Good day. Thank you for standing by. Welcome to the Seer, Inc. Third Quarter 2021 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, today's conference may be recorded. I would now like to hand the conference over to your host today, Carrie Mendivil, Investor Relations. Please go ahead.

Thank you. Earlier today, Seer released financial results for the quarter ended September 30, 2021. If you have not received this news release or if you'd like to be added to the company's distribution list, please send an email to [email protected]. Joining me today from Seer are Omid Farokhzad, Chairman, Chief Executive Officer and Founder; Omead Ostadan, President and Chief Operating Officer; and David Horn, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of 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 Seer issued today. For a more complete listing and description, please see the Risk Factors section in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2021, and in its other filings with the Securities and Exchange Commission. Except as required by law, Seer disclaims any intention or obligation to update or revise any financial projections or 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, November 9, 2021. With that, I'd like to turn the call to Omid.

Thanks, Carrie. We're continuing to make outstanding progress, and I could not be more pleased with the momentum as we approach the close of 2021 and prepare for broad commercial release in early 2022. Coming into 2021, we were focused on four key areas: first, setting the pace for innovation in the proteomic space. Second, leveraging the unique capabilities of our differentiated solutions. Third, coupling exceptional customer experience with transformative products. And fourth, forming strategic relationships with key customers and partners. And of course, as always and most importantly, we're focused on continuing to grow our incredibly talented team. Now 10 months into the year, we have demonstrated tangible progress across all four areas. On innovation, our team has continued to push the boundaries of our technology at the interface of nanotechnology, biology, and machine learning to deepen our access to the proteome and its variants. On our unique capabilities; the power of this technology is its ability to enable highly robust, deep unbiased proteomics at scale. As we progress through limited release, we're seeing an increasing number of customers planning at-scale studies of a thousand samples or more. This is fundamentally transformative as prior to SEER, the most deep unbiased plasma proteomics studies that were conducted were in the size range of tens of samples. With regard to the customer experience; the Proteograph has been performing exceptionally well in the hands of customers. Customers are extremely pleased with the entire spectrum of the experience from the efficiency of installation and validation, to training, to ease of use, and the quality of data that they're generating. We're really excited to see several abstracts being presented in the fall conferences. And notably, these data were generated within just a few months following access to the Proteograph for most of these customers. On strategic relationships; we're making strong progress with our commercial partnerships to streamline workflows, expand geographic footprint, and set up global centers of excellence. We're also expanding our supply chain partnerships to strengthen our ability to support our growing customer base globally. And of course, finally with our team, we have continued to build our organization and add talent across a number of critical functions, including operations and quality, product development, and data as well as our commercial team. We are well positioned to scale our business as we head into 2022 and broad release. Now, we continue to see a strong market response to the Proteograph product suite. Revenue for the third quarter was $2.2 million, with $1.6 million of product-related revenue, reflecting the increase in the installed base and usage of the Proteograph product suite. Our funnel of prospective customers continues to expand and includes a broad range of global customer types, including pharma. We added new limited-release customers in the third quarter, and we are on track to meet our goal of a high single-digit number of sites across key applications and markets. We are particularly pleased with the caliber and ambitions of these customers. Early data was submitted by customers to the American Society for Mass Spectrometry or ASMS Conference, which was last week, demonstrating how uniquely this technology enables deep unbiased plasma proteomics at scale. We saw customers applying our technology in new ways for the first time, including novel methods such as TMT, novel analysis such as glycoproteomics, and novel insights generated from deep and unbiased detection of disease-related proteins. Collectively, this body of data demonstrates the power and flexibility of our technology to empower customers and open up this market. Throughout our first two phases of commercialization, I have been extremely pleased with how our technology has performed in customer hands, including the ease with which this system has been implemented, robustness of how the assay performs, and quality of data that is being generated. We have also developed close customer relationships that will enhance our ability to rapidly deploy applications, accelerate market creation, and drive adoption as we head into broad release. And the feedback we're receiving indicates that customers are really quite pleased whether they come from proteomics, genomics, or other backgrounds. They have been able to get up to speed and get going very quickly with our automated assay that requires little hands-on time to provide an easy-to-use, rapid, and reproducible workflow. It is clear that our solution is positioned to enable deep unbiased proteomics at scale for the first time. The ability for our technology to rapidly expand the discovery of new content at the amino acid or peptide level is one of the most significant variables in the opening of this market. We're also uniquely solving the sampling problem, serving the entire dynamic range of the plasma proteome. In doing so, we're not only enabling discovery of novel content at an unprecedented rate but we also enrich the value that the entire proteomics ecosystem can create; this will benefit mass spec providers, software providers, and others, which is why so many of these companies have begun to partner with us. As we extend our footprint globally with what is already a disruptive product, we're also pushing our next set of innovations to further expand the capabilities of the Proteograph product suite. We're continuing to expand our software feature sets, streamline data management across our workflow, and leverage the power of our nanoparticles to lay a roadmap into the future. We are committed to driving a continuous stream of new products and product enhancements that will set the pace for innovation in proteomics. There continues to be a growing enthusiasm and energy around our technology. We continue to make strong progress across all dimensions of our business as our performance this quarter demonstrates. We're rapidly laying the groundwork for broad release in 2022. I'm inspired by the progress of our customers, proud of the strides we're making with our technology, and grateful for the hard work that the Seer team is putting in every day. With that, I will now turn the call over to Omead for more detail on our commercial progress.

