Welcome. Day two of the TD Cowen Global Health Care Conference. I'm Dan Brennan. I follow tools and diagnostics. Really pleased to be joined here on stage with the senior management team of 10x Genomics. To my right, we have Serge Saxonov, who is the Chief Executive Officer. To his right, we have Adam Taich, who is the Chief Financial Officer. Gentlemen, welcome. Thank you for being here. Thank you. Great to be here. Great. We'll kick it off with a few kind of maybe more high-level questions. Serge, you just reported 4Q and full year 2024 results a few weeks ago. Maybe just kind of introductory comment about how 2024 played out versus expectations, how the business evolved. You've introduced several new products and reorganized the commercial organization. Maybe just give an intro commentary here. Yeah. Kind of thinking back to a year ago or the beginning of last year, it seems like a world away, right? Certainly, as we proceeded through the year, it was sort of on the background of an increasingly challenging macro environment. At the same time, we made lots of investments and lots of progress as a company that puts us in a really great position as I look forward. Probably the best position that we've had ever as a company as far as just the general industry landscape is concerned and the capabilities we have as a company. We launched major new products throughout last year across every one of our platforms. All those products have been received really, really well by our customers. Just last week, we were at the big industry conference, AGBT, hearing great feedback consistent with that, kind of really extended our lead relative to any potential competition and really set us up well to expand our markets. We also, throughout last year, made major changes in our sales force, bringing in new leadership and also mid-year embarking on a pretty major restructuring of how we do go to market. That certainly entailed quite a bit of internal disruption while we're proceeding through that. Now, as we've done it, as I'm looking to kind of the rest of the year, I actually feel really good about the new capabilities that we've built out and how things are progressing and the setup going forward. Terrific. Your 2025 guide reflects $610 million-$630 million in revenue. That's flat to 3% growth over 2024, which there declined slightly. Just maybe from a high level, could you walk us through the puts and takes of the guide, kind of how you envision you're playing out? Adam, you want to? Sure. Yeah, I can take that. Yeah. Embedded in that guide, Dan, is already a 5% decline in NIH spend. That was sort of the way we characterized that was in advance of that direct, indirect NIH dynamic that our business, which is 20-25% impacted by NIH or NIH-related spending, we've got a 5% decline sort of embedded into that. We've got great opportunity with the revised sales force and the work that we've been doing there on the commercial effort. We've got really strong goals behind the biopharma side of our business, which continues to grow from a fairly small base. Embedded in that is a modest decline in the single-cell business. It is double-digit increase in reactions offset by price, as well as a double-digit increase in our spatial business overall. OK. Maybe just digging into NIH for a moment, as you imagine, there's a lot of investor interest, which we asked all the panelists on stage. It's kind of a movie that's happening in real time right now. I think your cut, as you mentioned, Adam, 5% decline in NIH. I think you also talked about maybe there could be another $10 million or $15 million at risk from indirect spending caps. We've also heard from some of the speakers here that the government isn't really trying to cut. They're trying to redirect spending back into kind of direct grants. Just reflect upon that indirect potential impact for you and how we might look at that in terms of will it play out, won't it play out, and anything that you're hearing about redirecting money back into direct grants. Yeah, maybe I'll touch on this. I mean, first of all, kind of big picture-wise, I think our view of the state of the world is not much really different from what we articulated back on the earnings call. We're following this very, very closely, both our field teams out there with customers reading what is coming out of the administration, the NIH, and also me personally being with customers last week at the AGBT. There's certainly a very dynamic situation, clearly. It is important to keep in mind that NIH overall still represents a material, but a minor fraction of our overall business. As I said, we've already kind of incorporated, as Adam said, some expectation of decreases in NIH funding. Where we stand right now, we've said before, our products are by and large purchased using direct funds. The statements, again, from the administration, from NIH, and all the core documents, and all this sort of communication that's coming from the top is that the intention here is to shift the dollars. It's not to cut the overall funding, but to shift the dollars from the indirects into directs, which, of course, if that happens to the extent it happens, it benefits us. Right now, things are sort of in limbo, in legal limbo. Customers are necessarily quite uncertain and cautious. There's a range of behaviors. Many of them are just continuing to kind of order product and continue research. Some are hanging back. Some are kind of looking, waiting to see how it's going to play out. This was sort of the dynamic we were anticipating and articulated back at our earnings call. I don't think anything has really materially changed since then. OK. Maybe one more just on this kind of top-down view. China, news today that Illumina can no longer import into China. You discussed reasons why on the Q4 call, why, certainly, you're watching what's going on in China. You guys felt differently about your product positioning in there and maybe some risk profile, if you will, if something like that happened to you. Maybe just elaborate a little bit on your position