Awesome. Hi, everyone. This is Rachel Vatnsdal from the Life Science Tools and Diagnostics team here at JPMorgan. I've got the Rapid Micro Biosystems team with me up here today. This will be a standard 40-minute presentation. We'll start off with some slides presented by Rob, followed by Q&A. For those of you watching online, feel free to submit a question via the Q&A portal. Otherwise, for those of you in the room, please raise your hand. We do have a mic runner, we'll hand you a microphone if you have any. With that, Rob, why don't you take it away? Thank you, Rachel. Morning, everyone. My name is Rob Spignesi. I'm the CEO of Rapid Micro Biosystems, and I'm joined by Sean Wirtjes, our CFO. Thank you for your time. We'll jump right in. By way of background, at Rapid Micro Biosystems, we're focused on a critical part of the global pharmaceutical quality control infrastructure called microbial quality control, which is a regulated process to ensure the safety of finished drug product. The challenges with the current methods used around the world is they haven't innovated or changed in 100+ years since Louis Pasteur invented them. We'll go through what that looks like, but there's been no innovation for the most part. It's causing significant risk and cost to the industry. We developed technology that completely replaces and automates this critical process and brings it into the 21st century where it belongs. There are a number of reasons why we're excited about our opportunity and our future at Rapid Micro Biosystems. First, we're in a large and growing market, under pressure to change by regulators and industry itself. We have strong barriers to entry. We have first mover advantage, which is really important in our market, a low competitive intensity, and a robust patent portfolio to protect our technology. We have the right product for the market and the Growth Direct system, and we're proud to count more than half of the global top 20 pharma companies as our customers. We have an attractive business model where we place capital equipment and pull through a high yield, a high rate of very sticky and recurring revenue. We have a strong focus on system placement growth. We did experience headwinds due to COVID given customer site access. Although over the past year or so across 2022, site access has improved significantly, and we're back on site with customers. We've also taken action to improve our commercial execution, all of which gives us confidence that we'll return to growth in 2023. For those of you who've never been inside a Micro QC lab in a pharmaceutical site, this is what one could look like. You'll walk in, and you'll see people, you'll see petri dishes, you'll see paper, pencils, pens, and incubators. These are fundamentally the tools of the trade. Again, this process is designed to detect any microbial contamination anywhere in the manufacturing process. Think bacteria and mold and other organisms. The air is constantly tested, the people, the water systems, the surfaces, and the product itself. It's a very, very high volume test. It could be hundreds or even thousands of tests per day per facility, depending on what kind of facility it is and how large it is. It's mandated by the FDA and the equivalents around the world, so it's not optional. As you can probably tell from this photo, it's a very manual process where technicians are taking samples, incubating them, reading them, like, looking at them visually and counting the actual growth. It's subjective. There's human error involved in it, paper-based, very slow because you're waiting for the organisms to grow. Critically, it's insecure. It's lacking data integrity. We'll talk a bit about this in a few slides. This is what's drawing regulatory scrutiny on this process. It's, we believe largely ill-equipped to support modern pharmaceutical manufacturing around the world. Our solution to this is the Growth Direct platform, again, designed to automate that process and bring it into the 21st century. The Growth Direct platform is the only fully automated and high throughput secure MQC system in the world. It's benefited from years of development. It's our second generation system, years of technical development, feedback from customers and investment. The platform itself is a Growth Direct system, as you can see, on the left, fully automated system. Proprietary consumables, which we manufacture, and they're designed to automate the vast majority of daily routine use test volume in any pharmaceutical plant in the world. A full data and software complement to seamlessly and securely interconnect our system with the customer's information management systems, and a full complement of global validation and support services to move the system from installation through what's called validation and into routine use for our customers. The platform delivers a very strong value proposition, and starting with data integrity. Most customers we work with around the world are seeking to solve a data integrity challenge. Customers can go from potentially a weaker environment with data integrity to a highly robust environment from a data integrity standpoint and achieve regulatory compliance in the process. Operational efficiency. This is all about speed to an answer and automation. The system is fully automated, but it's also rapid. We provide test results much faster than the legacy method. We give customers information much faster to make a decision. I ship to market faster. I can move the next processing step faster. I can find a problem in my manufacturing operation faster, so I can shut