QSI - NASDAQ

Thank you for standing by, and welcome to the Quantum-Si Fourth Quarter and Year-End 2025 Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Lindsay Risa (sic) [ Risa Lindsay ]. Please go ahead.

Good afternoon, everyone, and thank you for joining us. Earlier today, Quantum-Si released financial results for the fourth quarter and full year ended December 31, 2025. A copy of the press release is available on the company's website. Joining me today are Jeff Hawkins, our President and Chief Executive Officer; as well as Jeff Keyes, our Chief Financial Officer. Before we begin, I would like to remind you that management will be making certain forward-looking statements 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 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 date today, March 3, 2026. 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 not prepared in accordance with U.S. generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is included in the press release filed earlier today. With that, let me turn the call over to Jeff Hawkins.

Good afternoon, and thank you for joining us. On today's call, we will provide a business update and review our operating results for the fourth quarter and full year of 2025 and provide an outlook for 2026. After that, we will open the call for questions. Before diving into specific updates, I want to first frame at a high level how we are thinking about 2026. We expect that 2026 will be a transition year with revenue primarily driven by consumable utilization from our installed base and some new placements, very modest new capital sales and a laser focus on Proteus development and preparing the market for a strong commercial ramp in 2027 and beyond. As a reminder, our 3 corporate priorities for 2025 are as follows: to accelerate commercial adoption, to deliver on our innovation road map and to preserve our financial strength. Our first corporate priority was to accelerate commercial adoption. Our revenue for the fourth quarter was $451,000 as top line results continued to be impacted by the capital sales headwinds in the market. As we look to 2026, we believe that our placement program will continue to allow us to engage with new customers and capture consumable revenue, but that capital sales of our first-generation Platinum Pro instrument will be very limited, given the deliberate focus on market preparation for the Proteus launch at the end of 2026. We will provide more color on this topic throughout the call. As a reminder, during the second quarter of 2025, we announced the launch of an expanded set of instrument acquisition options that allow customers to have our instrument in their lab and purchase and run consumables without having to find the capital dollars to acquire the instrument upfront. By all measures, this program has been a success, and we view it as a key market development program to continue with during 2026 as we build momentum into the Proteus launch. Since launching the program, we have secured 17 new customers spanning academic labs, pharma and biotech. It has allowed us to access key opinion leaders in some of our direct markets that we had not had access to prior to this program. We view these labs as strong long-term prospects for Proteus, and we believe that being able to engage with them now and have their laboratory staff get hands-on experience with our technology will improve the prospects of them adopting Proteus once launched. In addition to capturing consumable revenue from these 17 customers, we are also building a strong publication pipeline that will help to further demonstrate the value of our technology across a range of applications. Turning now to scientific affairs. As we have previously shared, developing a publication pipeline takes focus and effort over an extended period of time. During 2025, we had 5 manuscripts submitted for publication and built a strong pipeline of additional studies and manuscripts for future publication. The time we invested in this area in 2025 continues to yield results, and we have already seen 3 new manuscripts released via publication or preprints in the first 2 months of 2026. More important than the number of new manuscripts is the range of applications we are beginning to see emerge. One of the papers from Dr. Lowe of Stanford University showcased the potential of our technology to be applied in the field of clinical proteomics to address complex conditions like hemoglobinopathies that are not easily resolved using current technologies. The second example of a new application of our technology was captured in a manuscript from the researchers at the U.S. Naval Research Laboratory. They described a modified workflow that enabled biological sample to result in under 24 hours for rapid pathogen and toxin detection, an area that is underserved by existing technologies. We believe that these papers and others in the pipeline will continue to demonstrate that the potential opportunity for our technology extends well beyond the basic research markets that we operate in today. We believe that this is important since these new applications move us towards customers who typically have high consumable utilization rates and repeat ordering patterns. Beyond these initiatives, we continue to monitor and evaluate several partnership opportunities that may further accelerate certain components of our development activities spanning from new customer applications to sample preparation and enrichment and applications of artificial intelligence tools that could extract deeper insights from the protein sequencing data our system generates. Novel enrichment technologies for very low abundance, high-value biomarker analysis is a key area of interest for us, and we are currently exploring some promising partnership opportunities in this space. As I stated earlier, our focus in 2026 is on the development of the market for Proteus, which we expect to launch at the end of this year. This started in earnest at our October 2025 Investor and Analyst Day, where we showed data demonstrating that Proteus is surpassing our