Hello and thank you for standing by and welcome to the Quantum-Si Second Quarter 2021 Earnings Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. Please be advised that today's call is being recorded. I would now like to hand the conference over to your first speaker today, Mike Cavanaugh, leading Investor Relations. Thank you. Please go ahead.

Good afternoon and thank you for joining us today. At the close of today's market, QSI released its financial results for the second quarter, which ended June 30, 2021, and provided a business update. The release is currently available on the Investors section of the company's website at ir.quantum-si.com. John Stark, Quantum-Si's Chief Executive Officer; and Claudia Drayton, Chief Financial Officer, will host this afternoon's call. During today's call, we will be making certain forward-looking statements. This may include statements regarding, among other things expectations with respect to financial results, future performance, development of products and services, anticipated financial impacts and other effects of the business combination on our business, the size and potential growth of current or future markets for our products and services and the potential impact of the COVID-19 pandemic on our business. We use forward-looking statements that are based on current information, assumptions and expectations that are subject to change and evolve. And there are a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our filings made with the Securities and Exchange Commission. You're cautioned not to place undue reliance on these forward-looking statements and the company disclaims any obligation to update such statements. During this call, we will refer to non-GAAP financial measures, including adjusted EBITDA. These financial measures are not prepared in accordance with U.S. generally accepted accounting principles, or GAAP. These non-GAAP financial measures are not intended to be considered, an isolation or substitute the results prepared in accordance with GAAP. The definitions and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and the discussion of why we present these non-GAAP financial measures are included in today's press release. As a reminder, this call is being webcast live and recorded. To access the webcast, please visit the Events section in the Investors section of the website. A replay of the event will be available following the call. I would now like to turn the call over to John Stark.

Thank you, Mike, and good afternoon everyone. I'm excited to be hosting Quantum-Si's first earnings call as a public company. This is a rewarding milestone for the company and the talented team who have dedicated the past eight years to our mission of transforming the field of single molecule detection and proteomics. We now have the resources from the completion of our business combination with HighCape Capital to push forward on our mission to be a market leader in the emerging field of single molecule protein sequencing. We aim to become the first company to commercialize a system that enables digital sequencing that amino acid resolution and are well-positioned to see the enormous opportunity we believe this market presents for years to come. Our technology has the potential to have a profound impact on advancing general health and personalized medicine. On today's call, I will provide an overview of the progress we have made in the first half of 2021 and discuss the momentum we are building across all areas throughout the company. We continue to recruit industry leading talent and are on pace to double the organization size this year to over 150 employees. Our commercial momentum is building as we have started to install platinum systems at external sites. I will further expand on these areas and provide specific details on the outlook and strategy for the company. Claudia Drayton will then review our Q2 2021 financial results. We will then conclude with a question-and-answer session. Before we move on to provide specifics on our progress, outlook and strategy, I would like to discuss why advancement in the field of proteomics is critical and why we believe our technology will drive market expansion similar to how DNA sequencing impacted genomics over the past two decades. DNA sequencing has…

Thank you, John. I will now take you through the details of our Q2 financial performance and then end with a high level of spending outlook for the remainder of 2021. Total operating expenses in the second quarter of 2021 were $32.2 million, an increase of $24 million or 292% from $8.2 million in the second quarter of 2020. Research and development expenses for the second quarter of 2021 were $13.1 million compared to $6.6 million in the same period of 2020. The increase in R&D expense was driven primarily by increased compensation costs related to hiring additional R&D personnel, as John described earlier, and one-time expense such related to the merger with HighCape. Selling, general and administrative expenses for the second quarter of 2021 were $19.1 million compared to $1.6 million in the same period of 2020, the increase in SG&A expenses was primarily driven by transaction costs, incurred to complete our SPAC business combination, increased compensation costs and other expenses related to being a publicly traded company. Net loss for the second quarter of 2021 was $35.7 million compared to a net loss of $8.2 million during the same timeframe in 2020. Adjusted EBITDA was a loss of $14.6 million in the second quarter of 2021 compared to a loss of $7.5 million in the same period of 2020. Adjusted EBITDA reconciliation calculations to GAAP net loss can be found in today's press release. Moving to the balance sheet, as of June 30, 2021 cash and cash equivalent was $522 million. This balance reflects over $511 million of net cash proceeds we received upon the closing of the business combination with HighCape late last quarter. We believe the company is now well capitalized to support the next stage of development and is in a position to invest aggressively, to expand Quantum-Si market readiness. As we go for the remainder of 2021, we expect to continue to invest in scale the organization, to advance our technology and to prepare the organization for commercial launch in 2022. Accordingly, we expect operational spending to continue to grow sequentially in the next few quarters. I will now like to turn the call back over to John for closing remarks.

Quantum-Si is now entering a phase that brings us closer to achieving the mission established by the team's founding members over eight years ago, to transform the field of single molecule proteomics. We are well down the path to enable the scientific and eventual clinical communities with commercialized tools to sequence proteins and amino acid resolution. We are excited about the opportunity to take leadership in this field and advance the understanding of how we treat disease. We are fully committed to executing the company's near-term goals and building off the momentum of the first half of the year, as we focus on executing our commercial roadmap. We will continue building a world-class team, scaling production efforts and reporting on progress with external partners’ insights. Finally, we expect to continue to pursue new application areas, to explore the power of our suite of products. I look forward to our next update and I will now turn the call over for questions.

[Operator Instructions] The first question is from Kyle Mikson with Canaccord Genuity. Please proceed.

