Hey guys, thanks for joining us. My name is Tejas Savant, and I'm the Life Science Tools and Diagnostics Analyst here at Morgan Stanley. It's my pleasure to host Olink this morning, and we have Jon and Oskar representing the company. Before we kick things off, just need to read an important disclosure. Please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, do reach out to your sales rep. With that, Jon, maybe just to set the stage a little bit, can you just talk about what you view as the key accomplishments over the last six to 12 months for Olink, and what are some of the key opportunities and goals as you think about 2023? Sure thing. First of all, thanks for hosting us here at Tech. It's great to be here. Yeah, no, if we look at our business from a broader perspective, I mean, super excited by the development we did and transfer our technology onto NGS. 'Cause, you know, we scaled to now 3,000 proteins in single-plex data quality with very high throughput and great performance. Obviously how that enables the research community now to do proteomics to scale where it's never been before is an amazing accomplishment and achievement. Super excited by what our teams are doing there. Then that product has been met so extremely, you know, great reception from the market. We launched it a couple of years back, and now representing roughly 70% of the business, I think, yeah, speaks for itself in terms of developing products that the market truly is looking for. We are also closing in very soon here on 1,000 publications. Keep in mind, we founded the company in 2016, so I think it's quite amazing to see not only the amount, but the type of science that is being done and hopefully how this will really contribute to how modern drugs are developed and modern healthcare executed. Yeah. Lots of cool stuff happening on the Midplex side as well with Signature launch next year. These were maybe some first smaller steps for us into the Midplex market. Next year will be a very cool and exciting Midplex market. If we look ahead into next year. We've been very clear, and we very clearly hear from our customers in the market that continue to scale the number of assays. The vertical integration we did, so we bought an antibody generation company a few years back in Agrisera, northern Sweden. Been an amazing acquisition for us and truly changed how we much more aggressively, purposefully can build out the library and, like, in the direction of the targets that we want. That has actually been more successful, that acquisition integration that we had hoped. Yeah, providing lots of great new interesting exciting assays that we'll put on our platform. We also want to further increase throughput. Continue to polish the workflows in the assets. Explore is obviously the most important part in the company. Will be a very important and exciting 2023. As we also, as I mentioned, talking about Midplex. I think on the Midplex side, will 2023 also be a very, very important year. As we talked about, actually towards the end of this year, we'll be launching a totally new product. Which has been there in proteomics before. When we talk about Highplex, for those that are maybe not super familiar, then you look at thousands of proteins across thousands of samples simultaneously. In the Midplex space, it's maybe, you know, 50-100 proteins and 50-100 samples-ish. Roughly 50% of that Midplex market is spent on inflammation markers. Of course, super important, biology. What we can bring to the table in the Midplex market, as we have done on the Highplex market with our truly, you know, novel and disruptive technologies to increase multiplexing. With higher specificity, sensitivity across a very broad dynamic range and minimal sample consumption, right? The Olink Flex product will be a library of 200 mostly inflammatory markers. One aspect that we haven't spoke that much about, I mean, proteomics is fairly new on Wall Street. It's fairly complicated science to sort of maneuver. One dimension that we haven't spoken that much about is absolute quantification. Right. When we do the Highplex work, all projects, basically, you always have, like, a case-control. It could be a healthy versus a disease or responder versus non-responder, and then you compare relative concentrations of proteins. As you hone in towards more targeted questions, and closer to the clinic, you want to introduce absolute quantification. Right. This is a dimension of our technology, which is very unique as well, that you can transition from relative to absolute quantification. In that library of 200 assays, we have now calibrators for every protein. That means the antigen. You will run what's called a standard curve, and then you will get the absolute quantitative measurement of every protein. 