first-generation technology across all key performance metrics. While we indicated during the event that sharing the early Proteus data would likely impact Platinum Pro sales, we believed that sharing this data would allow us to more effectively engage with potential customers and channel partners about budgeting for Proteus well in advance of its launch. Based on customer and channel partner feedback to date and to continue to advance the Proteus prelaunch discussions, we decided to pull forward the announcement of our list price from the second quarter of 2026 to today. Accordingly, we announced that the list price for Proteus will be $425,000. We believe this list price strikes the appropriate balance between capturing the premium value of Proteus and the expected launch capabilities while also making the platform more accessible to a larger number of potential customers than existing technologies. Our second priority was to deliver on our innovation road map. 2025 was a successful year across all of our development programs. We launched our version 4 sequencing kit and an expanded set of 24 barcodes during the third quarter of 2025, our version 3 library prep kit in the fourth quarter of 2025, and most importantly, demonstrated sequencing on a prototype Proteus system, which exceeded our current system across all performance metrics at our November 2025 Investor and Analyst Day. We also shared our progress and plans for expanded proteome coverage and PTM analysis capabilities as well as the feasibility of a controlled cleavage chemistry, a critical piece of core technology that ensures we have a clear, executable path to our long-term goal of enabling de novo protein sequencing at scale. As we look to 2026, our full focus is on Proteus development. I am pleased to report our instrument development efforts remain on track. Our prototype systems continue to perform well and are fully deployed within our internal R&D efforts. We have also received our first fully integrated Proteus instruments and are working with our partners to continue to manufacture and deliver additional instruments to support the scale-up of our internal development work. Next, I want to provide an update on our efforts to improve proteome coverage, which spans 2 key areas: one, expanding the number and frequency at which we detect individual amino acids and two, the sequencing read length we achieved. I would like to take a few minutes to touch on both areas. First, during our November 2025 Investor and Analyst Day, we shared details about our proprietary amino acid recognizer development program. Specifically, we shared about how we had recently seen a significant improvement in our performance of developing new amino acid recognizers, through a combination of applying state-of-the-art artificial intelligence tools trained on our proprietary data and by scaling up the throughput of our candidate screening and selection process. At the November 2025 event, we stated that we believe that we would be able to launch Proteus with detection of 18 amino acids and would further demonstrate detection of all 20 amino acids in 2026. I am pleased to report that we are progressing ahead of expectations on both goals and expect to provide a more quantitative update on this topic in the near future. The second component to proteome coverage is sequencing read length. Prior to sequencing, customers prepare their protein sample using our library prep kit. The library prep process digests the proteins into smaller pieces called peptides and then attaches a linker that allows the peptides to bind to the nano-wells on our consumable. Based on the method of digestion our library prep kit deploys, the average length of the peptides generated is approximately 18 to 20 amino acids. As we shared at our November 2025 event, the early data on Proteus indicated that the average sequencing read length on Proteus was superior to our existing platform. This means that the number of amino acids we can sequence per peptide was more than we can with platinum. A longer sequencing read length is important as we look to unlock certain high-value applications for customers like deep PTM analysis and profiling. I'm pleased to report that we are continuing to observe longer sequencing on Proteus, and based on continued promising results, we have dedicated some members of our R&D team to focus on maximizing sequencing read length. We look forward to providing more quantitative updates on this area in the months ahead. Finally, I want to take a moment to review our progress and forward plans with library prep. We launched our version 3 library prep kit during the fourth quarter of 2025. The version 3 kit enables customers to sequence samples with as little as 1 to 2 nanograms of protein. Overall, the version 3 kit delivered a more than 100-fold reduction in input required over our prior library prep kit. As part of that development effort, the R&D team identified some potential avenues to explore for even further reduction in input requirements. We have a small team working on technical feasibility now, and we'll have more updates to provide on our next earnings call. Our third priority was to preserve our financial strength. We believe that the data will continue to demonstrate that Proteus is not only a new architecture with greater throughput and automation, but also a significant leap forward in terms of sequencing performance and application breadth. We also believe that Proteus is well positioned to be the long-term driver of commercial adoption, revenue growth and our path to profitability. We are fortunate to have a strong balance sheet that allows us to execute on this strategic plan with a focus on long-term value creation but also acknowledge that the Proteus focus in 2026 will impact top line results. We are committed to continuing to operate with a high level of fiscal discipline while ensuring the core strategic initiatives are appropriately funded to deliver on time and with the capabilities customers are asking for. I will now turn the call over to Jeff to review our financial results.

