Good day, and thank you for standing by. Welcome to the Nautilus Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ji-Yon Yi, Head of Investor Relations.

Thank you. Earlier today, Nautilus released financial results for the quarter ended December 31, 2024. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to [email protected]. Joining me today from Nautilus are Sujal Patel, Co-Founder and CEO; Parag Mallick, Co-Founder and Chief Scientist; and Anna Mowry, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking within the meaning of the federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release Nautilus issued today. Except as required by law, Nautilus disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast on February 27, 2025. With that, I'll turn the call over to Sujal.

Thanks, Ji-Yon, and welcome to everyone. We'll provide a quick look back at our 2024 progress, update you on our work since the last call and present our fourth quarter 2024 financial results. Our goal at Nautilus is to enable proteomics researchers to study the entirety of the proteome at a depth and breadth never before possible. We aim to make the creation, accessibility, and use of that higher-resolution, higher-quality data easy enough that it will be practical for every lab everywhere to accelerate scientific research, enable the discovery of new biomarkers and ultimately power the development of new therapies and diagnostic tests that will positively impact human health. As you saw in this morning's press release, based on the desire to reduce technical risk and bring to market a product with the greatest possible performance, we now expect that the launch of our proteome analysis platform will occur in late 2026. Parag will provide detail on the rationale for that timeframe in a few moments. Since the achievements of last year serve as a foundation for the work ahead, I want to take a few moments to walk you through some notable recent accomplishments. But before I do, it's important to remember that we'll be discussing the status of our overall platform development initiatives and share details on progress against each of the platform's modalities: broadscale discovery, which aims to comprehensively quantify the proteome, and targeted quantification, which is currently focused on proteoform detection. While both modalities share the same core platform, each has its own development path. In 2024, we had a number of key demonstrations and progress regarding the core platform. Among them, we developed improvements to the scale and quality of our reagent production, an instrument and an assay capable of multi-cycling reagents over many cycles and observing protein binding events at the single molecule level, and software capable of processing the data coming off the instrument and through proprietary bioinformatics algorithms, turning that multi-cycle data into biological insight. With regards to our pursuit of broadscale decoding, we developed a large number of probes that successfully bind epitopes spanning the human proteome. We also performed an ultra-deep characterization of a large number of probes to define detailed binding profiles and kinetics. Lastly, we demonstrated via western blot that these probes can bind to and differentiate proteins successfully, and that the results strongly correlate to our binding models. Additionally, we made progress on our integrated proteoform capabilities. At World HUPO last October, and as Parag reported on our previous call, we shared data on the world's first quantitative measurement of biological variation in tau proteoforms potentially associated with Alzheimer's disease. These preliminary findings have spurred substantive conversations with a number of potential partners interested in exploring tau proteoform landscapes at a resolution never before possible. Armed with the learnings and advances of last year and years prior, we now have greater clarity about what remains to be done to deliver what we believe will be a game-changing product to the market. We're focused on the good that we anticipate our platform can do and confident in our ability to get there. For a more detailed update on our R&D efforts, let me turn the call over to Parag.