in China, what's going on there, and kind of what you baked in for 2025. Yeah. I mean, China, one of the things about our business in China, it certainly suffered in kind of several years ago with COVID and kind of the shutdowns and so on. We have made a lot of progress last year in terms of getting closer to our customers, building out a larger network of distributors and service providers. We feel like we have pretty good visibility now on what's going on. The business has been quite healthy. As far as the news with Illumina is concerned, one of the things to really appreciate is that our products work with their sequencer agnostic. They work with other sequencers. That is what we've heard from our customers on the ground, service providers, that it's fairly straightforward to them to use other sequencers and to switch over. Of course, sort of the latest news suggests that they can still kind of keep buying Illumina consumables going forward, so that further sort of mitigates whatever friction there might be in terms of kind of switching the products to new sequencers. Overall, we feel like we're in a good position. Again, there's no good substitute out there for our products. We stand pretty far apart from the rest just competitively. That gives us a good position. We're also not sort of in that bull's eye of the regulatory agencies over there the way that sort of conventional sequencing is. OK. Let's kind of shift into your business area. Single-cell, you talked about the guide this year between the reaction and kind of the overall revenue growth. Last year, revenue declined, I think low double digits. It was flat to modestly lower volume offset by low double-digit price pressure. Maybe just speak to, I mean, you've had a proliferation of product announcements. You've been trying to bring down price in a rational way. Talk about the price aspect. Where are you? You've a lot of permeations in terms of how customers could use your products. Where do you feel you are today from a price basis? Do you think you've hit a level that there's no longer really a big enough gap versus other players? Can we move forward on price? Just kind of walk through that kind of analysis, if you will. Yeah, right. As you know, I've always maintained that we believe there's a very large elasticity in these markets. Single-cell is a general-purpose kind of technology that's applicable across the range of biology. The vast majority of applications that should be using single-cell aren't using it yet. The biggest throttle, the biggest barrier has been price. Further from customers consistently, it makes sense from first principles. It is kind of the dynamic that has been clearly playing out in the market. Last year, we made a number of product introductions specifically to enable kind of lower pricing in various configurations. We also, as part of our kind of commercial restructuring, also enabled the sales team to be more kind of accommodating with customers, especially when they're looking to do new applications, big applications to drive volume. Where we feel, and of course, the performance of our products relative to sort of any potential competition has been consistently great, consistently superior. Over the course of last year, the gap has increased with the new product launches. The feedback we got consistently last week as well from customers. We feel like we're, as far as products are concerned, all these launches, we're in a good spot on pricing for any given application configuration. We can now deliver not only by far the best performance by a long shot, we're also delivering really cost-effective solutions for the most part, actually more cost-effective than other products. We do feel like we're in a great spot here. There is a dynamic where the new products, as they gain adoption, that does impose pricing pressure on the top line until the growth in volumes catches up with a decreased price. That is what we talked about in contemplating our guide and kind of the progress through this year. Product-wise, we feel like we're in a good spot with the new lineup. We also, as I said, we've given our sales team the direction to go after, to compete to win, to go after large projects, these large new opportunities that are appearing. A great example of that was the Chan Zuckerberg Initiative that we did. There are a lot more of those in the works. That is another element that's going to drive a lot more volume, a lot more revenue, but through also reduced pricing at scale. We model single-cell revenue growth picking up to, say, 4% growth in 2026. You've talked about what's implied in the guide this year. Again, you're not going to guide for 2026 right now. Back to this question on price, you've got good volumes. We'll talk about pharm in a moment. Is it fair to think, though, like the price declines by back half 2025, you feel pretty good or could be leveling out, and then we could begin to get stability or maybe something positive? Yeah. I mean, the general framework that we have in our minds, there is this sort of the initial pricing declines by virtue of the new products and kind of these new projects. We are seeing volume growth coming out of that. I commented on that as we were going through Q3 to Q4 and stuff. As sort of the pricing stabilizes, the volume growth should continue. That should drive the top line. Again, we see that there is like much larger opportunity out there than what has been captured so far for single-cell. We are seeing the evidence of that with new applications and new customers kind of coming into the ecosystem now as well. Maybe on Chan Zuckerberg, since it's a massive project, unclear what the revenue contribution would have to be. I mean, we would think for really large projects, there has to be discounts. How do we think about projects like that contributing to revenue and/or any future ones, which you alluded to could be in the works? I mean, you're right. These are very large volumes. That does entail kind of being partners with us, with our customers around pricing. We see a lot more of