Good morning, and thanks for joining us to have a conversation with Jeff Hawkins, CEO of Quantum-Si. Quantum-Si commercializes Platinum, a single-molecule protein sequencing device, and also provides Platinum protein analysis software. The company has been developing a second-generation sequencer with a new architecture called Proteus. To discuss the company's strategy for continued commercial success and also long-term growth in 2025 and beyond, I welcome Jeff to this discussion. Jeff, glad to see you here, and thank you for accepting our invitation and also talking to our audience this morning. Just to get started, Jeff, could you provide us a brief overview of what Quantum-Si is and what the business strategy is here? Yeah, sure. Thanks for having us, RK. As you mentioned, we're the first company, and to this day, sort of the only company that's been able to commercialize what's called next-generation protein sequencing. That means the ability to look at proteins at the individual amino acid level. If you're looking for sort of an analogy, think of DNA sequencing and being able to read the four bases of DNA, in this case, reading a 20-letter alphabet. We brought to market the Platinum machine and Platinum Pro as sort of a first-generation technology. I'm sure we'll get into sort of how it's being used and what the role has been of that tech. In November of last year, we announced the Proteus architecture that really puts us at the scale we believe is going to be necessary to really penetrate the commercial opportunity. I'm sure we'll have a chance to get into that today. As you said, Proteus is the next major catalyst, the next major event for you folks. What's the, and where is the development status at this point? Also, when should investors start hearing additional updates on the progress of Proteus itself? Sure. I think we should start with, you know, over the last three years, we've had, I think, a very good track record as a company of setting out milestones on the technology front, whether that be new sequencing kits, library preparation kits, software tools, and setting dates and going and hitting those dates. It sounds simple. It sounds like, obviously, that's what you're supposed to do. I think in this space with a tech, a novel tech platform like this, it's, you know, historically been very difficult to do that. As I said, we rolled out the Proteus platform sort of architecture last year in November. The big goal to hit this year, which we feel very good about, is the ability to do sequencing on a prototype of that platform before the end of the year. Throughout the year, we've been giving updates on our progress, everything from sort of developing some of the raw components, the dyes, and things needed for the new tech. The consumable fabrication and surface chemistry capabilities are already in place and supporting our ongoing development activities. We'll give more updates, you know, on each call. We have an analyst and investor day coming up in November where we expect to give, you know, a more wholesome update on the platform, as well as sort of how we're thinking about next year and its progression towards launch. Again, with the big milestone being sequencing on the prototype by the end of the year, which sets us up for that launch in the second half of next year, you know, feel very good about being able to hit that milestone. Going backwards a little bit, you know, Platinum was the first device that was launched with Quantum-Si, which was in 2022, which was over three years ago now. What have you learned about this market itself? You know, over the course of the three years, you know, have you changed your thoughts about the market, you know, from then to now? Yeah, maybe if we start at the macro level, I think I've been in the field for 25 years, and it's always been a belief, I think, of folks in the industry that proteomics would be bigger than genomics at some point. I think we've all been waiting for the moment or the why or the catalyst of that. I do think what's occurred over the last three years is you're now starting to see those large-scale population-level studies getting executed. Some of them have just started. I think those will be the catalyst of a lot of data being generated that will drive new biomarkers, therapeutic targets, diagnostic opportunities. I do think some of those catalyst events have happened more broadly for the market, which is good. I think for us, when I think about what we've learned, when you're getting a platform like this ready for market, you do all these classic marketing techniques, voice of customer, market research. I think proteomics analysis is so much more complex than DNA. There's a strong tie into how the sample is prepped to the range of biological samples. I think we've learned a lot about that complexity, that sort of the compatibility with the upfront methods. That's why you've seen us evolving our library prep methods. I think sometimes you just have to get into the real world to learn these things and then sort of react to them and put the pipeline in place on the R&D side to address them. Talking about the evolution, you know, when we think about Platinum, we certainly can think of it as a very successful product because it actually opened up protein sequencing, you know, at a cost much lower than traditionally what we have to