things down, clean, remediate, and get back to work and save basically what would have been scrap material if the old method was implemented. Insight and accuracy. It's a computer-driven, machine-driven system and eliminates human error, which could lead to challenges like recalls and regulatory interventions. The value prop is driven-Global adoption. And I'll go through that in a couple slides. From a quick stat standpoint, we've got 125 systems placed around the world. Many of our customers have multiple systems and multiple sites. I think notably, 60%+ of approved CAR T therapies are using the Growth Direct. Our value proposition resonates across all modalities, but it's especially strong in biologics and cell and gene therapies. Over 100 systems validated around the world, and over three million consumables shipped around the world as well. This is a, I'll call it pre and post-workflow, effectively. Before a customer implements a Growth Direct, you can see in the top there, this is the legacy summary workflow of the manual method. It's a 15-step, kind of convoluted, slow, insecure method that can take anywhere from five-14 days to get an answer with notable data integrity challenges. The Growth Direct goes in, the workflow changes dramatically. It goes from a 15-step to a two-step, fully automated walk away workflow. You get results in about half the time or less, in some cases, again, fully automated and with full data integrity and compliance. Significant and clear value proposition for our customers. I touched on, we have a attractive business model where we place capital equipment and then pull through a high rate of recurring revenue. Our initial purchase order or upfront sale, for a single system is between $500,000 and $600,000. Whoops. That includes both the system, the Growth Direct itself, the LIMS interconnect software and validation services to move the system from installation into routine use. Once in routine use, this is that point in time in which the customer is now using the system as the system of record for that microbial quality control test, we expect a high yield and a high rate of recurring revenue. That's between $200,000 to $250,000 per year made up of consumables and service contract. The majority of this is consumables. It's a powerful model. We've proven this business model, and in 2022, we recorded about $11 million in recurring revenue. The market is large. It's about 350 million tests per year conducted annually in microbial quality control. The market's split roughly a third in North America, a third in Europe, and a third in Asia. That volume corresponds to about $5 billion in annual recurring market opportunity. Moreover, the total market opportunity for our system is about 10,000 systems. If you converted this volume onto our platform, it's about 10,000 Growth Direct systems globally, which is another approximately $5 billion call it in one time, a one-time opportunity. The market also has strong growth. The total market's growing at 8%, but the advanced modalities of biologics and cell and gene therapies, again, where our value prop resonates strongly, is growing much faster at over 13%. There are a number of tailwinds driving the industry and the market towards automation, the Growth Direct most specifically. There's regulatory pressure, there's industry pressure, and there's supply chain pressure. First, from a regulatory standpoint, the FDA and the EMA and other regulators have issued guidelines around data integrity and have begun to enforce against it. You can see the number of warning letters is up, 483s and other actions due to data integrity. A solution like ours, the Growth Direct, very secure, full data integrity, is a really good countermeasure to this pressure. From an industry standpoint, the new modalities, in many cases, just simply outstrip the legacy method's ability to keep up. Especially in some of the cell and gene categories, some biologics that have a higher test volume, and in many cases, a much faster turnaround requirement. The combination of a lot of volume, high accuracy required, and a fast turnaround makes it custom-made for the Growth Direct. Finally, supply chain. I think we're all probably familiar with having a quality and predictability in our supply chain. Many supply chain issues in pharmaceuticals are due to quality failures. To have a system that ensures robust quality and continuity of the supply chain is also putting pressure on the industry to adopt technology such as the Growth Direct and automation in general. Our value prop has allowed us to acquire a top-tier customer base. As I mentioned, we have the majority of the global top 20 pharmaceutical companies. The majority of our placements are with the global top 20. That being said, we also address small and mid-size customers as well. We're especially strong in biologics and cell and gene therapy, but again, we can address any pharmaceutical manufacturing modality to include small molecules and other formats. Looking at the right-hand side of the chart, you can see the complexion and composition of our system placement network. Think of us as generally balanced between North America and Europe with regard to our customer placements. Smaller in Asia, but growing. We're seeing very encouraging signs with our business in Asia and the value prop there. Our sales strategy is very much a land and expand. We seek to acquire customers and then roll these systems out across their networks. It could be across the geographies, across application formats, even certain product categories. Basically, to paint this