these in the works, for sure. We do see that as net contributors. These are the kinds of things that would not have happened in the past. These are new projects, new ideas that people are coming up with. Yeah, we do see that as ultimately a material driver of growth, although any given project is not necessarily going to be hugely meaningful by itself. OK. Maybe just one more high-level one on this demand elasticity. Maybe it can link directly to pharma. When you see prices come down, maybe you can talk about pharma in this regard. What else would be the key demand elasticity points? If we looked out two years from now where prices are today and you were to see an acceleration in growth, what are the new projects that would be coming in or new customers that would be coming in that would be kind of driving that kind of growth? Yeah. I mean, some of it touches on pharma. Some of it is just like broad academia. As I've said before, our products have gotten really, really well established among early adopters and innovators. In fact, if you do kind of a survey of our customers, they self-identify very much as early adopters and innovators by and large. There is a broad sort of world of mainstream biology, all the experimentation that happens out there that has not really gotten into single-cell. There is a big opportunity there. We certainly, with the launch of our products around for allowing lower price per sample, lower price per cell. On-chip multiplexing is an important one. Chromium Flex last year is another important one. We are seeing new customers that were previously kind of on the sidelines for single-cell, now seeing it as being affordable and entering the ecosystem. Still early days, but the feedback has been very much consistent with that. Just kind of entering more mainstream biology applications. We're seeing certainly more interest on the other side of it with the large-scale experiments too, again. The CZI project is one example. There's a lot more where people are looking to do these massive single-cell experiments to do perturbation, especially perturbation screens using CRISPR. This is an application that just has really been taking off. It's been on a vertical kind of takeoff trajectory. Lots and lots of interest. Kind of it's been sort of a confluence of the product innovation that we have been doing, the dropping price of sequencing, and the arrival of all the AI technologies to make use of these massive data sets has drawn a lot of interest on the academic side among many, many researchers, but also on the biopharma side, lots of biotechs. The biopharma are also putting together these massive data sets to really just kind of drive the understanding of biology, find drug targets, find drug candidates. In general, kind of large-scale combinatorial type screens are something that is a big application that is really exploding in interest. The big unlock there is really price per data point per cell. That's happening. We're in the middle of it right now. We feel really great about enabling it. I guess one other element, one other vector that I would mention is just the increasing interest of single-cell, both single-cell and spatial in translation applications. More and more people are, kind of, customers are looking at that. That's another vector of growth for us. Again, we've sort of started out in more an academic setting. With both sort of the maturation of products and being able, being compatible now with FFPE and fixed FFPE tissues and fixed protocols, the stage has been set for their use in translation applications. This is where you also expect to see larger and larger volumes. Samples are there. Price per sample is important. You can imagine running larger and larger cohorts of samples to do this. Is that part of the—because I wanted to ask on pharma, the excitement saying 15%-20% of revenues today going to 50% over time. I'm not sure what over time is. I was going to ask, what is driving the more emphatic confidence, if you will, about this pharma uptake? Is it the price has gotten down now over a point to kind of draw this demand in? A, obviously you launched FLX a few years ago. Maybe it's just timetable for that. You are talking about this translational. I'm sure that's pharma as well. Really, what's driven the confidence and any time frame over which you think we can go from 15%-20% to 50%? Yeah. Fundamentally, it's sort of the conversations we've been having with pharma and kind of the existence proof of all these different applications across the entire continuum of drug development. Talking about kind of on the earlier stage doing these massive screens. There's a lot of interest in doing single-cell analysis in order to find drug targets and drug candidates on that in the discovery side of the world. That is really growing really rapidly in many ways, kind of a sweet spot for single-cell. Also, as you go down the sort of the process of drug development, lots of interest in preclinical work and using organoid models. Single-cell and spatial is a very natural complement to that. More and more interest in also kind of looking into integrating these technologies in clinical trials. Cell therapy, incredible interest. Like some places, this has become the workforce. In all of these examples, you see individual companies using it in a particular department or a particular individual company. There is this opportunity to expand it to a much larger set across companies, across departments within pharma. That is what gives us confidence. It is sort of these existence proofs that are popping up all over the place across the entire continuum that all we need to do is scale it up now to kind of across the ecosystem. I mean, the reason those existence proofs have been popping up goes back to sort of your question is because the products have now matured to the point that, yes, you can run them at scale. The pricing points are now accommodating of all these applications, the fixation protocols, the FFPE, and the general progress of just products being out there and people have had enough