do, especially going up to get a mass spec to do this, right? At the same time, you know, once although you got the technology validation, do you also think that it has been commercially successful or has it actually helped you kind of figure out the market and kind of set the market for Proteus and whatever additional next-generation devices that you could come to, could bring to the market? Yeah, maybe a mix of the two. I think at some point somebody was going to launch a tech that had this level of resolution and was going to have to do the market development. On one hand, we're having to do the lift by ourselves. We're the only company in the space, which tends to make the lift bigger and take longer. The flip side is, I think it really has highlighted to us just really what that barrier to entry is here, meaning how hard is it to actually get a technology built reliable into market. There's definitely an aspect of this is market development and technology validation. What do you do when you have this level of resolution and capability? The flip side is we're also, we've been able to build in a very cost-effective way capabilities we need for Proteus and for the future. As an example, operationally, when you're launching your first platform, you typically really defer the investments in your supply chains and your operational capacity and capability until you are in the market. We're in the market. We've been able to make those investments. That's now in place. We can leverage that as we go into the Proteus launch. Commercially, we have a mix of direct and distribution. We've set up 23 partners outside of the U.S. covering a large number of countries. We have a U.S.-based distribution partner as well. We've been able to get a pretty healthy size footprint and a lot of people out talking and educating the market without the OpEx carry of a huge direct sales force. I think that positions us well. We're not coming into Proteus sort of with no brand recognition, no one knowing what the tech is about. We have these sort of lighthouse accounts being established and able to talk about the tech in every major region. I think those things help, regardless of the exact top line contribution today, they definitely are things that will be in place when we get to Proteus. In terms of the commercialization, there's another piece of the market which has been kind of growing in a weird way for you folks, right? Because when you started, you were thinking about academic centers as a place where you could grow the business and out into the biopharma market. Fortunately or unfortunately, the government business kind of had some tremors this year. How were you thinking about that, especially going into Proteus and commercialization of Proteus? Sure. Yeah, I think you said it right. As is often with a new tech like this, you say, hey, let's start with the KOLs. Let's start with the people who will sort of work with you and no matter how, you know, perfect or not your technology is. We did do that. Our first several customers were like that. To have it to do over again, we went into biopharma last year and found some really good traction doing barcoding, which really helped them with candidate selection and screening. It was something we hadn't thought of when we were coming to market. It's something we learned as we got into the market. It's been a nice opportunity for us. We continue to execute on it, albeit that world has a much slower sales cycle. We have not seen the capital constraints that we've seen in the academic space. I think, though, two other things we've seen, obviously the international component is something that has been healthy for us as we've gone into that space, been in that world for a little over a year now. We actually, despite the academic side being impacted by NIH, the government labs in the defense space who are thinking about the future, sort of infrastructure for bio threats and these types of things has been a very good customer for us in terms of being able to put machines in there and have consumable pull-through. We've been doing what you do when one market segment gets slowed down, you go after all the other ones that are available to you. I think each time learning more about applications and just more and more educated when we get to Proteus. Regarding the library preparation kits and the sequencing kits, as the next version of these kits come through, do these kits, the older versions, still work in Proteus or do you have to kind of start generating a new set of OEM products for them? Yeah, it's a good question. A key theme from our investor day in 2024 when we rolled this out was when we were thinking about the next generation architecture, we really spent a lot of time thinking about what was the hardest thing we solved. There are a lot of hard things solved that I don't want to sort of undercall. You can just sort of see it in all the IP we have of all the inventions we had to make just to get Platinum to the market. One of the hardest things I think we all agreed on internally with the R&D leadership was the surface chemistry of the consumable for single molecule loading, the biochemistry, the recognizers for the amino acids, the enzymes. These were the areas that were extraordinarily difficult. It's been the source of a lot of delays for other people attempting to solve the same