Thanks, and good morning all. As Sujal shared, in Q4 and throughout 2024, we continued to make progress against our core development goals. We remain focused on increasing scale, stability and reproducibility across our consumables, assay and platform and continue to see meaningful gains along each of those dimensions. This progress goes hand-in-hand with advancing the reliability, quality and customer readiness of our instrument and software along with advancements in our ability to investigate the proteoform landscape of tau. As Sujal mentioned, both our broadscale discovery and targeted proteoform analysis are built upon the same core platform. The movement from platform development towards platform application demonstrated recently for our proteoform analysis also serves as a general validation of our progress in developing a fully integrated end-to-end platform that starts with sample in, immobilizes that sample at the single molecule level, robustly interrogates that sample cycle after cycle and then coalesces that data through a data analytic and machine learning pipeline, producing quantitative output that can be a foundation for unlocking biological insight. At U.S. HUPO earlier this week, we presented several posters and a luncheon seminar, which demonstrated progress towards both our broadscale discovery and targeted proteoform capabilities. On the proteoform side, we developed a high-resolution single molecule tau proteoform assay to quantify the molecular heterogeneity of tau proteoforms, achieving high accuracy and reproducibility with over three orders of magnitude of dynamic range, and precise measurements of specific tau isoforms and phosphorylation levels in organoid model systems. These results demonstrate our readiness to engage in significant partnerships to explore the role of tau proteoforms in both drug and biomarker development. On the broadscale side, we discussed the development and characterization of robust multi-affinity probes capable of binding to a variety of proteins with extreme sensitivity in the yoctomole range, the potential for the platform to be applied not just to humans, but to a diversity of organisms and a new adaptive decoding algorithm that can account for run-to-run variation in probe binding. In meetings with KOLs throughout U.S. HUPO and in interviews with a range of potential future customers over recent weeks, we heard researchers discuss the value of data attributes that go far beyond just the number of measurable proteins. They consistently discuss the quality of data they seek and point to factors such as reproducibility, specificity and accuracy. Our approach is substantially different in confidence and quality compared to traditional affinity-based approaches in which proteins are identified and quantified by one or two affinity reagents versus dozens. One particularly exciting moment for me came in discussions of our proteoform assay when a researcher declared that our approach was something he had always wanted and, in his opinion, would revolutionize progress in combating neurodegenerative diseases. Now, regarding our current R&D priorities, you'll recall that last quarter, we reported that we are behind on our internal milestones with respect to our next major broadscale goal to quantify a significant number, 500, 1,000, 2,000 proteins from a complex sample like cell lysate on the road to measuring the comprehensive proteome. This represents the last piece of validating the broadscale capabilities of our platform. Our unique method of identifying proteins, called protein identification by short-epitope mapping (PrISM), involves the development and integration of hundreds of proprietary multi-affinity probes that interrogate single protein molecules. Over the last three years, we have spent substantial time and energy building and optimizing our affinity reagent pipeline and characterizing thousands of probe candidates. These studies, particularly in Q4, have given us increased confidence in the probes we developed regarding their ability to bind to various epitopes within proteins, differentiate among proteins, which is essential for decoding, and predict the binding to proteins. One key ingredient in this was large-scale screening of probes against millions of peptides drawn from the human proteome to define detailed models of sequence specificity for each probe. We also conducted significant work on the binding kinetics of these probes and tested how probes bind to dozens of different proteins through techniques, including western blot and bilayer interferometry. Through that detailed analysis, we can confidently say our affinity reagent pipeline does indeed produce probes with necessary characteristics for implementing PrISM. Alongside our extensive probe characterization efforts, we have been optimizing and increasing the robustness of the fluorescent labels used within our platform, the chemistry used to attach probes to these labels, the chip surfaces to maximize specific binding, and the buffers used during binding and measurement. We've also examined how diverse label types and labeling approaches impacted these metrics on a probe-by-probe basis. Internally, we defined criteria for transitioning probe candidates to platform-ready labeled probes. As we entered 2025, many probe candidates were not meeting the performance targets desired of platform-ready labeled probes. In the first quarter, we focused on several new development workstreams related to our labels, labeling approaches, assay buffers, and surface chemistry. The data from those experiments have clarified the need to optimize some elements of our surface chemistry and assay conditions to achieve better alignment between our probes and our assay. However, appropriately testing these optimizations and integrating any subsequent platform modifications will require time not anticipated when we established the current launch timeframe. Thus, this evolutionary work will push back the anticipated timeline for quantifying a significant number of proteins from a complex sample like cell lysate. While we are disappointed with this delay, we are encouraged by the extensive data corpus we've collected that suggests our probe library is capable of successfully implementing PrISM and thereby unlocking the proteome. With that, I'll turn the call back to Sujal.