map yellow is fundamentally our commercial strategy, and you can see we're chipping away at it. One more point on this slide, I wanted to reinforce. While it's a great start, we'll call it, 125 systems placed globally, again, with a market of 10,000 or so Growth Directs, a lot of runway to go to expand and grow our network. Not only do we have a top-tier customer base, but they're very engaged and supportive as well. A good example of this is these eight customers you can see here, in November, published a paper in the PDA Journal. I won't go through it all because there's a lot to it, but the, basically, the summaries, two main summaries, came out of the paper and describe how these customers validated their Growth Direct systems. But the ease of validation, and the compliance with the regs were two very important takeaways. It also demonstrated the suitability of the Growth Direct for the rigors of worldwide GMP pharmaceutical manufacturing, which is a very, very high standard. Moreover, all of our applications were addressed by the papers. Our water application, our bioburden application, and our environmental monitoring application were also addressed to include those that require it, applications to the FDA and EMA. A great endorsement, we believe with regard to our technology. It's also a great, we think, guide for new customers who are looking at the Growth Direct to understand what the regulatory environment looks like as well as the validation approach as well. A major part of our growth strategy is also innovating new technologies and new products to bring differentiation and increase value proposition to the market. Two really good examples of this are our RMB Nucleus Mold Alarm product and our Rapid Sterility Kit. Starting with mold, this product was developed based on our knowledge of our AI organisms and our software system. It's fundamentally a software product that allows the early detection of mold in the manufacturing environment. We're actually able to differentiate between mold and bacteria. Customers get especially concerned with mold because it can grow quickly, it's hard to remediate, especially if it goes several days before you detect it. Our system can give the customer an alarm that there's mold present in the facility in as little as one day. The legacy method, traditional method, takes about seven days or more. You can probably see the huge advantage of knowing you've got a contamination problem around mold in your facility. This is a software change that's built into our system. There's no change to the physical system itself or consumables. This is a software basically addition. We launched the product in Q4 of 2022, and we plan to implement it with several large customers in 2023. Turning to Rapid Sterility, this is a new consumable for the Growth Direct. You know, generally, our product strategy is designed around leveraging the platform. So while we leverage the fundamental platform with the software change, this is leveraging the platform now with a new consumable. And the value proposition around Rapid Sterility is a much faster sterility result for the customer. Sterility is typically the end of line, the last major test conducted before a product is shipped to market to ensure the final format, the vial, the syringe, et cetera, is actually sterile and ready for patient use. It's a, it's a gating step, and the legacy method takes 14 days or longer. We're targeting five-seven days with our technology, so that's one week plus customers can get product to market, recognize revenue faster, get medications to patients a lot faster. The status of this program is it's in beta right now with a, one of our top, global top 20 customers. We're considering expanding the beta engagements to other customers as well. More to follow as we move through development. As I touched on in the introduction, we have a very strong focus on increasing system placement growth. In a brief history of time, from our start of our launch in 2017, we've had strong system placement growth, as you can see here. Now, we did encounter headwinds due to COVID and customer site access limitations. Our sales process is most robust and most effective when we're on site working with customers, working through their workflows, engaging in the various stakeholders in the sale. COVID did create a headwind to that. Commercial execution also wasn't exactly where we wanted it. To touch on that being said, over the course of 2022, site access increased dramatically, and we took action as well to improve commercial execution. We've expanded lead generation and marketing capabilities to ensure we had the right volume of leads and opportunities coming into our sales funnel. Comprehensive improvement of our sales process, tools, and training to better enable our growing sales team to be effective in the field. An increased focus on key accounts. These are the teams that address the needs of the very large customers that can grow with us around the world. Additionally, we're partnering with customers as well, a reference selling. Customer selling customers is a very powerful tool in our market. Publishing white papers and awareness, type of pieces, technical webinars, et cetera. You saw a good example of it, with the eight customer paper. Of course, Rapid Micro does that as well to build awareness and leads for our company. Sum total of this gives us a lot of encouragement. We're seeing traction and optimistic that we will return to growth in 2023. In addition to focusing, a strong focus on system placement growth, a very strong focus on increasing gross