problem. When we thought about Proteus, we thought about how do we get the output and the capabilities we want and not impact those things. The answer to your question is, with the exception of maybe a different fluorescent label, of which we've already talked about having plenty of those for Proteus, this chemistry moves straight over into the new architecture. We're able to do that on the consumable. The hardware is compatible with it. A lot of our calling algorithms will be compatible with Proteus. We sought to take more of an engineering and integration risk and really minimize the raw technology innovation risk by keeping that biochemistry, sort of that sequencing chemistry intact. I think that gives us the confidence in delivering this platform on time. In terms of the recognizers that you have been developing, do you have all the recognizers that you need at this point to read out all the 20 amino acids, or is that chemistry still developing? Yeah, we're still evolving. We don't read all of the 20 amino acids. We just launched a version four of our chemistry. Just to give you sort of a feel for the magnitude of improvement each time, our version three chemistry has been in the market for about a year. The new chemistry we launched is giving an 83% increase in sequencing output. It's a significant leap. There are still some amino acids we don't cover. The majority of those are very low in prevalence. However, the goal is to get to all 20, and we expect to provide more insight into that at our investor day. How do we see that progressing? Where do we think we'll be at with Proteus? When are you sort of quote unquote done in that regard? A good roadmap there that we're confident in, getting ultimately to the 20. Not only on the chemistry side, but also on the analysis side, you have been making some changes and improvements. Can you kind of describe a little bit about what sort of development has been happening on the analysis side of the software? Yeah, the data analysis, you know, I think we, I treat the sort of the tools, the algorithm science, sort of we treat them in two sort of buckets. One is the internal application of tools. What can we do to leverage data we have to inform development? I think the thing we've been sort of the most vocal about is these recognizers. Simply put, you're sort of evolving proteins to have a certain behavior to bind to a given amino acid. These are not things they do in nature. When you first get started, you have to just go in the lab and try lots of combinations. Now, with the advent of some of the new AI tools, one of the things we've been talking about, we have a partnership with NVIDIA. We've been able to recently take years' worth of data and train an algorithm on that proprietary data and then design new recognizers. The early data from that shows really significant leaps in each cycle in terms of its improvement over the prior cycle. There are those internal aspects when I think about algorithms. Then there's the external side. Again, going back to the Platinum original launch, we had analysis software to call amino acids, identify peptides, identify proteins, your foundational suite of capabilities. What we've done over the last few years and continue to do is, there have become specific applications customers want to do where maybe a slightly different approach to the analysis or new workflow to automate something. We do this pretty frequently. We store these tools in the cloud so customers have access to them as they come out. We tend to make improvements to these every time we improve the kit as well. I think the analysis side is going to be a continued evolution. At some point, we may think about even opening up aspects of our data that would allow others to develop tools, sort of akin to what happened in the DNA sequencing world. Not something we've done in a large way yet, but something we're certainly looking at as we think about ways to just keep enriching the tools that people can use to extract more and more insights out of the data that's being generated. You gave us an example of how once you started interacting with the biopharma, you know, the barcoding became important for them and you started making a different set of tools for that part of the business itself. Similar to that, how often do you see customers coming in and asking you for unique problems to be solved? Do you see your business kind of expanding that way in terms of generating new business areas? I don't know if that's the right word to use. Yeah, I would say it's really frequent. We built a specific team about 18 months ago or so. We call it application development. It sits in the company rather than in the field or in the commercial organization. We also have application scientists in the field that support customers. This team is at that intersection between the commercial team and R&D. The person we brought in to lead that actually came out of a big mass spec core lab. The whole reason for that team is customers get access to a new tech and they constantly want to ask you about this problem they've never solved before. Sometimes it's solvable today and sometimes it's not. What we're looking to do with that is really identify the things that are like barcoding, meaning it wasn't just one, you know, biopharma that said, "I want to do barcoding." It was one obviously the first