200 proteins in a bucket, and you can randomly pick and choose 200 of those into a bucket of 20 assays. That you will get as a kitted version for a signature. This would actually open up the Midplex space in a way you can't do today, which we hope and think will be a very important driver for the signature platform. Our target portfolio. We will also work to expand a few other products in that Midplex space to really complement the portfolio. Of course, continuous work is being done through high to mid into low- Which we call the Focus offering. Definitely we need to ramp up capacity there because of the demands that we're seeing from the market. Yeah, across the whole sort of breadth of what we do, I think 2023 will be one of our most exciting years to date. Got it. A lot to unpack there. You know, starting with you know, your deCODE paper, right? The preprint that came out in bioRxiv that demonstrated higher pQTLs for Olink versus you know, SomaScan, different data sets, but nonetheless, it was pretty exciting, compelling data. Has that started to influence customer decision-making in terms of choice of platform in your view? Yeah. I actually think it has. It's, you know, it's extremely sizable experiment. You know, the scale of that is gonna be hard to replicate, you know, to have basically 50,000 samples. To compare. Yeah, to assess specificity in protein research is very complex. Right. Here you can marry genomics with proteomics to do just that. It's a very, very strong data set and clearly demonstrates like, you know, the superior specificity of our technology. It's quite intuitive, I think, from the start. Obviously, you know, three things need to happen for us to just detect one protein, like both antibodies need to bind and the DNA barcode to be created. This is how our technology works. That should drive high specificity. In this experiment, it was clearly, you know, evident as well. Obviously, specificity is, you know, crucial. Right. If you speak in genomics terms, like if you would, you know, get base pair wrongs, I mean, what sort of conclusions would you derive from the project? Here, similar in proteomics, it's critical. Yes, it's definitely been, you know, important. Driver in discussions for our technology. Got it. And on that point on specificity, Jon, how do you think about this Telomere Diagnostics tuck-in that SomaLogic recently did? Is that something which you view as perhaps like opening up the possibility that there could be significant improvement for them? Or do you feel that, you know, the Proximity Extension Assay approach that you guys take will always, you know, have a clear advantage? I tend to focus on Olink and PEA and, you know, what we do to build new cool or better improved products and how we can make the best use of our amazing disruptive technology. That's my focus, and I think your question is better off to someone in SomaLogic. All right. Fair enough. What are your views on, you know, the importance of characterizing, you know, PTMs, isoforms, et cetera, that contribute to, you know, the variations in protein structure? You know, there's really no approach on the market today that can do justice to all of these. In your view, is that a rate-limiting step in terms of what is the near-term proteomics opportunity that's accessible to all of you guys? First of all, I think it's super important science and biology. Which has to be done. When we talk to our customers and how would you rank? Your priorities, we still, if we may call it sort of the native proteins in circulation, to just try to piece together, you know, the proteins that are active in certain disease areas or use cases and so forth, is like the first step, and then they all come back to this is the highest priority. Would we like to look at PTMs as well? Absolutely. Keep in mind, I mean, here you have to be a bit thoughtful. I mean, one of the challenges is like stability. I'm sure, I mean, if you can think about 10, 15 PTMs, like it will be stable. In serum or plasma. Priority-wise, you know, functional native proteins is the, our first priority. Do we want to add, and should we look at, post-translationally modified proteins as well? Yes, I think so. It's not our top priority, but yeah, our second. Got it. Fair enough. Turning to the services side of the business, Jon. Clearly, I mean, the U.K. Biobank was, you know, a marquee sort of project for you. You've got, I think, you know, you've been selected to run samples at FinnGen and Sequanta as well. Over what timeframe, in your mind, do these projects play out, and how should we think about the financial implications? Yeah. I mean, if we take two steps back and look at mega trends in science today, I would really call out proteomics to be a mega trend. Just going back to the central dogma in biology, we spend quite a lot of time on DNA, RNA, but we haven't looked at protein. As I look at all of these cohorts around the world, like what data points they have top of mind to generate today, is proteins. That is what we're seeing. On top of that, also seeing, you know, how granting bodies that write grants today actually require multi-omics capabilities, i.e., like, you really need to be able to look at proteins as well. A really strong trend in favor of proteomics, which makes, of course, normal sense, right? That we haven't been able to study proteins in the scale and quality we can do today. Obviously, that they are so important for real-time human biology. All these