Thanks, Jeff. I'll now walk through our operating results for the fourth quarter and full year 2025 and then provide our outlook for 2026. Revenue in the fourth quarter of 2025 was $451,000, consisting of revenue from our Platinum line of instruments, consumable kits and related services. Gross profit was $122,000, resulting in a gross margin of 27%. Gross margin in the quarter was primarily impacted by revenue mix with a higher proportion of consumable revenue to hardware as well as certain inventory adjustments recorded during the period. For the full year 2025, revenue was $2.4 million, gross profit was $1.2 million and gross margin was 47%. Full year gross margin benefited from a higher mix of instrument sales and a lower overall impact from inventory adjustments compared to the fourth quarter. As Jeff stated earlier, we have been impacted by capital headwinds throughout 2025, first, starting with delays in NIH funding and concern over the overall NIH budget and indirect reimbursement rates as well as general uncertainty around tariffs and putting customer capital budgets in limbo as they look to prioritize what they spend capital dollars on in an uncertain environment. Turning to expenses. GAAP total operating expenses for the fourth quarter of 2025 were $21.2 million compared to $31.3 million in the fourth quarter of 2024. Adjusted operating expenses were $18.3 million compared to $26.7 million in the prior year quarter. For the full year 2025, GAAP total operating expenses were $117.3 million compared to $110.2 million in 2024, while adjusted operating expenses were $86.3 million, down from $99 million in the prior year. The year-over-year reduction in adjusted operating expenses reflects continued cost discipline, more focused R&D activities and targeted resource allocation towards advancing the Proteus platform. Included in full year GAAP operating expenses were charges of approximately $18.7 million, primarily related to the accounting adjustment of a net termination payment and associated asset write-off from a leased facility in New Haven, Connecticut, as well as settlement and preliminary settlement of certain legacy litigation matters. Dividend and interest income was $2.2 million in the fourth quarter of 2025, consistent with the prior year quarter and $9.7 million for the full year of 2025 compared to $11.4 million in 2024. The year-over-year decrease for the full year reflects lower interest rates and changes in invested balances. As of December 31, 2025, we had $215.8 million in cash, cash equivalents and investment in marketable securities. Turning to our outlook for 2026. We are anticipating total revenue to be approximately $1 million with adjusted operating expenses of $98 million or less and total cash usage of $93 million or less. We view 2026 as a deliberate transition year for the company as we prepare for the anticipated launch of Proteus at the end of 2026, we are making intentional choices that prioritize long-term platform adoption over near-term revenue maximization. This includes embedding upgrade pass into Platinum Pro units, which has a near-term revenue impact as well as impacts of customer delayed purchases as they plan for Proteus as we continue to educate and prepare the market about the leapfrog capabilities of our next platform. From an operating expense standpoint, our guidance reflects the activities required to complete the development in support of the successful commercial launch of Proteus by the end of the year, while continuing to manage costs with discipline. Our expected cash usage also includes modest inventory build and commercial readiness efforts ahead of the launch. With $215.8 million in cash and investments at year-end, we believe we are well positioned to execute on our strategy and support operations into the second quarter of 2028. As we look past 2026, I will remind you that we have built our operating expense structure that leverages key external partners for development-related activities as we complete these activities, including launching Proteus, we have the ability to reclaim this operating expense spend to augment our cash runway or strategically redeploy some to other activities such as commercialization activities. I will reiterate what Jeff said on how we're thinking about the business in 2026 and as we move forward. Again, 2026 reflects a transition year with intentional trade-offs. We're expanding our installed base in a capital-efficient way, maintaining customer engagement and data generation and positioning the company for the Proteus launch rather than optimizing for near-term instrument revenue. Importantly, we are executing the strategy from a position of financial strength. We have the flexibility to fund development, commercial readiness and ongoing operations without being forced into near-term capital decisions. Finally, management and the Board remain deeply aligned with shareholders. Insider ownership remains very meaningful and recent Form 4 activity reflects routine tax-related mechanics associated with equity compensation vesting with no management team members selling shares outside of planned mandated selling for required tax withholdings. Overall, we believe we are making the right trade-offs, prioritizing long-term platform value over short-term optics and positioning Quantum-Si for what we believe will be a highly meaningful next phase of growth. With that, we're happy to take your questions.