day. Then we understood what they were trying to do and we could take that out to the market more broadly. In that case, it was an opportunity to make a specific kit to really optimize the upfront workflow in front of sequencing for that application. I think we hear a lot of similar stories, a lot of this in what's called post-translational modifications. Think of that as a very small change that happens to an amino acid, but that's often the thing that's biologically relevant. That becomes the diagnostic biomarker. That becomes the therapeutic target. The best example is probably right now Alzheimer's with Tau. It's not the protein Tau, it's a phosphorylated version, so a PTM of Tau that matters. We hear a lot about that and I think we see opportunities to try to bring out broader capability sets to address those. That's what we're really looking for over the one-offs, but we like information and data, so we talk to everybody and then we figure out how best to put them into chunks that can be applicable to a broader audience. Okay. Also, in terms of device utilization, obviously, there has been a steady flow of publications and presentations at various conferences. How did you see that helping not only on the commercial side of things, but also in the development side of things? Yeah, I mean, commercially, customer evangelism is sort of like the best version of sales at this early stage. Obviously, you can have great sales reps, and I think we do. You can do great marketing, but at the end of the day, a customer in a prestigious institute or in a biopharma, wherever they might be, talking about how they're using it helps somebody who's similar sort of know that I'm not the first to try this. There's always some people who are good at the first, but a lot of people are more comfortable being second or third or being part of a user group. We're going to continue to focus there. We've built out a small sort of scientific affairs team that focuses on this. We'll keep doing that. I don't see us ever stopping doing that. I think the flip side is you also learn a lot as those studies are evolving and the data is being generated that, of course, informs what we do. I think it was a big, this new kit we launched, one of the things we did was added an enzyme that cuts through the amino acid that's right before a proline. That was really driven by some of these interactions and customers telling us like, "Hey, I'm trying to see this change that's downstream of that proline." I think you learn these things and then you can feed them into the pipeline. Sometimes they translate into the product quicker than other times, but you definitely learn a lot when people are trying to do novel things to publish. I know you spoke a little bit about your upcoming investor day by the end of this year. Do you think we are going to see a Proteus number two come up? If I told you exactly what was going to be there, you wouldn't come. I'm not going to do that. I think last year's is a good example of what we try to do with these days. The point of these days isn't just to give a routine update. The point of these days is to give certainly updates on programs that we've actively talked about, but also give investors and analysts sort of a view of what do we think we're going to accomplish over the coming years. The other thing it does too, I think that's equally as important, is we try to get more members of the management team involved in these so investors can really get a feel for what's the bench of talent here that's building these products. Why should we believe they're going to get launched on time? We're going to continue with that theme and get new faces and other people that maybe you don't see as frequently as maybe myself or the CFO being on quarterly calls. I think you'll get a combination of the two again, but you'll have to attend to get the exact things we're going to show. Okay. One of the things which I admire about Quantum-Si and yourself is how well you have been managing your balance sheet and managing to keep it strong as well. At this point, with the current cash that you have and all these milestones that you want to achieve, what's the runway that you could get? Yeah, we've said we have cash to carry us out into Q2 of 2028. We ended last quarter with $214 million on the balance sheet. Right at the beginning of July, we did a $50 million registered direct. We have a little over $260 million. I think one part of it has been sort of accessing capital when it's been available. The other part is the operational sort of expense control. The example I like to give people is when I joined the company, we had nobody in commercial. It was just R&D and very little operations, and the company spent about $120 million or so. We'll spend less than $100 million this year, well less than that. We have a little over 30 people in commercial. We have full internalized operations, and we're still a very productive R&D organization despite it being smaller than it was in 2022. I think that sort of speaks to the level of discipline we've brought and the focus on that. We don't want to throttle the investment in the right areas because we are still innovating and building a market. We're very cognizant of that and we treat the capital we have carefully. Thank you. Thank you very much, Jeff, and good luck. Thank you for having us.