various cohorts, and importantly across different ethnicities.... and regions in the world is of supreme importance to science and to Olink. We are definitely in discussions with many of those. As you know, these are sizable projects. Our experience is that they are done in stages that you start with, you know, a pilot, and you generate data, scientific rationales to get the next level of funding and so forth. Do we think that over the course of the next, you know, five to 10 years, that's gonna be a lot of population proteomics studies using PEA? Absolutely. Got it. In terms of these large proteomic studies, are they sort of comparable to GWAS in the sense that, you know, there's that initial ramp, and then there's a break for the researchers to go and, like, validate all the different targets? Yeah. I mean, definitely, what the workflows and processes happen. I mean, first you start with the discovery, and in proteomics, you wanna cast that sort of broad net, right? If you have a particular question in mind, say that responder versus non-responder, trying to usually hone in on a few pathways. Proteins organizing pathways. You want to be much more targeted and study those and verify across other cohorts, move into prospective validation and not just only retrospective work. This is, as you know, Tejas, like, exactly how we design the product portfolio from Explore to Target to Focus. To really facilitate how science is executed. Got it. Any color you can provide on the traction you're seeing from, you know, your contract lab service providers? I mean, I think you've started working with CellCarta, with Fulgent, with a few of these now. What's been the appetite that they're seeing from their end customers? Yeah. This is a great data point, actually. You know, I've been here since day one, and as we see now when CROs come knocking on our door. Yeah. Why do they do that? Well, their customers are knocking on their door, and say, "You know, we want protein data, and we want Olink data." I see that as another data point in that megatrend of you know, we want to add protein data to the samples that we collect or have collected. Great. In addition to that, with our externalization strategy, to you know, use the CROs, which also have you know, huge networks that we don't have. Right. Can tap into those. Yeah, it's win-win-win, I think. Got it. You know, turning to the kit side of the business, you know, Explore externalizations have been a little bit below sort of what the street was modeling for you this year, but you've pointed to the fact that these can be lumpy. I think the other interesting thing you mentioned is the point about sample capacity and trying not to sort of flood the market with too much capacity. Can you just walk us through that? I have a couple of follow-ups on that as well. Yes, we actually believe that we're ahead, but I'll get you there. When we did our model and, you know, we hadn't even launched Explore as a product. Our assumption when we went into the NGS market was that, you know, one customer, one NovaSeq or NextSeq. We sort of made, you know, assumptions on number of customers and so forth. But what we did wrong is that these customers have fleets of NovaSeq 6000. Actually, if you do the math. It's very difficult for us, and we can't promise, that's why we don't want to take on ourselves to keep track of the number of NovaSeq 6000 being used because they buy a few. How could we sort of keep track of that? We just don't- Right ....feel that we can. If we would do the math today on the 29 that we reported. Right times the NovaSeq 6000 are being used, that outcome will be higher than the model that You know, we had in the start. We're actually capacity-wise- Ahead of our, call it, IPO plan. You know, strategically and competitively, it's super important for us, and we are very excited as we look to the second half of this year and continue to ramp. It's a super important step on our strategic path. Got it. From a financial standpoint for you guys, do the economics differ at all in terms of a NovaSeq 6000 customer running kits versus one of these CRO customers, you know, doing, you know, offering your platform essentially to their end users? Yeah. I mean, for us, I mean, as a fee-for-service product, if you have one-to-one sort of compariso, it would be higher revenue, for a fee for service versus a kit, right? that's Talso the beauty of it and what's in for the customer to be able- Right ...to do more work- Right ... for the same budget. That's a good comment as well, Tejas. That's also a balancing act for us, right? If you would, you know, stop doing service tomorrow. We would see a cliff. We're trying to balance that among other things like capacity- Got it. ...market demand, and all of these dimensions, hopefully in a quite thoughtful, successful manner. Got it. Quick one for Oskar here. What percent of your kit revenue today, Oskar, do you think comes from customers who, you know, you've said some of them are at over $1 million in annual throughput? I mean, I'm just trying to get a sense of how, I guess, diversified is the use over here in terms of