Thanks for the update, Parag. Parag just outlined how the learnings of recent quarters have positioned us to pursue a development path with reduced technical risk and that we believe will yield the greatest possible platform performance, but at the cost of time. Based on the efforts required to implement these modifications to our assay configuration, surface chemistry, and related platform elements that Parag articulated, we now expect that the launch of our proteome analysis platform, instruments, and reagents will occur in late 2026. Throughout this development path, we envision significant scientific milestones and value creation inflection points for both modalities of our platform: targeted proteoform detection and broadscale discovery proteomics. Here are a few examples. A major goal in the first half of 2025 is to provide leading researchers with access to our platform for tau proteoform-related studies. We firmly believe that 2025 will be the year that researchers begin to apply the platform's capabilities to ask and answer important questions about the role of tau proteoforms in Alzheimer's disease. Secondly, we'll create and publish data showcasing the tau proteoform assay performance characteristics such as sensitivity, dynamic range, and reproducibility. Third, we anticipate signing at least one tau-related partnership in the first half of 2025. Fourth, we'll focus on decoding an increased number of proteins, starting with predefined mixtures and advancing towards complex samples like cell lysate. Finally, we will share data showcasing the broadscale proteome assay performance characteristics, such as stability, sensitivity, dynamic range, and reproducibility. We remain dedicated to driving our scientific and development efforts forward as efficiently and effectively as possible. By choosing to pursue modifications to our assay configuration, surface chemistry, and related platform elements at this time, we believe we are positioning Nautilus to ultimately create the maximum possible impact in the marketplace and biological science. This extended development timeframe required a reevaluation of our operating plan and organizational structure to ensure that we are best positioned to execute our broadscale and targeted proteoform goals. To that end, yesterday, we reduced our headcount by approximately 16% to align our resources with our development goals while extending our cash runway. Based on these challenging but necessary changes and with ongoing very tight financial management, we anticipate that our cash runway will extend through 2027. For more on that and a full report on our finances, let me now hand the call over to Anna.

Thanks, Sujal. Total operating expenses for the fourth quarter of 2024 were $20.0 million, roughly equal to the fourth quarter of 2023 and $0.9 million above last quarter. This flat year-over-year operating expense for Q4 2024 is the result of the focus and ongoing efforts of our team to identify better and more cost-effective ways to achieve our goals. Research and development expenses in the fourth quarter of 2024 were $12.8 million, compared to $12.5 million in the prior-year period. General and administrative expenses totaled $7.2 million in the fourth quarter of 2024, down from $7.5 million in the prior-year period. Overall, the net loss for the fourth quarter of 2024 was $17.6 million, compared to $17.0 million in the prior-year period. For fiscal year 2024, operating expenses were $81.5 million, an increase of $5.3 million or 7% from $76.2 million in fiscal year 2023. Both research and development expenses and general and administrative expenses increased by 7% in fiscal year 2024. The net loss for fiscal year 2024 was $70.8 million, compared to $63.7 million in fiscal year 2023, reflecting an 11% year-over-year increase. As Sujal stated previously, we anticipate the launch of our platform in late 2026. To ensure that our cash runway well exceeds this timeline, we made the decision yesterday to reduce our headcount by approximately 16%, impacting all areas of the business. We expect this will result in limited one-time costs recorded in the first half of 2025. While these steps will lead to cost savings in the short term, they will also allow us to invest in future business needs within a lower spending envelope. For fiscal year 2025, we anticipate our total operating expenses to be at or below 2024 levels. Turning to our balance sheet, we ended the year with approximately $206 million in cash, cash equivalents, and investments, compared to $264 million at the end of last year. The efforts we took in 2024 to limit spending growth, combined with yesterday's workforce reduction, mean we now expect our cash runway to extend through 2027. With that, I'll turn it back to Sujal.

Thanks, Anna. Anna's report clearly demonstrates our commitment to very tight financial management of this business. We understand what it will take to get Nautilus to commercialization and have cultivated a culture of rigorous financial discipline that will benefit us both in the short term and long term. We're excited about what lies ahead for Nautilus and the difference our platform can make in biological science. Our mission to positively impact the health and lives of people around the world remains unchanged and serves as the standard we hold ourselves to. I'm grateful to our team, our investors, our strategic partners, and our research collaborators for joining us on this journey to revolutionize proteomics and empower the scientific community in unprecedented ways. We made good progress in 2024 and look forward to building on those successes as we navigate development in 2025 on our way to commercial availability next year. With that, I'm happy to open the call for questions.