Thank you. I'm excited by our strong commercial progress as we execute against our objectives for the year, and I believe that our measured approach to commercialization is paving the way for broad release customers to seamlessly adopt the Proteograph suite and scale their studies. We are already seeing increasing momentum at customer sites as they experience the power of our technology firsthand in their pilot studies, present on those studies, and reimagine what they can do in scalable future studies. We saw the first of these customer presentations at ASMS last week. Starting with Oregon Health Sciences University Knight Cancer Institute, one of our collaboration sites. As we previously shared, following their pilot study, OHSU has obtained funding and is in the process of receiving samples to initiate a large-scale prostate cancer study that will include at least 500 and possibly up to 1,000 serum samples. This study would be the largest unbiased deep serum proteomics effort ever undertaken at the Institute and potentially ever anywhere. At ASMS, they shared the poster that documents results from a smaller pilot scale study. These results and their very positive experience with the Proteograph set the stage for their follow-on study which will be highly scaled and carefully designed to a defined clinical endpoint. Their thoughtful and thorough plan for this scaled study will provide a blueprint that others can follow in tackling projects of similar size and complexity. Another collaboration customer, The Broad Institute, shared a poster using the Proteograph to look at the plasma proteome of patients undergoing therapeutic ablation and monitoring the result in tissue damage on a time course as a model for myocardial infarction. This data was compared with the Broad's previous method which used extensive depletion and fractionation on similar samples, which was published in Nature protocols in 2017. This poster demonstrated the Proteograph's ability to dramatically reduce time and labor while robustly and deeply sampling the proteome with increased sensitivity. Researchers at Broad were able to detect an average of 2,200 proteins in each of three patient plasma samples across five time points with a total of approximately 4,000 proteins identified across all measurements. The Proteograph enabled earlier detection of troponins, a key group of proteins whose abundance in plasma is an indicator of potential heart trauma, with many more peptides per sample, improving sensitivity versus their previous method. They also detected new potential biomarkers using the Proteograph. These biomarkers need validation, but their detection points to the promise and power of the Proteograph to identify novel content and deepen biological insights. This study lays the foundation for future use of the Proteograph to study complex diseases at a scale of hundreds of thousands of samples while delivering the performance needed for translation in clinical research. Sanford Burnham Prebys Medical Discovery Institute; researchers at Sanford Burnham demonstrated the compatibility of the Proteograph product suite with tandem mass tag or TMT multiplexing, a popular method to increase the throughput and sensitivity of mass spectrometry. Using TMT, researchers processed four pooled samples in quadruplets and detected a total of 2,785 protein groups across those samples, with what we believe is unprecedented reproducibility for deep unbiased proteomics shown by CVs of approximately 15%. Importantly, these proteins were detected across nine orders of magnitude of dynamic range, and it includes important classes of proteins such as 456 cancer-related proteins, at least 163 FDA-approved drug targets, 40 cytokines, and many TNF proteins that are in the picogram per milliliter quantities in plasma. This study demonstrates that the Proteograph provides deep access across the plasma proteome; it's highly adaptable to commonly used mass spec methods and can be a highly valuable tool for clinical and translational research of varying scales. And finally, Protein Metrics, a privately held company whose software is employed industry-wide for protein characterization, including glycosylation analysis and a host of other post-translational modifications or PTMs, used pilot data from the Proteograph product suite to look at glycoproteins which are quite important for biomarker discovery. Protein glycosylation is an important class of post-translational modifications that can have a dramatic impact on protein structure and function in health and disease. Studying the proteome at the level of amino acid and peptide resolution and identifying novel glycoforms of proteins has important implications in biomarker discovery and drug target identification. In this study, the Proteograph product suite enables analysis of subpopulations of the glycoprotein without the need for subsequent glycopeptide specific enrichment, demonstrating that the Proteograph not only enables deep unbiased proteomics at scale but can also identify a large range of proteoforms, including those found in post-translational modifications. These early results demonstrate the unique capabilities of the Proteograph product suite to unlock much of what is yet unknown about the proteome, its specific variants, and the critical role those protein variants play in governing biology. It is exciting and gratifying to see that once we put our technology into customers' hands, they are able to move quickly, observe important results, and generate novel insights even from initial pilot studies. Switching to our commercial progress; we are well on our way towards meeting our goal of a high single-digit limited-release customers, who coupled with our collaboration customers are forming an important base of lighthouse accounts and providing blueprints for a broad commercial release to follow. These customers represent an expanding set of customer types and application areas, including multibillion-dollar companies, some with substantial R&D and commercial operations across multiple geographies, including China. Heading into 2022, we have a growing pipeline of prospective customers across a diverse range of applications and markets and we are ramping our commercial efforts to meet this demand. We are building out our commercial capabilities and operations, we are scaling our team, adding a number of highly talented individuals across marketing, sales, and support, and we're expanding our commercial partnerships to extend global reach and allow us to serve a diverse customer base. Overall, I'm extremely pleased with the execution of our commercial strategy over the first 10 months of the year. We are engaged with thought leaders and seeing large-scale projects planned or funded in record time. We are seeing robust performance of our product in customer hands with compelling data being presented just months after customers gain access to the technology. We are building a broad and deep pipeline of prospects and are continuing to scale up our commercial organization to meet the opportunity. All of this makes me very confident as we round the corner into 2022 and towards broad release. With that, I will now turn the call over to David.