Certainly. And our first question for today comes from the line of Scott Henry from Alliance Global Partners.

Just a couple of questions. First, what are you seeing as far as consumable trends, as far as the trends within the installed base?

Yes, Scott. So we're continuing to see customers purchase at a consistent rate. As we said in the past, the academic customers will sometimes purchase more episodically, buy consumables, complete a set of experiments, then publish data before buying again. Other segments of the market will have a more consistent order pattern. But if you think about -- maybe one way to think about it is the guidance we gave for revenue this year, we're expecting very modest CapEx. But what is baked into that guidance is we're expecting a more than 25% increase in the number of consumable kits that are being run by our customers. So we are seeing that utilization improve. And we think -- what we're learning and how to do that and how to really drive that, we think learning that now and getting that really well understood process will be obviously very important as we get to Proteus and look to drive the utilization of that system as well.

Okay. So if I'm interpreting that correct, for 2026, in anticipation of the Proteus launch, we should really factor in very few placements with almost all the revenue coming from consumables and service revenue?

Yes, I think that's correct. A lot of the revenue obviously coming from consumables or the services revenue. In terms of the capital equipment side, maybe just a couple of pieces of information. The first is, yes, we expect a fairly modest number of Platinum Pro machines being purchased for capital. The other point to make on that, that's a little bit of a nuance, but it's important, Jeff talked about in his remarks that in some instances, customers are -- might want to buy a Platinum Pro, but they'll be asking for a credit for a future Proteus machine. And if we offer that credit it can sort of alter the revenue recognition in the short term, capturing it over the full period of time when they eventually purchase a Proteus. So there is that component to it as well if people have that credit, it sort of reduces the recognized revenue in the short term.

Okay. And then I know you're not looking to give guidance into 2027. But in a bigger picture type of way, can you talk a little bit about how we should think about the launch curve for the Proteus? Would you expect early adopters to use it right away and then kind of the typical S-curve? Or just how we should think about the traction, given that you already have the Platinum on the market, so it's somewhat educated customer base. But just kind of qualitatively, how you would think about that?

