Telesis Bio, Inc. (NASDAQ:TBIO) Q4 2022 Earnings Call Transcript
Telesis Bio, Inc. (NASDAQ:TBIO) Q4 2022 Earnings Call Transcript March 25, 2023
Operator: Good day, and thank you for standing by, and welcome to the Q4 2022 Telesis Bio Earnings Conference Call. . I would now like to hand the conference over to your speaker today, Jen Carroll, Telesis' Vice President of Investor Relations. You may begin.
Jen Carroll: Thank you, Justin. Good afternoon, and thanks for joining us for Telesis Bio's Fourth Quarter and Year-end 2022 Earnings Call. With me on the call today are Telesis Bio Founder and Chief Executive Officer, Todd Nelson; Chief Operating Officer, Eric Esser; and Decky Goodrich, Senior Vice President of Commercial Operations. Our fourth quarter and full year 2022 financial results press release is now available on the Investors section of our website. Before we begin, I would like to inform you that certain statements we make during the call will be forward-looking statements that involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. Such factors include those referenced in the safe harbor statement included in our earnings release and in our filings with the SEC.
This conference call contains time-sensitive information and is accurate only as of the live broadcast on March 21, 2023. Finally, any percentage changes we discuss will be on a year-over-year basis unless otherwise noted. And with that, I will hand the call over to our CEO, and we can get started.
Todd Nelson: Thanks, Jen. Welcome, everyone. Thank you for joining today's call. First, I would like to thank our entire Telesis Bio team for their tremendous efforts resulting in a stellar 2022, where we exceeded revenue expectations, delivered meaningful expansion of gross margin and, in recognition of the current macroeconomic environment, delivered on reducing our operating expenses as a measure to extend our cash reserves. We have done this at the same time as funding our growth initiatives and executing commercially. Our overall plan this year is to continue to expand our BioXp customer base and drive the adoption of new BioXp kits. And to do this, we'll be focused on 3 things. First, expanding access to the synthetic biology market.
We will do this by introducing our Select kit line of BioXp products that will allow customers to use their own DNA as a starting point. Second, we'll be entering a new market for NGS library prep. We will launch an NGS library prep kit that will run on our existing BioXp installed base. And later in the year, we will launch a 9600 version for high throughput NGS sample prep. And third, we will expand in the fourth quarter, our genome engineering workflow applications through the launch of CRISPR guide RNA based upon our proprietary enzymatic DNA synthesis chemistry referred to as SOLA. Telesis Bio is a leader in automated multi-omic and synthetic biology solutions. At our heart, we are an instrumentation company offering unique first-to-market benchtop automation platforms that are driving production of DNA, mRNA and protein to the benchtop for a global customer base.
Our systems enable decentralization of rapid, accurate and reproducible writing of biology. Our vision at Telesis Bio has always been to provide researchers with the tools to build biology in their own laboratory without any constraints. The ability to create novel synthetic biology-enabled solutions allows us to address large unmet needs in our targeted markets. Scientists around the world are using our comprehensive solutions to accelerate a design-build-test paradigm for novel, high-value products for biologics and vaccine discovery, genome editing and cell and gene therapies, just to name a few. Now moving on to our fourth quarter and year-end results. I'd like to remind everyone that our detailed financial results for the fourth quarter were also included in today's press release.
Total revenue for the fourth quarter and full year 2022 was $9.5 million and $27.4 million, representing growth of 208% and 148% for the respective periods. Notably, our core BioXp revenue, which consists of instruments and kits grew at 158% and 67% for the fourth quarter and full year, respectively. This strong growth was the direct result of demand for both the BioXp 3250 and our recently launched BioXp 9600 systems and increased utilization resulting from new kits launched during the year. In the fourth quarter, we sold a total of 19 BioXp units, representing 138% increase over Q4 of 2021. And similarly, for the year, we sold 66 additional instruments representing 32% growth, which brings the total installed base to in excess of 250 instruments.
Photo by Robina Weermeijer on Unsplash
Overall, we continue to be very pleased with the demand for the 3250 and the initial uptake within the market of the 9600. The launch of the BioXp 9600 system brings significant revenue potential stemming from higher instrument ASPs, higher BioXp kit utilization rates and an ability to expand into new and adjacent markets. Gross margins came in at 68% for the fourth quarter and 57% for the full year of 2022, reflecting positive mix shift in revenue towards higher-priced BioXp kits launched during the year for mRNA, long fragment builds, cell-free DNA scale-up as well as the receipt of Pfizer technical milestone payment resulting from the successful achievement of our first of 4 milestones. Operating expenses were $14.3 million for the fourth quarter of 2022 compared to $13 million for the same period in the prior year.