Thanks, Omead. Total revenue for the third quarter of 2021 was $2.2 million compared to $72,000 in the third quarter of 2020. The increase in revenue was primarily due to sales of products related to our Proteograph product suite. Revenue consisted of sales of Proteograph SP100 instruments, assay kits, platform evaluations, services, and grant revenue. Product-related revenue for the third quarter of 2021 was $1.6 million, including related product revenue of $787,000, which consisted of sales of SP100 instruments, assay kits, and platform evaluations. Related party revenue of $787,000 represents product sales to PrognomIQ. As we expected and have described previously, PrognomIQ is ramping faster than other limited release customers, primarily due to their deep familiarity with the technology which has allowed them to scale quickly as they interrogate hundreds and soon thousands of carefully collected and curated clinical samples. Service revenue was $500,000 and represents the completion of a project under an agreement with a large pharmaceutical company. While we have no plans to enter the service business as a normal course offering to our customers, we will continue to deploy our capabilities in unique strategically important situations where; one, we want to catalyze adoption of our Proteograph product suite to develop a specific market; or two, we partner with large institutions that have significant clinical assets to jointly undertake an important study. As such, you may see us recognize service revenue on an intermittent basis rather than consistently quarter to quarter. Grant revenue from our SBIR grant from the NIH was $10,000 in the third quarter of 2021, representing a decrease in activity related to this grant from the third quarter of 2020. Total gross profit inclusive of grant revenue was $1.2 million for the third quarter of 2021, representing a gross margin of 54%. Gross margin was driven by product mix and the recognition of service revenue in the quarter. Total operating expenses for the third quarter of 2021 were $19.6 million compared to $8.5 million in the third quarter of 2020. Research and development expenses for the third quarter of 2021 were $7.7 million compared to $4.8 million in the third quarter of 2020. The increase in R&D expenses was primarily driven by an increase in product development efforts related to our Proteograph product suite, including increased employee compensation costs and other related expenses, including stock-based compensation due to growth in research and development personnel and increased costs related to the expansion of facilities and depreciation of laboratory equipment. Selling, general and administrative expenses for the third quarter of 2021 were $11.9 million compared to $3.7 million in the third quarter of 2020. The increase in SG&A expenses was primarily driven by an increase in employee compensation and other related expenses, including stock-based compensation due to growth in selling, general and administrative personnel. In addition, we incurred increased marketing costs related to the limited release phase of our commercialization plan and increased costs related to becoming a public company. Net loss for the third quarter was $18.4 million compared to $8.2 million in the third quarter of 2020. We ended the third quarter of 2021 with approximately $506.6 million in cash, cash equivalents, and investments. At this point, I would like to turn the call back to Omid for closing comments.