Yes, I think about it in a couple of distinct sort of groups of customers. To your point, we have existing Platinum users and some number of those people will certainly move over to the Proteus over the course of the first year or 2 of the launch. I think it really is going to depend upon exactly which applications are available at launch. And then sort of what are the other potentially transitional financial incentives we might give to those customers to help them move with us earlier in the launch curve. So I think about the existing installed base in that way. A lot of people do know about Platinum and Platinum Pro, but I can tell you from the early feedback I'm hearing from our team in the field as they're out talking about Proteus, we are also getting in front of a lot of people that we've had no access to or fairly limited access to prior because the applications that we are offering on Platinum Pro might not have met their needs, where now with some of those capabilities being communicated as coming with Proteus is opening the door to be able to talk with those potential customers. I think that's a new sort of set of customers that don't have a Platinum today and are now engaging with us. So I think about those folks, they'll probably follow a more sort of sequenced. Some people will adopt early, some will wait to see. So that group probably moves in a more classic new technology introduction sort of way. And I think the third piece, the third sort of leg of the stool in this case is really our channel partners. As we've talked about on prior calls, we've built a global channel partner network. We think we've got all of the major markets covered with that. Will every one of those markets be a good fit for Proteus? That's something we're really working through. We do have a really important channel partner meeting coming up this month where we're going to get together in person with these partners. I think we'll learn a lot at that meeting about really which of those partners and which of the markets are going to be good opportunities for Proteus. And obviously, that -- the access to those markets can help us early in the launch as our partners are also investing and working to build out their installed bases. So that's how I think about it. I mean, there will always be some stepwise fashion to the commercialization. But I think this year and what we're committed to is really helping you understand exactly how we're building that momentum towards that launch to try to have that sort of curve, go efficiently and sort of reach that inflection point we want over sort of maybe a longer early access period that we went through with the Platinum machine.

Okay. Great. And just a final question, which is just more clarification. The $98 million in guidance for operating expenses, is that -- does that include stock comp? Or is that more of just a cash expense guidance number?

Scott, this is Jeff. Yes. So that includes -- that's kind of our adjusted operating expense number. And for adjusted operating expense, we do pull out stock-based compensation. We think that's -- on an adjusted basis, that's kind of the more reasonable way to look at OpEx that's more cash oriented as we look forward.

And our next question comes from the line of Swayampakula Ramakanth from HCW.

With you announcing the price point for Proteus, I'm just trying to understand what it means. Does this mean that you have some secured preorders or letters of intent that you feel comfortable enough to put the dollar amount -- I mean, the price point out this early.

Yes. Good question, RK. We don't have any secured orders to communicate at this time. I think we're putting the price out because what we're seeing as we're out talking with customers and some of the questions we're getting from our channel partners in preparation for our meeting this month is they're looking for that price point to be able to do their capital planning. We are aware of a few grants that some customers are working on that are going to be due over the next couple of months for their sort of regular capital planning cycle. And to ensure we get incorporated in those submissions, we need to be able to provide that price. So we see this as sort of helping to continue that dialogue with customers, help them have the data they need at the time frame when their grants or their tenders if they're located in international locations are due, they're going to need that price point. So that's why we're releasing it now is to ensure we get incorporated into those proposals and that we get incorporated at the right level in that to the extent they get funded, they've got the right amount of dollars set aside to purchase the machine.

Okay. And then based on some of the commentary that you've been talking about how people's spending on capital expenditure is -- it has been a tough one for -- at least in 2025. So going into 2026, with this particular price point, do you see folks go the lease purchase method? Or do you think that there will be decent number of potential clients who would actually purchase it for cash?

Yes, RK. So maybe the first point to make here is at this time, we've only communicated a list price and an ability to purchase a Proteus through a straight capital purchase. We haven't extended some of the other purchase or acquisition sort of models to Proteus at this time. We're going to continue to do those other models with Platinum Pro, but we haven't yet committed to doing that with Proteus. I think we're watching a couple of things. I think the first thing is, obviously, some of the NIH uncertainties, at least appear on paper to be improving. The most recent NIH budget is about a 1% reduction over the prior year, so much less dramatic cuts than originally thought. I think importantly, and Jeff called this out in his remarks, but to reiterate, the indirect overhead rates are not changing in 2026. That was a pretty significant concern for customers in '25 as indirects often are a source of the funding for new equipment. So I think it's -- we're sort of fortunate in that regard. Proteus is probably the bigger impact on Platinum sales. But on the flip side, we'll get to see sort of a more stable NIH environment for a year here before we're in the market with Proteus. And again, taking steps deliberately in our engagement with customers, including with the list price to really try to get into those grant applications, those tender proposals here early such that those capital dollars would be ready when we get to launch in our delivering units out into 2027 and beyond. So that's really how we're thinking about it and sort of the things we're watching.