Thank you. At this time, we will conduct a question-and-answer session. Our first question comes from Yuko Oku at Morgan Stanley. Your line is open.

Good morning, and thank you for taking my questions. Could you further elaborate on your plan to modify the assay configuration and surface chemistry? What are the specific issues you're currently facing that these changes would address? And with these planned changes, has anything changed in terms of how you're thinking about initial specifications for the platform at launch or your plans to continue to improve those specs for subsequent kits?

Good morning, Yuko. This is Sujal. Why don't I have Parag start with this question, and then I will take the second half.

Great. Thank you for the question. The key aspect of the assay involves a couple of different components. One is that all are targeted at driving the specific binding of our affinity reagents to proteins that contain an epitope of interest and to differentiate the non-specific binding away from proteins that don't contain an epitope. Some of the key factors influencing that are how those particular probes are labeled with a fluorophore. If those probes are labeled in a slightly suboptimal way, you might end up conjugating a fluorophore into the binding region of the antibody, interfering with its ability to bind to its target. Additionally, depending upon the surface chemistry, it's possible that as you add fluorescent moieties, it might drive towards non-specific binding. Those are the kinds of separations we're working to enhance. Many small factors can influence assay configurations, such as how the surface is passivated, the actual chemical structure of the fluorescent label, and how it is attached to the probe of interest.

Thanks, Parag. This is Sujal. Let me just take the second half of your question, Yuko, which relates to specifications. The key point here is that the assay configuration change Parag discusses is meant to allow us to get a larger number of probe candidates that we have built and are building to have a higher yield where they function well on our platform. When we say that this approach has less technical risk and allows us to optimize performance, we mean we're trying to achieve a much higher yield from the probes already developed and those we're developing to deliver high specification in terms of proteome coverage. Regarding other specifications like dynamic range sensitivity and instrument reliability, the additional time spent developing our first instrument and reagents for full commercial launch allows us time to enhance these areas. We anticipate that they will meet or exceed launch specifications by late 2026.

Great. That was helpful color. Thank you for that. Just a related question. Do the planned changes to the assay configuration or surface chemistry change how you're thinking about the cost structure of the platform or consumables? And is that $1 million bundle pricing still the right way to think about the price of the platform?

That's a great question. In terms of what the changes we are developing now do to our cost structure, they have no negative impact and may even have some positive impact, particularly on the consumable side in terms of cost. We anticipate that our pricing is roughly correct based on the guidance given previously, which is that an instrument deal, including the instruments, software, services, and support, will be approximately $1 million. Sample costs will vary based on product configuration but could start at a few thousand dollars per sample and then decline over time. Those price points, based on continued conversations with customers, seem to be right given the differential quality of data our platform produces.

Okay. Thank you.

Our next question comes from Subbu Nambi at Guggenheim Securities.

Hey, guys, thank you for taking my question. Parag, this is for you. I'm a bit confused. Shouldn't surface chemistry be uniform for all proteins? If tau worked so well, why does it require optimization for different proteins? I understood that you use the same surface chemistry.

We can. Parag, are you on mute?

I apologize. I could only hear the second part of your question. Could you please repeat the first part?

Absolutely. I'm confused a little bit. Shouldn't surface chemistry be uniform for all proteins? If you were able to attach tau to a surface, shouldn't that be the same chemistry for all different proteins?

Sure. Regarding surface chemistry and passivation, we are not talking about the immobilization of proteins via nanoparticles to the surface. You're correct that this is uniform across assays. We are addressing the labeling strategy, the number of cycles, and buffers that create interactions between fluorescent moieties used to label the probes and their interaction with the surface. Different buffers may lead to increased non-specific binding to the surface or other targets. Temperature and measurement duration can also influence the differentiation between specific and non-specific binding. With regard to fluorescence labeling, you're correct that it is a well-established method with various conjugation chemistries for labeling antibodies. Within our system, we want to perform measurements repeatedly. We've shown hundreds of cycles of measurement. So maintaining a balance of specific binding cycle after cycle is crucial, and optimizing our configuration will allow for greater differentiation for a wide number of our probes. It's about aligning probe characteristics to the assay configuration.