your kit revenue versus is it just like three or four customers are generating like, you know, 80% of the sales? No, I mean, clearly there are sort of some customers in the mix, and I think we've been quite clear that sort of, you know, the bell curve in that sort of 700 pull-through number and those sort of 29 installation is quite broad. There's clearly sort of, you know, some customers in there that we sort of view as super users that are sort of, you know, multi-million- Right ....dollar accounts. then sort of we see activity across all those installations. I think to the point that Jon made earlier about having, you know, quality installations and sort of, you know, people using sort of the NovaSeq actively for proteomics experiments. It's not sort of that, you know, most of them are idle, and there are some super users. I see. Got it. You've talked about sort of growing your multiplexing capabilities and target library as well. Jon, I mean, how do you see that trending over time? What is the theoretical maximum? Is there a point in your mind where there's sort of diminishing returns and you'd rather be investing rather than in plex into, I don't know, perhaps like PTMs or one of those other things you mentioned? Yeah. I mean, we regard ourselves as the market leaders. As a market leader, I mean, comes with great responsibility but also you really need to keep your sense of urgency, I think, to stay ahead. Now people are chasing you, and you need to now be even more focused on what you do. We need to really, I mean, we are a very innovative company, and we need to continue to innovate, and there are quite a few molecular tricks we still have up our sleeve with this amazing PEA technology. To sort of break down your question into pieces, I mean, first of all, we believe that the holy grail here is in a liquid biopsy or serum and plasma, i.e., circulating biomarkers. The million-dollar question there is, right, so how many proteins are there in circulation that make sense to measure? The honest answer is no one knows, right? People are saying seven, eight, nine, whatever. Whatever it is, that's our strategic target that we very aggressively, you know, are building towards. On top of that comes the PTMs. Other potential, you know, isoforms or whatnot that will be important as well. Being able to do that in, you know, the highest quality with, you know, very simple workflows in ultra-high throughput in a very affordable way. Here, I still think we have tons of work to do- Right ... to continue to lead and innovate and take proteomics into really the next era. So, yes, quite challenging scientific questions, but we are on top of them. Yeah, no, we have very good strategies in place, I think, to address basically everything I just talked about. Got it. You know, one of the points you made in your opening comments, Jon, was just, you know, the, your unique ability to essentially move with your customers from the high-plex setting to the low-plex setting and keep them captive to your platform. Now, as you sort of look at 2023, are there any incentive structures you need to look at to make sure that, you know, these guys don't go do that targeted work with somebody else after doing the high-plex work on Explore? Or is it just the fact that, you know, switching the platform is fraught with risk, and so it's highly unlikely to happen? No, I think you need to, in every category, like, be best in class. We are, you know, evaluated by the topmost scientists in this industry. You need to be, you know, top in class and deliver across all different dimensions. That's what we're focusing on, that in itself will lead and drive the discussion. Is it simpler to work with one company or platform and technology? Yes. I think it's an advantage. You know, we see that when people or new customers are, you know, evaluating various options. Looking at the capabilities. We have very purposefully designed the product portfolio the way we did because we know that they work in that, and they see that and appreciate that. It's a very important part, and it's actually also a growth driver for us because they might be most excited by Explore in the beginning, but then they realize, wow, you know, now I wanna dive into this. Right. Let's get a Signature. Vice versa, I wanna, you know, start off in the Midplex space, but then I'm getting really excited about this and wanna scale. Right. We see, you know, both things work sort of- Got it. ...in our favor there. Got it. Oskar, one for you. Can you just talk about, you know, the expected seasonality in the back half of the year? Is 4Q, you know, trending down by a couple of points versus 2021 still the right sort of framework to use? Have there been sort of any changes versus when you last guided? No. I think sort of, I mean, the mindset now is very much sort of similar to when we gave the guidance. I think sort of, you know, there will be slightly less seasonality this year compared to prior year. I think as we've discussed sort of many times, you know, it will take time to gradually sort of reduce that.... to sort of, you know, to even lower numbers. Clearly