Okay. And then the last question for me is, when you're talking about trying to identify more amino acids than what you thought you would have by the time you get Proteus into the market. So are we thinking that we could be closer to 20 amino acids by the time you launch? Or I know you didn't give specifics, but I'm just trying to understand from your excitement. So where do you think we'll be heading by that time?

Yes. So RK, we're thinking about it in a couple of different ways. I think that I commented on, and maybe I'll try to add a little bit of color here. So we're focused on, obviously, how many of the 20 amino acids can we detect. And in that regard, we said we believe we'd be able to launch Proteus with 18, and we would demonstrate 20 this year. Now when we communicated that, we, of course, expected to demonstrate 20 by the end of the year as we show in our Investor Relations materials. And obviously, the later in the year that is, then it pushes out sort of the delivery into 2027 with enough time to sort of do reagent development. So as we are able to sort of make progress there sooner, it opens up the prospects of that getting -- all 20 getting into a kit sooner into the launch of Proteus than maybe we originally anticipated. The other factor is we're really looking at the combination of a number of amino acids, the frequency at which we detect those in all the different sequencing context and then adding in sort of that additional layer of how long is the sequencing read length. And if you put all these together, what we're really focused on is how much of the protein are we sequencing, how much of that protein are we seeing? And the more we're seeing, the more sort of applications open up, the deeper the ability to analyze samples for PTMs and other things become. So I think we're seeing sort of progress across all of these areas sort of ahead of the pace we expected when we laid out sort of that road map at our Investor and Analyst Day. And I think we're committed to you and the rest of analysts and investors that -- we'll provide some more quantitative sort of milestones on this as we go this year to help you understand sort of what level of improvement has been made here over, say, the existing commercial kit. We're going to do that as we move through the year, but it's sort of on all of those factors where we're seeing really positive progress from our teams and feel good about the capabilities we'll be able to deliver not only at launch but getting to that full 20 as soon after launch as we possibly can.

And our next question comes from the line of Michael King from Rodman & Renshaw.

Congrats on the progress on the technology front. I'm just wondering, as far as Proteus is concerned, when you look at your existing customer base versus the potential customer base for Proteus. How much overlap do you think there really is? Are the -- are they similar? Are they the same? Or are they not the same at all? And if the latter, will each of your sales be sort of a conquest sale as opposed to repeat customer sale?

It's a good question, Michael. So we haven't really tried to quantify exactly what the overlap is. But maybe I'd speak about it a little more qualitatively. So we've talked about before our Platinum machine is in sort of a wide range of labs. So a good number of our Platinum machines, as you can sort of pick up on by looking at the publications are in what I would call a core lab, a large academic center, who's got mass spec and other technologies and a lot of sort of proteomic analysis capabilities. So a good number of our machines, both in academia, but also in pharma are in what I would call more classic proteomics core labs. Those folks are, in our view, are going to be a very good potential fit to move from the Platinum or Platinum Pro machine and into the Proteus. Some of our machines, though, because of the price point of the Platinum Pro machine are in what I would call smaller basic research laboratories, perhaps a single investigator with a fairly small laboratory staff. So some of those folks might not quite have the volume of research or the level of funding needed to move to Proteus. That said, there could be groups of, say, 2 or 3 investigators in some of those institutes that may pool funds together to purchase a Proteus. So a little harder to figure out the exact ratio of those smaller individual investigator labs converting to Proteus, but we think some of them will. Really where we're focused with some of this initial sort of transition or upgrading will be amongst those larger core labs, proteomic centers of excellence that really are pretty ideal fits and where we think that overlap between use of Platinum today and use of Proteus in the future could be a pretty high level.

Okay. for the additional color. I'm just wondering, you talked about in your formal remarks, the interaction you've had with clients and the -- not necessarily implementation, but the design or conceptualization of kits. Are there sort of a couple of applications that are low-hanging fruit, whether it's, I don't know, kinase pockets or other GPCRs, other sort of validated drug targets or perhaps detection technologies like for biomarker work. Where do you see sort of the top 2 or 3 applications giving you a tailwind on launch?