Thanks, David. I'm incredibly proud of our team at Seer and the progress we're making to transform proteomics and empower the scientific community. We continue to execute on our key objectives and look forward to updating you on our progress as we continue to open up a new gateway to the proteome. With that, we will now open it up to questions.

Operator Instructions. And our first question comes from the line of Derik De Bruin with Bank of America. Your line is open. Please go ahead.

Hello and good afternoon. David, could you share any insights on the run rate pull-throughs for the instruments? Additionally, could you provide some details about what was implemented in consumables regarding product revenues?

Yes, Derik, it's a bit too early to discuss pull-through. Considering where we are with our customers receiving the instruments and ramping up, it's really premature. Regarding product revenue, if you look at the 10-Q, you'll see that this quarter's product revenue is primarily from instrument sales. The related PrognomIQ revenue is mostly from consumables. This aligns with our expectations since PrognomIQ is about two to three quarters ahead in terms of familiarity with the technology, enabling them to scale projects more quickly due to their head start. The instrumentation serves as a leading indicator of our growing installed base and customer diversity. We anticipate this will lead to an increase in consumable revenue as those customers become proficient with the technology and the projects they are executing.

The related party revenue was significantly higher than we anticipated. Is that a sustainable rate for the future? I would like to better understand its significance and how to model it accurately.

Yes. In the short term, we anticipate that PrognomIQ, which is related party revenue, will maintain a similar percentage of overall revenue from quarter to quarter. As our customer base expands and that revenue increases, we expect to see a slight decline in this percentage as we progress through 2022 and 2023. However, in the short term, I would consider it to be in a similar range regarding its percentage of revenue.

Got it. I have a question regarding some of the posters you presented. I noticed that the CVs on the Sanford Brose poster were about 15%, while on the Broad, it was around 25%. I'm curious about the comparison between the labs and why one shows significantly better reproducibility than the other. I’m also interested in understanding the specific experiments conducted and if those 25% levels are a good benchmark for what your customers can use, as I'm trying to relate it to other methods.

Derik, I think as you look at CVs, you have to also think about the depth of the protein coverage that folks are seeing, the number of samples that they are looking at. So for example, in the case of Broad, it was three samples over five time courses. And then the protein sample cost in terms of protein across those samples approached 4,000. Individually, it was north of 2,000. So that's a different kind of readout that the Broad folks get. And again, it's just a function of the samples that they use. It's also a function of the detection and the gradient time that they use. So as you increase the depth, Derik, you would absolutely expect that for that CV to widen; that is normal. So that's where we just think of it.

Okay, thanks. That helps. I'll get back in the queue. I don't want to hog all the questions. Thanks.

Thank you. And our next question comes from the line of Tejas Savant with Morgan Stanley. Your line is open. Please go ahead.

Hi, this is Neil on for Tejas. Could you give us a quick update on Enlight Medical and progress of the Proteograph in China? And any early color on what the order book looks like there?

Let me have Omead comment on where we are with China and the Enlight experience. I think that may be more appropriate. If there is a need to weigh in on a day we want well. Omead?

Thank you. As we announced last quarter, we have signed a distribution deal with Enlight Medical, and we are excited to start this relationship. The progress we've made with them has been very positive and strong. Initially, our strategy was to enter China in mid-2022, but we decided to postpone that by about a year. We are currently establishing ourselves as a distributor to expand our business in China. You can expect to see the results of this effort over time, primarily in 2022. I am pleased with how the relationship has started, the level of engagement, and the infrastructure and processes we are implementing to ensure a successful business in China moving forward.