margins as well. It's important to note that to serve this top-tier customer base, we've had to make investments in manufacturing, supply chain, and other infrastructure. Our current business scale has not yet risen to the level to cover these costs. With business volume, these costs will grow at a much lower rate, creating leverage and significant margin expansion in our business. That being said, independent of volume leverage, we're also going after directly direct costs in our business. Product cost and direct labor, direct materials and cost out. Manufacturing efficiency. This is mostly about our manufacturing automation and our manufacturing technology and making sure it's running and is being as efficient as possible, reducing eliminating scrap in the process, and then service productivity and efficiency. This is all about, for example, our Project RAPID program that we've spoken about publicly that reduces the time from installation to routine use. In sum total of this, we expect to impact our business very positively. We'll have gross margins by 2024 and expansion to 50% to 60% gross margins as we scale, and consumables will be at the top end or above that range. Yesterday morning, we pre-announced revenue for Q4 and fiscal year 2022. The revenue came in at $17 million to $17.2 million. System placements at nine, systems validated at 19, and recurring revenue between $11 million and $11.1 million. This was at and a bit above our most recent guidance. Some select highlights from the announcement, we did add a new global top 20 customer who's based in the U.S. That's an exciting event, as always, and to welcome any new customer, especially one of the larger ones. We're seeing increasing contribution from Asia as well, and it's very exciting. We're very excited about that market and what we're seeing. We brought on a new large customer in Japan. We talked about our RMB Nucleus Mold Alarm software was launched in Q4, and of course, the paper written by our eight top large customers. Notably, we finished the year with $140 million in cash, with expected cash runway into at least 2026. To wrap up, again, excited about our opportunity in the business ahead of us. A large market that's growing under pressure to change. We've got strong barriers to entry. We have the right product and a phenomenal customer base, and we're only gonna grow within its attractive business model and a very strong focus on system placement growth to drive sustainable long-term growth and shareholder value. That's what I have, Rachel. With that, we'll start the Q&A session. As a reminder, if you do have a question in the room, please raise your hand, and then we have Mike Runners that'll hand you a microphone. Thank you, Rob. Maybe just to kick it off, you guys went through a strategic review earlier in 2022. Can you just walk through the conclusion of that? It wrapped up in early December. What did the board really communicate to you in terms of near term and then longer term objectives? You know, were there any further operational adjustments that came from that review that you need to implement throughout 23? Yeah. The strategy post-review remains consistent. To drive system sales growth, is to improve gross margins, is to innovate new products, and is to prudently manage our large balance sheet. No major significant strategy changes coming out of the review. Helpful. Then can you just give us an update on how site access has been trending? Is it fair to say that customer access is back to pre-pandemic levels yet? If not, you know, what needs to happen in order to get that cadence and placements of, you know, validations as well to get back how they were trending pre-COVID? Yep. Yep. It's largely regional dependent. It's largely back to pre-COVID in the U.S., also in Europe, notwithstanding the changes in how people work. You know, people are working more remotely, it seems, everywhere. Generally, site access has improved in North America and Europe to getting close to pre-pandemic levels. Most of Asia as well, you know, with the potential exception of China, but most of our Asian locations are quite open as well. Helpful. Can you just walk us through, you made some changes to your commercial force lately. You recently said that almost 70% of your commercial team has been new within the last year. Can you just kinda walk us through the progress that you've made, A, you know, on training them, and then, B, what do you think is needed additionally? Is it more training to get them fully ramped? Do you think you'll need to add additional headcount to that commercial function? Just kinda walk us through the put and take steps. Training is a continual event, right, and enabling. It's continual training, continual enablement. That being said, we've got the majority of our team in place, gone through a lot of training. We actually have the whole sales team in end of this month for our global sales meeting, which we're very excited about. The team has made a lot of progress. It's also important to note, some of the best training happens in front of customers. The site access as well as help, it builds upon itself. There's formal training, there's peer training, there's training when we're actually in front of a customer, effectively in front of a customer as well. All that is training in the right direction, and I walked through some of the enablement activities that we're doing, all of which is getting traction and we're very excited about. The only, there's a few notable heads that we'll recruit for, head of sales. We announced a while ago that I'm leading commercial