Yes. I think we're -- we obviously, through the Platinum machines being in the market are working with customers, not only across a lot of segments, but across a lot of different sort of disease areas. I think we talked a little bit in the prepared remarks about some of the data that came out recently from Stanford that's in hemoglobinopathies. That's an example of sort of a clinical application, something we hadn't really conceived of when we came to market with Platinum, but a great application of sequencing, a single amino acid change drives the diagnostic drives the sort of the treatment outcomes. I think when we think about Proteus, I still think about it right now in somewhat broader set of capabilities, and I think we'll refine our point of view on maybe specific disease areas or research areas as we get closer to market. But I think the broad capabilities we really want to make sure we have is with the Proteus having a lot more sequencing output, one clear opportunity is to really work with much more complex biological samples, right? So that's -- that today is a limitation with our current platform. That opens up people doing work in sort of identifying new biomarkers that could be academically, that could be in -- that could also be in pharma and biotech. Post-translational modifications, Michael, is a big focus of ours. That's an area today that some people have applied our tech to. It takes a little more work on customers' side today to do that with our current technology and the capabilities and the analysis tools. But it's an area that we're dedicating a lot of time to. And as we lift this overall proteome coverage, it's really going to enable that area. And we think that's important in discovery of biomarkers. That's important in translational, on validating those biomarkers on a high number of samples. And whether that's for a therapeutic target or for a diagnostic biomarker, the PTMs, we think, is a key part. And that sort of ties me to the last piece, which is that translational lab is a lab we haven't been in as much today. We're often in -- we're in a core lab or we're in a basic sort of biology research lab, doing very fundamental research. Translational labs, taking those defined biomarkers and trying to scale up that work on a large number of samples to validate its link to disease or its diagnostic potential or treatment response, whatever that end point might be. We don't have as much exposure in those labs today, but we think the ability to look at PTMs, the ability to look at more complex samples really helps us start to line up to fit into that translational lab where we would expect them to be doing that type of work, and those labs are typically also your more consistent consumable utilizers than some of the more fundamental research labs.

Great. And then sorry, if you just indulge me one more. Just as far as the total spend is concerned, does that include or anticipate some increase in the field sales force? Are you going to be adding bodies to get out there?

Michael, this is Jeff Keyes. Yes. So for 2026, our total spend includes completing out the Proteus development program and augmenting our commercial team to be able to be launch ready as we get into the end of the year and into 2027. As I mentioned as well, once we're done with the development of the Proteus program, we've utilized a lot of outside spend for development activities. And once the program is concluded, we have the ability to pull a lot of that outside spend back and then either bank it for additional cash runway or redeploy it to other activities. So there's also an opportunity to redeploy to commercial activities. But as we plan for our 2026 guidance, we are fully funded from a commercialization standpoint. And obviously, that will be evaluated over the course of 2026 to make sure we have the right resources, right partners and right deployment for the Proteus launch.

And our next question comes from the line of Kyle Mikson from Canaccord Genuity.

You didn't provide a ton of detail on this. So I want to ask this question of what exactly you've heard from customers that gave you confidence to slow things down on the Platinum side and then move all focus to Proteus. And I'm wondering if that came from -- just maybe just elaborate a little bit on what the feedback was and if that came from the new customers that Proteus kind of affords you or if it was from the existing base?