time to test them. It's always a little bit surprising to me and to us. We would like to move fast. How long sometimes it takes for companies to really kind of validate these protocols and validate these products. It is happening. The trajectory is very positive. That is what gives us confidence. Maybe one more, and then we'll jump into spatial here. In terms of your share, you talked about where you are. You talked about the feedback from AGBT and the quality lead over the competitors. They are definitely there. They are still offering discounts. Any sense on your relative share of the single-cell market today? Do you think that's kind of implied stable over the next few years? Could you still see a little share? Just how do we think about that in terms of the competitive landscape? Yeah. I mean, look, there's always been competition in single-cell for sure since the beginning of kind of the field. Sometimes it's easy to forget that. It has gone through cycles. The last few years, certainly, there has been more. For sure, we track this very closely through various kinds of surveys and obviously engaging with our customers really tightly to evaluate it. One of the great benefits, what I said at the beginning of launching all the products we did last year, it really, really extended our lead relative to everyone else out there. It has extended the lead in terms of performance, in terms of quality, in terms of ease of use. It closed whatever gaps exist in pricing. We feel really good where we are in terms of the competitive position. We obviously also have a great commercial infrastructure, including support to really deliver a really great customer experience. As I look to the next several years, if anything, I expect our advantage in the market to increase. Great. OK. Let's jump over to spatial. Your guide this year is for double digits. I think we've got it in the low teens growth rate ourselves. You grew over 30% in 2024. You have really tough multi-year comps. Just kind of walk through where we are in spatial, kind of what you've assumed, what are the key assumptions, if you will, for the 2025 guide? Yeah, I can take that. Yeah. I mean, I think, as you mentioned, we've guided to double-digit growth for the business overall. It continues to be a constrained CapEx environment. That is part of what we've factored into that guide. We're continuing to see really strong pull-through both on Xenium and on the Visium platform. There is competition in that market. We're conscious of that. In part, if we need to, we'll continue to compete to win from a price perspective where needed on the spatial side. We feel really good. Customers are extremely happy with the product they're getting. I think it was a testament to a lot of the conversations at AGBT were really around spatial. I really still feel like we're in early innings as it relates to that market. I think you've got around 420 or so Xenium install base at year-end 2024. IFT placed 166 boxes last year. Just speak to what you think that market opportunity looks like overall and what you've assumed or what type of placement rate we could assume for 2025. Overall, maybe I'll touch on the opportunity. We can talk about sort of some of the assumptions around '25. Overall, stepping back around spatial, what is spatial and what is Xenium around? What are the most, what is the essence of measuring biology? It's molecules, it's cells, and tissues. Spatial, in particular, Xenium is the platform that's delivering this for the first time. As a consequence of that, it is really a culmination of kind of various technology stacks and also different kind of markets really coming together, molecular biology, cell biology, tissue biology. By virtue of that, the potential is really enormous. We've said it from the very beginning of when we first made our investments in spatial, launching the products. I still strongly believe in that. If anything, the feedback from the market in terms of applications and the potential has been there. The environment, especially around instrumentation, has been particularly tough the last year and a half. We have to be conscious of that. The overall opportunity is massive. It's absolutely massive. I still strongly believe this has the potential, I would say the likelihood of being the biggest technology transformation since the launch of NGS. When you think about the clinical implications and potential there, probably larger and probably faster. Again, it's going to be a question of how we kind of march through that opportunity. There is a lot to be done in terms of sort of the initial stages of adoption for customers to be kind of ramping up their usage and doing it in the context of a much more challenged macro environment. We feel really good about kind of certainly where we are platform-wise and the potential of the platform now going forward. I would just add then, piggybacking on Serge's comment, I mean, with that in mind, when you think about double digits for 2025, it's really low to mid-single digit on the instrumentation side of the spatial business and then stronger double-digit growth on the pull-through from consumables. We were chatting with someone at the Broad who we were trying to like in the clinical opportunity for spatial versus sequencing. They said it took about, I mean, they picked a number, seven years until sequencing went from research tool to you had a clinical assay that actually moved it into the clinic. Is there any way to think about where we stand today with the research that's being done on spatial in academia and starting to be done on pharma when you think we could begin to see spatial as a clinical tool? First, you've got the discovery. You have to find a signal that you need to measure on spatial. Then B, I don't know if the instrument needs to change to make it more robust and rugged to sit in a clinical lab. How do we think about that kind of transition, if you will? Yeah. The opportunity is there. It's actually one of the most exciting things over the course of the past year to see how it's been coming up