Ladies and gentlemen, thank you for standing by. Welcome to Quantum-Si Fourth Quarter Fiscal Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to turn the conference to Juan Avendano, Head of Investor Relations for Quantum-Si. Juan, please go ahead.

Good morning, everyone. Thank you for joining us. Earlier today, Quantum-Si released financial results for the fourth quarter and fiscal year ended December 31, 2022. A copy of the press release is available on the Company's website. Joining me today are Jeff Hawkins, Chief Executive Officer; Patrick Schneider, Chief Operating Officer; and Claudia Drayton, Chief Financial Officer. Before we begin, I'd like to remind you that management will be making certain 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 of our press release. For a more complete list and description of risk factors, please see the Company's filings made with the Securities and Exchange Commission. This conference call contains time-sensitive information that is accurate only as of the live broadcast today, March 6, 2023, except as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements. During this call, we will also be referring to certain financial measures that are now prepared in accordance to U.S. generally accepted accounting principles or GAAP, including adjusted EBITDA. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today. With that, I will turn the call over to Jeff.

Thank you, Juan. Good morning everyone and thank you for joining us today. In today's call, we will provide a business update, present our fourth quarter and fiscal year 2022 financial performance and provide an outlook for 2023. We will then open the line for questions. 2022 was a landmark year for Quantum-Si. We achieved several major milestones during the year to name a few; on the research and development front, we accelerated our product development efforts and successfully demonstrated the ability to recognize 15 out of the 20 amino acids. This represents a path to more than 70% coverage of the Human Proteome identification of up to 90% of proteins, as well as a greater understanding of protein sequence variation and post-translational modifications. Our protein sequencing technology was published in the Journal Science. As a reminder, Quantum-Si's next-generation single molecule protein sequencing features our proprietary time domain sequencing method that allows us to sequence peptides at the amino acid level in a massively parallel fashion using a semiconductor chip. The publication in science is an important validation of our technology as this is the first peer-reviewed paper from any company demonstrating next-generation protein sequencing technology in a major journal. On the supply chain front, we work closely with our suppliers and contract manufacturers to build up the supply of instruments, ships, and reagent kits in support of internal product development needs and commercial launch. In addition, we successfully completed technology transfer and capacity increase activities at our chip assembly and packaging facility in Garnet Valley, Pennsylvania. On the commercial front, we increased our marketing efforts, including exhibiting our products at several industry trade shows in the fourth quarter of last year. We also added key sales and market development personnel and appointed Dr. Grace Johnston as Chief Commercial Officer…

Thank you, Jeff. Starting with product development, we are making good progress on our protein engineering and directed evolution programs. We continue to advance our amino acid recognizer systems, given this, we are well-positioned to increase proteome coverage capabilities of our technology in 2023. As a reminder, by proteome, we mean not only the 20,000 canonical proteins but also the millions of proteoform including post-translational modifications. As mentioned in our last earnings call, we are enhancing the customer facing software. Since our last update, we added talent including a very experienced leader to our Bioinformatics team. In a matter of weeks, they hit the ground running and have already made notable improvements in the software algorithms for high-quality peptide calls. That being said, we expect improvements to our Quantum-Si Cloud Analytics to be continuous in nature in order to address ongoing customer feedback from the commercial rollout. We are also making inroads with our partnership strategy. Earlier this year, we announced that we entered into a partnership and a licensing agreement with Biovista, an AI-driven bioscience firm to integrate Biovista's visit database and visualization technology tool into Quantum-Si's cloud analytics and help to advance proteomics research biomarker discovery and drug development applications. At the same time, we announced a partnership with Aviva Systems Biology, a leading provider of antibody protein and immunoassay reagent products to co-develop sample preparation kits for protein sequencing research workflows with Platinum, including targeted proteoform analysis. Staying on the subject of protein sample prep, we are on track to launch Carbon, our automated sample prep instrument in 2023. Carbon will help to streamline the end-to-end workflow of our platform. Although not required, preliminary data suggests that Carbon can enhance protein loading onto our Platinum protein sequencer. Particularly for those customers who might not be sophisticated in…