currently, and we're going to bring on a top commercial leader, and I would say select geographic sales regions and some select marketing roles as well that we'll be hiring for in 2023. Helpful. Obviously a lot of focus here on system placements. Yeah. Also, pull-through is another important metric. How should we think about consumables pull-through ramping throughout 2023? What should we model on pull-through per system placement, and how does that really compare to, you know, the run rates in the past several years as well? Yeah. Yep. Yeah, I'll take that one. I think what we've talked about this year is that we're around $80,000 per system for average validated systems in consumable pull-through. That's not a true reflection of the systems that are in routine use, so that number's a bit higher, actually notably higher for those systems. Given that metric, we look at that $80,000 in 2022, we would expect that to increase high single digits into the teens, in line with what our longer term expectation would be for that metric as well. We do expect to see that tick up during the year as we get. Shrink that timeframe down that it takes for us to get systems into routine use and get more systems that are validated but not in routine use yet moved into that phase and using it in their normal day-to-day operations. Helpful. Then kind of going back to the placements angle. Obviously multi-system placements are a huge win for you guys when you're able to do that. Walk us through how long it takes typically for a customer to buy their first instrument, and then kind of translate that into, you know, future purchases and getting those ramped as well? Yeah. Yeah. The many customers' initial purchase is one to a handful of systems. They'll go through a validation process, get them into routine use and then expand from there. As I touched on, there's multiple ways customers can do this. You know, some customers want to automate all their cell and gene, for example, portfolio. Others wanna automate a site network or a geography, and then they wind up expanding from there. That follow-on step, you know, can be variable depending on the customer or where they are in their growth. I can tell you know, we're encouraged with the multi-system orders that we do see in our forward-looking funnels. Helpful. Then you talk about, you know, a few different metrics when an instrument's placed. Mm-hmm. installed, validated, routine use. For those of us newer to the story in the room, can you just walk us through what are the differences between each of those? You know, how long does it take to be in each step before you eventually get to routine use? Yep. Lastly, how many are in your validated base for routine use right now? Okay. On both of the first part- Sure. A customer orders the system, it's shipped and installed. Installation can take anywhere from two weeks to four weeks, depending on site access and the facility layout. It goes into validation, and this is the process by which the system will be validated under GMP to be the system of record to perform the actual test. It's a very important process. That can be between six and nine months, and we've been working, you know, over the past few years now to reduce that. Historically, that used to be a year or more, to give you a sense of where we are now. It's closer to, you know, nine months at the high end of the range for new customers and six months for repeat customers. We've demonstrated that we can be well below that as well. There is an element here that it does require some customer cooperation, so with a lot of resources from customer and availability, we're able to get it done quite quickly. If the customer is a little more resource constrained, it can go a bit longer. Just call that six-nine months, and we're working towards the lower end of that range from a validation. Routine use, there can be a gap from the end of validation into routine use. That can be three months. In some cases, it can be a bit more, again, depending on the customer's specific requirements. At that point, you know, Rapid Micro has, you know, completed its service. We do work with customers in that jump from validations to routine use as well. Yeah. I'd just add to that's an area where we are also focused on reducing that time in terms of how customers bring that in. You know, that process to go from validation completion into routine uses can be different, quite a bit different between customers. We're looking more for more opportunities to standardize that, to be able to help them with workflows and shrink that time down. In terms of validated systems, we have 125 systems placed. We're over 100 systems validated right now. you know, the majority of those systems that are validated are in routine uses as you'd expect, but we are doing things to try to shrink the number that are kind of in that in-between period right now, to bring those systems into routine use, and that will help drive that metric in terms of pull-through that we talked about earlier. Helpful. Maybe let's spend a minute here on your exposure to CDMOs. Can you just talk about how meaningful of a customer set that is? You know, in our world, there's been a lot of focus on the concerns around biotech funding... Mm-hmm. What is that pressuring on their pipeline. What are some of the conversations that you're having with those CDMO customers, and do you see them kind of pulling back demand as a result of these funding constraints? Yeah. We have a good position with CDMOs. Most of the CDMO work we do is with current commercial products, so we don't. There