Great. And how are you thinking about the sales force ramp ahead of broader commercial launch in light of tighter labor market conditions right now?

Look, we're not disclosing the number of reps. Suffice it to say that we've substantially grown our commercial team in 2021 and expect to do it in 2022. I have to say that we've probably attracted some of the best commercial lines at the senior level in this company, and these are folks that have really decades of experience selling life science tools and the commercial model that they use, including, by the way, the way they stack their team. I expect we're going to be able to meet customer demand in a very efficient way. I think for me to comment, but in general, even since day one where we started, we're always hiring about one to two quarters ahead so that folks are up and running and up to speed by the time the quarter comes that we need them to execute. I think that's been the plan. I'm very proud of the commercial team that we've built. Let me go add to that?

Maybe just a couple of things. So totally acknowledging outside your labor market, but I think to the point that Omid raised, given the range and caliber of the people we have around the table and the commercial team already, the opportunity that the company represents, we haven't really had any complexity or difficulty either identifying, recruiting, or bringing on board commercial staff in sales, support, or marketing. So I feel really good about where we are in terms of today, quite frankly, and our preparation for 2022.

Got it. That's it for. Thank you for taking my questions.

Thank you. Operator Instructions. And our next question comes from the line of Tycho Peterson with JPMorgan. Your line is open. Please go ahead.

Hi, this is Rachel on for Tycho. Thanks for taking the questions. So first off, could you just talk about if you face any supply chain or inflationary pressures this quarter? And then supply chain constraints have obviously gotten tighter in recent weeks, and we've been hearing about it more. So could you talk about your confidence around ramping inventory ahead of the broader rollout in '22?

I'm sorry, the last question. Can you repeat your last question for me?

Yes. Just your confidence with the broader rollout in 2022 given the recent supply chain constraints that we've been hearing about across the industry.

Got it. Okay. So look, to date, our supply chain hasn't been affected by COVID as we had anticipated a lot of these potential shortages early and worked with our suppliers to ensure timely delivery of the components that we need to support our customer base. So based on what we know today, that's all I can speak about, and also of the very close relationship that we have with our suppliers, we don't anticipate any supply shortages, but of course, COVID itself is unpredictably fluid. So it's hard for me to anticipate what may be coming around the corner. But suffice it to say the visibility that we have is we're on the improving side of that curve and don't really anticipate any difficulties. Now, the one challenge I would say we have is with ex U.S. where we are actually seeing some difficulty just getting there in person just because of challenges that just international travel brings to our team in order to get there and then do installation and have a good customer experience. But again, we're managing those things. So in the U.S., we feel very good about where we are in terms of both the balance of 2021 and heading into broadly in 2022. And then as far as ex U.S., I think we'll have to see how that plays out. But certainly, it does create some complexity for us. Omead, do you want to add to that?

I think you got it.

Perfect. Okay. And then, last one for me. So I appreciate the commentary around that $500,000 of service revenue. Can you just give us some more color on that project with a large pharma company? How did that service product come to fruition? And then it sounds like that project is complete. So can you talk about any feedback that you received from that large pharma partner?

Yes. First of all, we won't be discussing the specifics of these projects, but let me check if Omead is comfortable providing additional insights.

Sure. The specifics of this project involve a customer who engaged us to undertake a service project. They are eager to initiate a reasonably sized project quickly and expect results within a short timeframe. As we've mentioned, we anticipated this need, which is why we are focused on establishing these centers of excellence. We now have potential candidates for these centers among our current early access or limited release customers. However, it will take some time to fully set them up so they can handle the required number of samples. This situation arose because the customer needed data promptly for a large sample study, and we were confident in our ability to deliver, which we did. As David pointed out, occasionally, there will be projects where we are the optimal choice for execution due to strategic, timing, or confidentiality reasons for the customer. We will consider these opportunities, even though our main business model is not service-oriented. Nonetheless, circumstances may occasionally position us as the best option for certain projects. I view these instances as precursors to potential future demand for similar, larger-scale projects.

That's great. Thank you.

Thank you. And I'm showing no further questions. And this does conclude today's question-and-answer session. Ladies and gentlemen, this also does conclude today's conference call. Thank you for participating. You may now disconnect. Everybody, have a great day.