Thanks. Hi, everyone. Thanks for taking the questions. Congrats on the first quarter here as a public company, and congrats on the five placements, I guess from the quarter two. And it sounds like most of those are for like academic customers. But when you think about the rest of the kind of early access program, I'm wondering where the rest of those shipments will go? Do you assume any commercial labs, things like that? And one other question about that this program, will any customers receive carbon, it sounded like platinum is going to be the main instrument. And then finally are any of these web currently using the instrument yet? Thanks.

Hey, thanks, Kyle. Good to hear from you and look forward to catching up with you later as well. First, let me answer the middle question about carbon. So the initial placements are all the analysis system. The platinum system will be shipping carbon in early 2022. As far as the five, you're absolutely correct. The majority of these sites are early access systems are KOLs, Key Opinion Leaders in the single molecule space. They tend to be technologists and that'll really round out the first 10. On the next phase of additional placements, really just expanding our commercial activity. There'll be two paths. One, we'll still have strategic placements. These will be with groups that we develop applications such as translational medicine centers, clinical research centers like pharma. And then we'll also have more of a transactional type approach where traditional buying where a purchase order is placed, then we'll ship an instrument and the customer will use it on current capabilities. And just finally, I think there was a third question there, which asked about I'm actually utilizing the systems can confirm. And we're very pleased to say that the first two systems were installed, trained, and we've actually had protein sequencing data ran on those systems and we look forward to the results that we see out of the next three placements.

Okay. That was great, John. Thanks so much. And you talked about like the hiring recently and obviously that was reflected in the expenses. Can you talk about maybe how many people have been hired for sales organization yet and maybe kind of the plans there? How are we going to go to market correctly?

Yes, absolutely. First of all, we've started building the inception of the commercial team at the end of last year, bringing on key talent, not only in marketing, obviously I have a background, extensive background in commercialization as well. We're now in the process of hiring our first few dedicated sales and support individuals. We can support basically the first 50 systems with current capacity, but we really building out into the second half of the year, but the real momentum were really start to occur in the first half of the year building out the commercial team.

Okay. That was great. And then maybe just touching on some of the targets that were talked about in the past, I know it's – recognizing some of what was discussed in the past around the transaction, it's tough to me all these goals, right. But just curious about the placement targets that were set, especially for maybe the first couple of years and that as well as the number of protein targets, I think, a number like 50 or so has got thrown around in the beginning, is there a reason you can't get to like, 3,000, 7,000 some like that over time, like competitors have said?

Yes, absolutely. We'll continue to expand yield as we go forward in future versions of chip, right. That's one way to expand density. We're the first customers we'll be getting in the millions of available wells to isolate single molecules and we'll be moving into the tens of millions. So you're absolutely correct on the scale of the technology. As far as, sorry, your second part of your question was about some of the targeted sites?

The protein target. Yeah. Like the…

Yeah. I mean, take a look at this market as far as who will be adopting the technology early? And we've already talked about first 10, really controlled release, looking at more technologists. As we go forward strategically again, it will be pharma and it will be more dedicated translational medicine groups. Seasonal ones are going to be really looking at content. And while you work with pharma especially in early clinical research phases is to understand alignment of content to both targets and markers, because those really build out future assays that will be used in clinical testing labs. But for the most part, what I would say is you've got basically a 2,000 to 3,000 customer landscape in the academic sector where really this is the first time they've been able to sequence proteins add amino acid resolution. Look at variant frequency as well as structural biology. So although content is going to be really important to our strategy, especially as we go down the path of working with the pharma companies and immune characterizations, we have a tremendous pharma opportunity in the basic research space as well, where it's going to be more or less looking at information biology that really has not been basically unchartered such as the phosphorylation of various [indiscernible] and coupling that with multi-ethnic applications to what they're doing in their existing DNA efforts.

Great. Okay. That was great. And you kind of alluded to some of the PTM analysis stuff there too, but I think you talked about in the prepared remarks, something about generating data, maybe publications with some of these early users. Do you kind of obviously you have been an outstanding IP portfolio, tons of issued patents and pending [indiscernible]? Could there be maybe next year or two some papers submitted for publication or even like white papers for some just tangible kind of data. I'm just wondering because it would – it would maybe help kind of accelerate kind of the types of applications as well as just the awareness?

Absolutely, that's the goal. And again, when we partner with early access groups, we always talk about study designs and potential applications, resource them accordingly. Again early access reason why we're now at five halfway through the year, and we'll be accelerating into the back end of the year with a minimum of 10 placements, as we feel very confident with the instrument is that, we – we're now focused on providing product; we're focused on scaling the commercial organization, but you really hit it on the head that's one of the key areas of focus, which is finalize the optimization of the system, but also show real meaningful published data that represents application, and we'll continue down that path here for the foreseeable future.

All right. Great, John. Just one last question for me, obviously there's some supply chain issues that we're hearing about recently, and you're so early in your kind of development of the instruments and of the system. So it's just any like semiconductor supply chain issues. It's like, what'd that? Do you see that kind of affecting your business maybe next year when you start to lose – try to ramp commercially speaking?

Currently right now, Kyle, we're very confident delivering product for the next couple of years. We're obviously very aware of the environment, monitor it closely. But we've secured strong relationships with our suppliers and feel good about as we go into the next couple of years.

Okay. Great. Thanks. Thanks again. Thanks John. I really appreciate it.

Yes. Thank you, Kyle.

Thank you, Mikson. [Operator Instructions] There are no additional questions waiting at this time. I will now turn the conference over to management for any closing remarks. I will now turn the conference over to management for any closing remarks.

This is John Stark. Just like to thank everybody for joining the call today. If there are no more questions, we'll conclude the call.

That concludes the conference call. Enjoy the rest of your day.