For the full year, operating expenses, including noncash charges, totaled $62 million, reflecting prudent efforts in the second quarter to reduce our annual run rate expenses. This increase in operating expenses was driven by personnel costs and expansion across our business, primarily our commercial organization to support our increased revenues. Net loss was $8.1 million for the fourth quarter 2022 compared to $12.5 million in the same period the prior year. The net loss per share was $0.27 for the fourth quarter compared to $0.43 for the corresponding year and for the full year period of $48 million compared to $39 million during the prior period. Cash and cash equivalents were $43.8 million as of December 31, 2022, noting also that the company has approximately $20 million worth of debt outstanding as of the end of the year.
In summary, during 2022, we believe that we assembled the right executive team that can drive revenues, increased gross margin and stabilized base operating costs so that we can become a profitable company in the second half of 2024 and deliver value to our shareholders. Now I'd like to briefly cover our financial guidance for the full year 2023, which will be back-end weighted in the second half of the year due to our 2023 new product launches throughout the year. For the full year 2023, we're issuing the following guidance: Total revenue of greater than $45 million. Gross margin is expected to be in the mid- to high 50s on a percentage basis. Operating expenses, including onetime and noncash charges, are expected to be approximately $62 million to $64 million.
Now let's walk through the things that will help us achieve this plan. First of all, on revenue growth, we have a robust series of BioXp product launches, including the launch of approximately 11 additional BioXp kits and 2 new BioXp systems for NGS library prep and the SOLA-powered system that will, for the first time, allow customers to achieve same-day turnaround results or CRISPR guide RNA. The combination of our new product launches when layered on to our historical growth should, in our view, generate significant continued revenue growth in the next couple of years. And now some details on our commercial strategy. We anticipate launching several Select kits for both mRNA and cell-free DNA scale-up. These kits will add value -- will add to the value proposition offered by our de novo gene synthesis kits and for the first time, as mentioned, will allow scientists to use their own DNA as a starting point in experiment.
We believe these make-to-stock kits will allow our current and future customers to use their BioXp systems more frequently, thus driving up recurring revenue growth rates. These kits should help us unlock the remainder of the synbio TAM of approximately $2.6 billion, which is estimated to be growing at a rate of 27%. And by opening up our systems for customers to use their own DNA as a starting point, we're providing scientists with further flexibility. In addition to the BioXp Select kit, we anticipate launching an additional BioXp platform focused on NGS library prep, which gives us access to an additional market opportunity of $1.6 billion, growing at 25%. One final note on product revenue. We anticipate launching the first ever version of the BioXp 9600 that will have our proprietary enzymatic DNA synthesis technology referred to as SOLA as a reagent platform.
The system will be the first-to-market product for CRISPR guides, enabling same-day turnaround. This, too, is a new market for us and represents an opportunity of approximately $1.5 billion, growing at 25%. Collaboration revenue, we anticipate continuing success with our partner, Pfizer, and we anticipate we will successfully achieve 2 additional milestones during the year. Moving on now to gross margins. We have a 3-point plan for achieving our targets, which include: number one, contributions from a favorable mix of higher-margin products like the 9600 and Select kits; number two, in-sourcing initiatives related to raw materials; and three, similar in-sourcing initiatives related to the vertical integration of our instrument manufacturing.
To this end, during the course of 2023, we anticipate further establishing an oligo production operation built around a fleet of proprietary oligo synthesis systems. When at full capacity, this operation will produce sufficient oligo volumes to meet our raw material needs, allowing us to effectively place existing supply from outside vendors. Additionally, we intend to internalize both the 3250 and 9600 instrument production lines throughout the year, which will also improve not only our supply chain and quality on our margins. Moving on to base costs or OpEx. We anticipate base costs will remain relatively flat during the year as we're able to backfill growth in this category, resulting from several large onetime charges we experienced in 2022.
As a reminder, as we continue to execute against our strategic plan, we continue to see a path to achieving profitability during 2024 but anticipate that we will seek access to additional capital during 2023 to further solidify our cash position. Strong revenue growth and expanding gross margins when combined with stabilizing operating costs and an experienced execution-oriented management team provides us with a potential path to profitability within a 12- to 18-month window based on timing at year-end of 2022. We are extremely pleased with the fourth quarter and full year results, and we remain encouraged by strong commercial execution and progress in our product pipeline. We are focused on executing against our near-term commercial goals, launching new products into 2 new markets, improving profit margins and decreasing costs, furthering new and existing partnerships and growing market share.
We continue to stabilize operating expenses and make strategic and measured investments to drive long-term sustainable growth and a path toward profitability. And with that, I will thank you for joining our call and ask the operator to open the call for questions. Thank you.
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