seems to be significant demand going forward, so we're not seeing a significant pullback at least at this point in time from our CDMO customers. Helpful. Maybe shifting over to the mold detection launch. Mm-hmm. Can you talk about how meaningful this is? How material of a growth driver will this be for consumables in the near term? Along the same, you know, product launch timelines, how should we think about the opportunity for Sterility and then, you know, the latest updates to that product as well? Yes. Both of them have very strong value props. The, the rollout for mold, again, this is a software update, effectively. It's a change to the system with regard to system software. Our goals in 2023 are really to get it, as you may imagine, into the hands of our customers, get them using it, and then we envision a subscription model, revenue model, on the heels of that, which over time, we expect to be, You know, certainly could be meaningful, and we expect it to be a fan favorite, I'll call it, with customers. The initial feedback is quite strong from our customer base. Similarly, from the sterility application standpoint, Rapid Sterility is needed in this market. It's an area where customers are literally gated from release to market. Having a Rapid Sterility application under the ages, if you will, of the Growth Direct that brings all the automation to bear and all the data integrity and the two-way communication with your information management system, there's strong demand for that product as well. That one's still in development, although we are working with a customer from a beta standpoint. We of course, have high expectations for sterility once it's launched as well. Got it. Helpful. Can you talk about service for a minute? What does the service attachment rate look like right now? Have you seen any difference in terms of the validation and service rate and what that looks like moving into 2023? Yeah. I'd say so I think there's two pieces to that answer. Validation attachment. Mm-hmm. We essentially require our customers to use our validation services. I think we had some early experiences where some customers tried to do it on their own, and I think we've learned that it's a lot better if we're there to help guide them along the way, and I think they've agreed with that. That attach rate is essentially 100%. Service contracts, typically under cGMP, customers are required to have service contracts for key equipment in their manufacturing process. That's well into the 90s in terms of our service contract attach rate as well. There are a few here and there who are using them in different environments such as R&D, where we wouldn't have a contract, but the vast majority of our customers are buying contracts from us on a recurring basis as well. It's helping to drive that growth in recurring revenue that Rob talked about up to $11 million a year when we were at $1 million just a few years ago. Mm-hmm. Maybe just drivers of adoption of Growth Direct. Obviously, there's been labor shortages across every industry, but can you talk about has that drove any of your conversations with customers just given wage inflation, labor shortages, and not having enough manufacturing floor workers to actually run those traditional methods of QC testing? It's definitely part of it. It's always been a part of the conversation. It is marginally more relevant these days. We've got a broad value prop, but labor is always part of it, and again, marginally more just given the current macro environment. Wonderful. cell and gene therapy, obviously, that's been called out as a key. Mm-hmm. -growth, driver of Growth Direct. Why do these customers, you know, favor Growth Direct more than those traditional biologics customers? Is there a part or, like, subsector of cell and gene therapy that's driving a significant portion of that growth as well? Yep. Just for clarity, we do have biologics and cell and gene are both very strong for us. Yeah. Within cell and gene, broadly there can be, and typically are, a higher rate of tests being taken and a very high premium on turnaround time and accuracy. It's custom built for the Growth Direct. Now, where we're especially strong within the cell and gene portfolio is CAR T. You know, this is 'cause it's gonna be a two-week, three-week turnaround time for the patient, extremely high volume given the manufacturing type of modality, and you wanna be incredibly accurate. The combination of speed, accuracy, turnaround time, and automation all favor the Growth Direct to handle that, to handle that segment. Helpful. Maybe shifting over more to the operating model now, just on gross margins. There's been a lot of discussion on when you guys can flip to gross margin positive. You previously had indicated late in 2023. Sounds like today you kind of flagged positive in 2024. Can you just kind of walk us through the timelines there? When do you expect to flip gross margin positive? How many placements are assumed to be able to hit that number? Yeah, just general timing expectations there. Yeah. Yeah. I think there's multiple factors at play here that you have to focus on. System placements certainly are important to us getting to gross margin positive. So is consumable margins and so is our service margin. We have to look at all three of those. You know, I think Rob talked in his presentation around the impact of volume on us. Volume will have a very positive impact on us as we grow the business and be one of probably the largest key driver individually in terms of gross margin expansion. If we look at 2023, you know, we obviously haven't