Thank you for that, Parag. Each protein exhibits unique characteristics, so how are you confident that whatever optimization you do will be broadly applicable in terms of specificity?

While each protein is unique, the optimizations revolve around the interaction between a labeled probe and a protein. This is driven by fundamental binding physics; for example, if you increase concentration, you increase the binding extent. The fundamental kinetics apply across proteins and demonstrate our progress on the platform.

Okay. Thank you, guys.

Our next question comes from Dan Brennan at TD Cowen.

Great. Thank you. Could you just review what the key milestones and timelines are over, say, '25 and into '26? Are there two or three checkpoints that the market will see when customers or investors can get further updates on whether you're meeting your expectations? Or will that come at some point in early '26?

Yeah, Dan, thanks for the question. Let me try to answer this in a couple of different ways. The core platform has two different modalities: one focused on proteoform detection, and another on broadscale discovery proteomics, which targets all gene-encoded proteins. Each of these modalities has different catalysts we anticipate over the upcoming quarters. Starting with the proteoform side, our primary target is tau, a critical biological marker in diseases like Alzheimer's. During the first half of 2025, we expect to provide researchers access to our platform for tau proteoform-related studies. We will continue to share data and update our investor deck over the upcoming days. Also, we expect to sign our first tau-related partnership in the first half of 2025. Regarding broadscale discovery, a significant milestone is the ability to decode a significant number of proteins from cell lysate, aiming for the 500, 1,000, and 2,000 protein mark. At this point, all aspects of the platform will align, and we will provide firm timeline updates. Meanwhile, we will have intermediate milestones, such as decoding predefined mixtures before tackling complex cell lysates. Additionally, we will continue sharing findings at scientific conferences on our broadscale capabilities as we progress.

Great. Thank you. Could you also speak about how your performance compares to other leading tau protein platforms?

Certainly. One of the critical differentiators of our platform is that we are the only commercial platform capable of measuring proteoforms in high throughput and sensitivity from complex samples. This ability allows us to investigate the combinations of isoforms and their phosphorylation states, helping reveal the order and timing of events leading to Alzheimer's. Moreover, this capability enables us to uncover substructural characteristics indicative of treatment responses and patient disease progression. In terms of dynamic range, we've demonstrated upwards of three orders of magnitude within our within-analyte dynamic range and superb reproducibility with CVs below 20%. Furthermore, we can access analytes consistently without the limitations faced by other platforms.

Great. Thank you.

Our next question comes from Matt Sykes at Goldman Sachs.

Good morning. This is Will Ortmayer on for Matt Sykes. Thanks for taking our questions. I appreciate the commentary around the probe optimization taking some time and pushing out the launch date. But just want to clarify, is that late 2026 launch for both the broadscale discovery and the more targeted platform, or are those timelines different?

Good morning, Will. Let me clarify that both modalities are heading to the market with distinct strategies. For the broadscale side, we are progressing towards a model where, by late 2026, we will have our commercial launch. From that point forward, we will primarily focus on selling instruments, consumables, software, and support services. In addition, we'll provide some services capabilities as an on-ramp to purchasing instruments. On the proteoform front, since the data produced through our platform is unique, we are focusing on partnering with organizations interested in this level of detail and collaborating on the tau proteoform. These analyses will be conducted in our facility, and we will work closely with our partners and return results to them as we advance. Over the next couple of years, we also plan to introduce additional biomarkers driven by our research and customer needs, but these capabilities will primarily be offered through partnerships.

Got it. That's super helpful. Thank you. Following up on that, you mentioned giving researchers access to proteoform in the first half of '25. Does that launch date impact your expectations for the early access program, maybe on the broadscale side in relation to instrument placements as well?

The early access period is designed for potential customers to use our platform for their own samples and gather insights. This period typically begins six to nine months prior to our commercial launch. By late 2026, the early access period will enable customers to experience our platform’s output and excitement, potentially leading to orders by the time of commercial launch. Thus, with the anticipated commercial launch at late 2026, we expect to initiate the early access period roughly six to nine months before.

I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.