in very tangible ways. I mean, there are literally papers that have been coming out showing immuno-oncology signatures that you can get with spatial analysis, literally with Xenium analysis, that you can't get any other way. It makes sense. Again, you need to know what cells there are, like immune cells, cancer cells, microenvironment, what they're doing, which pathways they're turning on, and if they're close to each other or not. All those things are critical for understanding whether the immune therapy is working and why it's working and why it's not working. Those signatures are coming up. The interest is also there both from pharma companies and kind of more forward-looking pathologists and clinicians. It is just a question of translating that interest and those signatures that are already appearing into products. That takes some amount of time. I do not think we are very far away from that at all. I do think that is one of the most exciting kind of things about spatial and the one we articulated from the very beginning. Unlike NGS, the format of spatial technology is tailor-fit to go into the clinic. You are dealing with slides. You do not need to do anything esoteric or exotic about it. You are doing kind of the same thing that pathologists have been doing forever, except you are increasing the plugs level massively and are able to see things that they had not been able to see before, the level of resolution that actually drives real biology. Would Visium HD or Xenium or some product in between them where you've got the speed and you've got the resolution be like a tool that could sit in the clinical lab? I would say the technology contours of it are certainly there, for sure. We haven't talked about our technology roadmap beyond this year, for sure. If you think about the fact that you're able to analyze a large number of targets, but it's up to you which targets and how many, the fact that it's a fully integrated system, the fact that it works with FFPE, with tissues right off the bat, it all kind of makes the technology very attractive for that direction. With Visium HD, kind of how do we think about the percentage of customers that are still on old Visium versus new Visium HD? You just said AGBT last week. Just talk a little bit about that product and kind of the demand trends you're seeing. I mean, the predominant trend has been toward HD with our customers. That has continued, for sure. We do get great feedback from the product. It makes a lot of sense. It is driving a lot of discoveries. It is higher priced than SD. We have been somewhat surprised to some extent by how many people kind of like using SD too, but to a large extent, it is to finish up existing studies and projects. I think everyone has their eyes on the transition to HD from what they have been seeing. Again, there is some subset of research that is going on SD by virtue of kind of the three-prime chemistry that is not yet available in HD. We just announced that is coming as well later this year. Maybe discuss. We have a few minutes left. I want to get to the balance sheet and kind of the cash flow statement. If we think about what came out of AGBT, I mean, could you pick what was the most notable thing that you felt? You had a lot of incremental announcements, but all of them were probably important in the product roadmap. Any of them that could really be a needle mover? To put things in context, last year was a massive product launch year for us, probably the biggest in our history across all our platforms. There is work to be done to just kind of get that fully integrated through the customer ecosystem. We are going to be launching meaningful products on top of that. We're particularly excited about place-based Flex product on the Chromium side, which is going to enable these place-based workflows, especially in biopharma, where you're starting with a plate of samples with different conditions. It really kind of sets up things well. We have not talked about other details, but there are really nice advantages in terms of scaling, in terms of other workflow issues. I think that is going to be the one that we're particularly excited about. We are also excited about our Visium launches, our Xenium launches, and the rest of it, as always, we are. Adam, can you walk through kind of the free cash flow expectations for 2025? Where are we? Do you expect free cash flow positivity for the year? How sustainable do you think that is? Yeah. In this sort of dynamic macroeconomic climate, the strength of balance sheet is critically important. It's something we take very seriously at 10x. We ended the year with $393 million of cash at the end of 2024. We don't intend to burn cash in 2025. We believe that's sustainable from here on out. One of the key levers to that in the final minute or two means you're facing your top line is growing. Obviously, it's been a challenging environment. Are you really pulling hard on different cost-out mechanisms or just kind of walking out? Yeah, good manufacturing productivity. Actually, the efficiency, even though we've made some investments to get sort of started in that commercial reorganization, it's a more efficient organization. We'll be able to scale that in a better way and continue to clamp down on the SG&A costs. Really just working through cost discipline. Great. Maybe last one, Serge, in the final seconds here. What's most misunderstood? Yeah, about the company. I mean, fundamental, I've said this before. I think it's as important as ever. Fundamentally, I see 10x as a problem-solving machine. If you look at where we are right now, I would say from sort of the landscape perspective, from the internal capabilities perspective, we're in the best place we've ever been as a company. We've got a great product advantage across all our platforms. We've got awesome capabilities, always had great capabilities in R&D historically. We now have a great commercial engine. We feel really great about the setup going forward for us. Great. Thank you. Thank you both for being here. Thanks, everyone, in the audience.