities. We will be working on that. We think that, especially for the bigger experiments, that's where proteomics will come in beginning, where you have when you run a lot of samples where the cost of building in automation and so on, will take care of that. Over time we wanna bring that in. It's gonna be a very little, a much smaller capital equipment, investment to get into Proteomics also. Will you break that out when you report or how? Like or just be like in a another line, like the Protein Prep, will it just fold into sequencing or? It's fold into library prep right now. Okay but we are still considering how we're gonna make sure that all of you understands how great this is gonna go. Got it. Maybe just a question on the spatial. 4 times cheaper. Is the idea there that if you're doing a lot more samples when we do like a per sample, it would be cheaper? Do you think actually the flow cell, instead of selling a $7,000 panel that, you know, 10x Genomics sells or a $4,000 panel, it would be 40% cheaper than that? Yeah. or 4 times cheaper than that? Yeah, we don't like for spatial, we think we don't like to talk about the cost of sequencing, right? We'd like to talk about the cost of insight. Mm-hmm. Because that's how our customers are thinking about it. What are they looking at? Then start to have a conversation if you look at what is the cost, if you look at single cell, what's the cost of per cell insights? What's the cost in Proteomics is that per protein? Is that per sample insight? Mm-hmm. The same for spatial. Is that per square millimeter or? Mm-hmm ... or is that per square cell or? Right, right. ... individual cell? I think that's a conversation we wanna have with customers where we are aligning our pricing model with the insight they're trying to achieve in their experiments. Mm-hmm. That's how we think about pricing in, for those applications. We need to own and have control over the whole end-to-end solution, workflow in order to have that conversation. Very important, we will still keep our ecosystem open, so everyone that has a single-cell or proteomics assay and so on, we will of course, make sure that that works on our ecosystem. We wanna make sure that our customers have freedom to choose, which, panel, which library prep they wanna choose. We wanna, of course, come out with a very, very competitive, end-to-end solution from Illumina also. It sounds like spatial maybe is a bigger opportunity than single-cell for you, or you wouldn't say that? I think the way we think about it right now is that from single-cell, especially the high volume applications, the millions of cells is something we excited about. I think that is something, again, we wanna drive that because that drives deep insight. Mm-hmm that changes biology. That's the direction we wanna go. That's the same with spatial, the big experiments with a lot of insights and obviously a lot of sequencing. Mm-hmm. We like those applications. Maybe just switching gears to your, you know, offering software as a service to customers, help them deal. You know, you've kind of talked about this goal, right? SaaS model. Deal with the heavy computational load when interpreting data. Yeah. You, you know, have highlighted BioInsight, you know, can easily prep and structure complex data-. Yeah ... straight into a foundation model. Just kind of can you speak a little about this BioInsight and? Yeah you know, will we hear more about this? Kind of how important is this for Illumina? Yeah, I think, if you think about it, over the last years we all talked about AI, and we do that also internally for how we can optimize our company with AI. Where we sit in a very unique space is that, where AI and large language model have changed, of course, our understanding of AI, but also what these models can be used for. It's only became possible because the amount of data that the internet today have that you can train those models on. There is a scaling law, the more data, the bigger models, the better insights you get. The same is likely gonna be the case for biology. The challenge we have right now is that there's no internet of biology. There's no big data sets out there that you can train models on. The data that's out there is very dispersed. We don't have the right standardization. We don't know exactly how those experiments was done, and thereby it's difficult to have high quality input into your models. BioInsight is sit and is put in the world to create those data set and create that so we can start to really build AI foundation model that can start to predict biology. Illumina is extremely well-positioned. We have, of course, the scale, we have the technology to do that because you need to have billions of insights to do so. If you look at Perturb-seq, which we're very excited about, you need first and foremost to being able to sequence billions of cells. You need to be able to have the compute power, which we have through DRAGEN. You need to have AI capabilities, which we have in the company. Importantly, you need to have a CRISPR library that is optimized across the whole genome, so you can knock in and knock out genomes across the whole genome and the whole pathway. When you have that combination, you can start to build these data sets that we're doing today. Pharma has been very interested to get access to these data set and actually pay for them. We will create those data set. We will sell it to pharma, in a subscription base where we're making money and creating the data set. At the same time we're accumulating that data that we're starting to help building those foundational models for the individuals pharma company to help in that drug discovery, but eventually also build up deep insight that can really change the understanding of biology. We will make sure that that's all available for Illumina customers. If you're part of our ecosystem as a researcher, you will get access to this data, you will get access to this model, you'll be able to build your own model. If you are in a clinical customers, that data is giving you better interpretation than anyone else can provide. You can imagine a future where you're not only buying sequencing from Illumina, you're buying insight. This is gonna change and I think we are very well-positioned to take, being a very substantial player. That's why we put BioInsight in place and so far, so good. Okay. We have a couple of minutes left. I thought it'd be worthwhile just to come back to Roche, if you don't mind, just to close it out since- I'm sure. these are most of the questions we get. What do we, you know, We're sitting here today, you know, they, you know, they had this launch and there's some missing pieces on them, variety of things. I guess a couple of questions. First, in the whole genome market, you sized the county market less than $100 million. Like how big is whole genome for you today, maybe in research, and do you think that product looks viable from the specs you see there? Just how do you think you head to head with them there? Yeah. We feel really good about, especially also with TruPath, the Constellation methodology, where, you know, you are not only getting short read information out, but you're getting all the structural long read out. I think actually TruPath is gonna change the way you think about a genome. If you look at whole genome applications, why wouldn't you like to get that? No other technology out there can actually provide the insight that TruPath can, and also with the simplicity of the workflow. If you have a NovaSeq X already, you can get going immediately. We actually think that we're very well-positioned for in the genome space, both for research in the beginning, but also for clinical applications. We feel really good about where we are on that. If you want to still do a short read genome, we feel good we can address that market also well. I mean, remember, it's not only the price of sequencing it is really the insight. The whole pipelines, the DRAGEN pipeline, we have the tertiary analysis platform we have with the Emedgene for rare diseases, but also the ICI for oncology application is also what's translating all that, the genome, quote unquote, into insight. Mm-hmm. Customers wants to get that. They're not just excited about the prices of the genome. Okay. Then maybe quick one. Ultima, like I know Ultima Element find boxes, just haven't really had the traction maybe people expected, although they have had some success. Anything new from them that you saw there in terms of, you know, price points or worries? No, I think that everybody's putting their best foot forward at. I was talking to all of them. It's a good collegial environment we are in. Right. Of course, we fight every day in the streets. Right ... which we should. We feel like they're trying to do what they need to do, continue to feel that we have a very strong position in the market and we'll continue to have that. Maybe just wrapping it up then, obviously we covered a lot of ground. We kinda set, you know, the message at the beginning. Maybe just in closing, what message do you wanna leave with investors then? I think I wanna leave you with the message that Illumina will be able to grow very strongly going forward, at least high single digit growth, even in a very competitive space. I wanna leave you with that, teams are competing. Illumina has the best team, both in our R&D, but more probably also very importantly in our commercial organization. I think some of you got exposure to some of our people here at AGBT. I feel I'm very proud of being a part of a company that is changing the world as we are and will change healthcare going forward, and we're committed to that. Terrific. Well, thanks, Jacob, for being here. Thank you, Dan. Appreciate you coming to the conference.