given guidance yet, but we've typically had Q4 be our biggest quarter. You know, I think if we are on the track that we would generally expect to be in an annual process working our way through, if we were at a high single-digit system placement, quarter in Q4 and had the progress that we plan to make during the year in the other areas that I mentioned, we'd expect to be at gross margin positive in Q4 if we can achieve those things. Not guidance at this point, but that's kind of the path we're on heading in that direction. Perfect. That's really helpful. Your long-term gross margin goal is 50%. Can you talk about the ramp from, you know, flipping positive to then eventually getting to that 50%? Same type of idea. Yeah. How many placements, validations, what's really needed in order to get there? Yeah. It's the same factors we're gonna be looking at. I mean, Rob talked about, you know, in addition to the operating leverage that we'll get out of the volume, you know, there are a number of things we're doing across products. One thing that's important to note is we have a couple of key products and services that drive our business, our systems and our water and bioburden consumables. If you look at them on a contribution margin basis, they're both in the mid double digits. They're actually quite profitable when you just factor in the cost of the product itself. That's not considering this overhead that we've been talking about. Our EM consumable is a different situation. That's slightly negative on a contribution margin basis, that is where a lot of the energy that we have going into reducing cost of the product is happening right now. We made good progress on that product, both in terms of getting cost out and being more efficient with manufacturing. We have a number of things on the table for 2023 that we're gonna continue to drive there that's gonna be an important part of us moving things forward. You know, we think that we'll be able to achieve that. Assuming that volume is happening to support that. You know, we're several years out from being in that 50% to 60% range, but it's gonna be driven by, you know, the volume across all of the products and services, but also those cost down activities mainly focused on EM, but we are not ignoring in any way our systems and our other consumables in terms of what we're doing there. We're going to be layering in things like sterility, which we expect to have good gross margins. We're adding software products like MoldAlarm, which is very good margins as software typically is. Those are also gonna help us to drive that gross margin expansion over the next couple of years. Helpful. Maybe just shifting back to near term gross margin. Mm-hmm. Q3, you had a pretty dramatic step down sequentially from Q2 due to that temporary ramp down in product manufacturing and then some expiration of consumables as well. Mm-hmm. Can you just kind of walk us through what was that ramp down in manufacturing and when exactly do you expect that to ramp back up? I know you had said with time. Yeah. How long does that take and kind of what's assumed now? Yeah, I think that's going to be measured in quarters. I think the issue we ran into is we obviously had planned a year where system placements, you know, were going to be or we expected them to be quite a bit higher than they actually ended up being, which Rob touched on. As a result, we had built inventory to meet that expectation, which means sitting here today, we have finished goods inventory in our systems that we are able to ship out to meet need going forward in the earlier part of 2023. We don't need to build new systems right now. That has an impact on margins, right? We're not absorbing cost in the, in the operation right now because of that. You know, it's going to be driven by how system placements ramp. You know, we'll talk about that when we give guidance for 2023 in terms of what we expect there. You know, I would look at this as a, you know, next several quarters probably, we have some impact from it, but I think our expectation would be is that that would gradually lessen over time as we work our way through 2023. Okay. Get back into kinda normal manufacturing volumes like we'd normally expect. Perfect. Then last question here, just around cash flow breakeven. Mm-hmm. You obviously, you mentioned you're exiting the year with about $140 million of cash that's expected to have your runway into at least 2026. Can you just talk about how do you plan on balancing investment into the commercial ramp versus, you know, the need to conserve cash? I think we'll be very targeted, but it's gonna be very much focused on the things Rob talked about. It's gonna be focused on driving system placement growth. It's gonna be focused on gross margin improvement. As we've been talking about, it's gonna be focused on moving our R&D pipeline, our new product development pipeline forward. All focused on being prudent, you know, managers of that cash that we have. We, we know that that is one of our largest assets, and we are very focused on making sure we do things in a very prudent way. So if I look out, you know, to that 2026 timeframe, is it possible that we could be at cash flow breakeven by then? It's possible, but there's a lot of factors that go into that, right? What happens with the, that revenue ramp? What happens with our investment strategy? We have levers we can pull over time to help manage that, and we'll do that. Again, it's a very, very important thing that we talk about pretty much every day in terms of where we're gonna spend and where we're not gonna spend.