Thank you, Patrick. Hello everyone. Let's discuss the details of our Q4 in fiscal year 2022 financial performance. Research and development expenses in the fourth quarter of 2022 were $18.2 million compared to $14.4 million in the fourth quarter of 2021. The increase was primarily due to higher internal and external product development activities and higher personnel costs as a result of increased headcount. Selling, general and administrative expenses in the fourth quarter of 2022 were $11.2 million compared to $13.4 million in the fourth quarter of 2021. The decrease was primarily the result of lower stock-based compensation expense associated with the business combination that took place last year, a reduction in consulting services, insurance and other professional fees, partially offset by an increase in compensation costs as a result of higher headcount. In aggregate, total operating expenses in the fourth quarter of 2022 were $38.8 million compared to $27.8 million in the fourth quarter of 2021. Operating expenses included a $9.5 million non-cash impairment charge in the fourth quarter of 2022 for goodwill recorded as part of the Majelac acquisition in 2021. Net loss for the quarter was $33.1 million compared to $29.4 million in the fourth quarter of 2021. Total year net loss was $132.4 million in 2022 compared to a loss of $95 million in 2021. Adjusted EBITDA was a loss of $24.5 million compared to a loss of $20.4 million in the fourth quarter of 2021. For the year adjusted EBITDA was a loss of $100.6 million in 2022 compared to a loss of $64 million in 2021. A reconciliation table of adjusted EBITDA to GAAP net loss is provided in our press release filed earlier today. As of December 31, 2022, we had $351.3 million in cash and cash equivalents and investments in marketable securities. As previously disclosed at an investor conference earlier this year, we began shipping orders of Platinum in Q1 2023. As a result, we expect to book revenue in Q1. That being said, given the early stage of commercialization, we do not plan on providing revenue guidance until we have a few quarters of commercial activity under our belt. With regards to operating expenses, we continue to increase our efforts to optimize costs and improve efficiencies, despite ongoing investments in R&D and higher investment needs and commercialization activities. As Jeff mentioned earlier, preserving our financial strength is one of our three corporate priorities for 2023. To this end, we expect non-GAAP operating expenses to be approximately flat in 2023 relative to the prior year. In addition, thanks to our cost improvement initiative, we now project that our current cash position can support our operations into the year 2026. I would now like to turn the call back over to Jeff for closing remarks.

Thank you, Claudia. We are excited about commercializing Platinum and look forward to partnering with our customers to demonstrate the capabilities of our next generation protein sequencing technology. The launch of Platinum is an important milestone and turning point not only for Quantum-Si, but also for the industry as we believe that our unique ability to sequence amino acids and characterize proteoforms and post-translational modifications can lead to novel proteomic insights, better diagnostics, improved drug development and truly transform the future of healthcare. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Alex Vukasin with Canaccord Genuity.

Hi, this is Alex on for Kyle Nixon. Thanks for the update call guys. Just a quick question. So in terms of the current order volume, I was wondering if you could provide some background on that, and additionally, if you could provide any color on the number of Platinums you expect to ship or will be shipped in 2023 as well as just some more color on the timing of Carbon, that'd be appreciated.

I'll take the first two and then hand it over to Patrick, who can give you a little more color on Carbon with respect to the rollout. As Claudia mentioned in her remarks, we're not giving quantitative guidance yet today. We're really using this initial rollout to measure sort of the implementation timeframe, how quickly people ramp to full utilization, the types of questions that we know will be asked as we start to give out quantitative guidance. But to reiterate what we said, the demand for the machine, the implementation, being able to be done by the customer, these things are all moving in line with our expectations, and we're very pleased with the feedback we're getting as well as the funnel building to support the demand throughout the year. Patrick, would you like to provide a little more guidance around Carbon?

Sure, and thank you for that question. I mean, just to reiterate. Obviously, we're focused on Platinum right now and so that's a big push. For Carbon, it's basically an end-to-end. It really brings our end-to-end solution together as sample prep for automated sample prep. The intention is for us to do beta testing in Q2 and if all goes well with that to launch at the end of 2023.

Our next question comes from Yuan Zhi with B. Riley. Your line is open.

Good morning. Thank you for taking our questions. I have a couple of them. First, just curious when you share the progress related to commercial launch of Platinum, can you clarify what metrics would you share there in addition to units shipped and the top line revenue?

Thanks for that question. As we said, we're measuring metrics such as placements. We're measuring the pull-through that those placements generate, really looking at the timeframe from when somebody receives a Platinum instrument to when they begin to run their studies and get to that utilization rate. And then obviously the top line metric all rolled up would be revenue. So, those are the sort of internal metrics we're using today. Again, early data is in line with our internal models so quite pleased with the early progress.

Got it. Thank you for that color. Follow up here. Can you provide an update of the interaction with customers? Thank you for the color around the test runs that you are conducting for potential customers. In your view, what's holding them back after test runs?

So, today, there's nothing holding the customers back after test runs. I think what -- maybe to build upon what Patrick had mentioned in his remarks, there are customers today, who are in academic research centers people that -- those of us in the industry would consider key opinion leaders. They are acquiring the platform and the technology and going straight into various studies they are looking to perform. There are some other customers though who, as Patrick mentioned, want to have a small number of samples tested to demonstrate that the technology is going to address sort of the study design they have in mind and that's where really the proof-of-concept testing service comes in. It's really a method to enable people to move through the sales funnel more quickly and get that sort of early technology demonstration, and then ultimately move to acquire the platform and in-source the work. So, that's sort of how the two different types of customers are progressing today.

I'm not showing any further questions at this time. I'd like to turn the call back over to Juan for any closing remarks.

Thank you all for your participation today. We look forward to updating you on our progress in the next quarterly earnings call. Have a good day.

Ladies and gentlemen, that does conclude today's presentation. You may now disconnect and have a wonderful day.