sort of, you know, monitoring sort of, you know, how sort of, you know, the strength of the dollar and sort of, you know, FX and how that will sort of, you know, develop over the- Right ...the rest of the year On the FX point, actually, Oskar, I mean, you know, obviously, you know, if you're exposed to Europe, everyone's seen sort of, you know, the parity sort of exchange rate now. Beyond just the translation aspect, are you seeing customer demand sort of like start to crack a little bit in Europe? Because we've heard that from some of the smaller companies in the life sciences, whether people are more skeptical of new purchases. No, I think sort of to date, and sort of by the time we gave sort of our guidance, I mean, we haven't seen any sort of letdown or change sort of in customer behavior on our end. You know, clearly sort of, you know, Europe is sort of, I mean, it's a big place and it's different, you know, depending on where you do business in Europe, it might be different. I think sort of where we operate, I think we see sort of continued sort of end market strength and a lot of interest in proteomics. Got it. You know, one of the questions we got recently was, you know, marquee customers slowing down contracting was a theme that came up on, that SomaLogic pointed to as one of the drivers of weakness, right? Now the two questions there, I mean, one is, are you seeing any opportunities for opportunistic sort of share gain, you know, based upon some of the, you know, shifts in some of the marquee customers? And second, are you seeing any sort of slowing down and contracting at all as customers like decide whether to pull the trigger or say, "Okay, we'll hold off till 2023 to do so? Yeah. I think if we take the context of this whole fireside chat and where you started on the science and technical differences between platforms, I think that's clearly out there, and it's been great benefit to our technology. That's definitely helped us. In terms of contracting, yeah, I agree with Oskar. I think what we see, if proteomics is a mega trend and proteins in circulation are in the sweet spot of that, and we are the leading technology and company, maybe it's like a fairly highly sort of prioritized research experiment or that you don't want to offset. I mean, knock on wood, we haven't seen that to date. We will obviously monitor closely. Got it. Oskar, can you walk us through how you're thinking about gross margin progression? I mean, there's a few moving pieces. You've got kit mix, you know, increasing. You've got the rolling off of the U.K. Biobank. And obviously there's, you know, inflation. Just walk us through the different moving pieces on the GM line. I think sort of as we sort of seen sort of during the start of this year, clearly sort of service margin and total gross margin being depressed by the U.K. Biobank. Now that that's been delivered, we sort of expect, you know, service margin to revert closer to 65%, for the remainder of the year. And then also to say sort of, you know, the continued sort of advancement of our kit business to sort of push the blended gross margin higher as we sort of generate, you know, close to 90% of kitted business. I think sort of moving back to sort of 70%, sort of where we've been historically. Got it. Fair enough. One on M&A. I mean, would you be willing to take on more debt for the right transaction? And what verticals would be of interest to you? Specifically the questions we get is, you know, could we see, you know, Olink make a play for a peptide sequencing company or perhaps like Agrisera scale more on the antibody side of things? How do you think about that aspect? Yeah. It's a great timing of a question. We basically just sort of wrapped up a retake on a five-year strategic plan and very carefully, you know, trying to look into and address your question and see what this space is gonna look like five years from now and where we want to be. I still think that five years from now, you know, this circulating proteins is gonna be the most important part. So much of what we talked about is definitely on the strategic roadmap. However, as you look into the future, I honestly think that healthcare will be driven by multi-omics signatures. I think proteins are gonna be the most important driver in those algorithms. They're being closest to our phenotype, very dynamic. Yeah, a very heavy weight to protein. Hence, from discovery into clinical decision-making with subset of proteins in absolute quantification, you know, the strategic value and importance of the library. If you can look at all proteins in circulation, or close to, and if you sit them on that and can drive them from polyclonals to monoclonals and into the clinic, it's gonna be very strategically valuable. If anything that's on our agenda- Got it. ...that is not only the antibody, it's also the antigen- Right. ...because of the calibrators that are needed. Yeah, that's an area where we are mostly excited, I think. Got it. This was a great overview. Thanks so much for doing this, guys. We appreciate it. Great. Thanks so much for hosting us. Appreciate it. Yeah, of course.