Yes. I think, Kyle, the way to think about it is for some of the customers, it's really a question of do they deploy capital dollars today or a Platinum when the Proteus is coming. I think for those customers who see an opportunity to use the existing technology for their work today and eventually grow into the Proteus, we are taking advantage of our ability to use the placement program to get access to them. As we said in the prepared remarks, I think it's a good data point since we launched that program, we've placed 17 instruments in unique customer end points. So I think when the current tech fits, and it's really more about they don't want to purchase today, knowing something new is coming, we do have that placement option to work with them, get them on the technology, get them utilizing it and then convert them in the future. I did mention earlier, if someone is purchasing a Platinum machine and wants to make sure they're protected from sort of the Proteus launch and making sure they have some financial benefit of that, we're certainly prepared to extend credits to those folks. And then I think there are a third bucket of customers, which are they want to be able to do something in terms of maybe the complexity of the sample or the throughput of work that just doesn't match up well to Platinum. So Proteus will be their entry point to working with Quantum-Si. So I sort of break people into those 3 buckets, and I think many people fit in either the first one where we access them today with the placement, moving them into a Proteus in the future or they're going to be Proteus first because it really is more about aligning what they're trying to accomplish with the capabilities of that platform.

Okay. And it's just interesting because like in theory, labs that were willing -- like would be willing to buy a Platinum for less than $100,000, would be willing to -- are comfortable with this price point. So I wanted to ask you about the list price a little bit. I know that was -- I think you touched on it earlier in a prior question. But the price is obviously almost equal to what you just did in revenue in the fourth quarter. I know there's a lot of dynamics going on, but maybe there are some new customers that you'll be able to target now that have access to more funds or they're more affluent. And overall, just again, just kind of curious what gives you comfort that the price point is going to be appropriate given the uptake that we've seen with Platinum thus far.

Yes. I think there's a couple of factors in play here. I think, obviously, there are some new customers that we can get to that we just can't access today. I think, as an example, we've talked about this in the past. In core labs today, we're often sort of a complementary platform to other platforms. And some of our labs then are the smaller individual investigator labs. So obviously, Proteus wouldn't be a great price point in those smaller individual investigator labs. But in the core labs, if you think about the price point we're at and the capabilities we're talking about, $425,000 is sort of about in the middle of what they're sort of -- maybe even the lower end. I mean, some of the best sort of the high-end mass spec machines can run upwards of $850,000 up to over $1 million each. So we don't think $425,000 in terms of those core labs and some of those higher volume sites is at all an impediment. I think it really comes down to what are the capabilities of the platform and do they address either very difficult things to do with their existing tech? Are they answering very important questions that researchers want to study? And if you do those things and we believe Proteus is going to have those capabilities, specifically things like PTMs, the complex biological samples, the increased proteome coverage, we'll have to do things like sequencing antibodies and looking at variable regions. These sort of things that are very difficult to do unless you own that $1 million mass spec machine and have all the custom infrastructure. When you start positioning Proteus in that context, a $425,000 price point, I think, is a very reasonable place to be at. It captures our value but makes it more accessible than those sort of $1 million price points. But yes, I think you're correct in one way that is that smaller individual investigator who has a lot less funding is probably not going to be the perfect target. But again, the way we view those is might there be 2 or 3 of those investigators that would look to pool money together to purchase a machine and have this capability. That's not something we've had to do today with Platinum or Platinum Pro, but certainly something you see in our industry in spatial and other areas where smaller investigators pool together to have the capability to do things when sometimes it's not offered at the core lab or somewhere nearby for them.

Got it. Can you just clarify, would you launch Proteus with the reagent rental kind of program as well? Or would it just be solely kind of direct instrument sales [ and shipments? ]

Yes. Right now, we are -- we've only announced the list price and the intent to do direct capital sales. We -- I think we'll start there. We'll get feedback in the market and then decide if we want to open up other acquisition models. But right now, our intent is to launch with only the ability to do a direct capital acquisition and then sort of get the market feedback and decide if we open that up to other things over time.

Okay. And then Jeff Keyes, it sounds like the mix will be mostly consumables this year, almost entirely consumables. So that would typically mean higher margins for most tools companies. But I think in your case, consumables seem to have a lower margin compared to the instrumentation. So I guess, I know you're not guiding to gross margin, but how low could it get to this year relative to the mid- to high 40s that you've been at recently in the past couple of years?

Yes. So I think your comments are reasonable and everything else being equal, our consumables have a lower margin than capital equipment, but there's a couple of things going on here, too, because during the course of 2026, we expect to have some capital sales and some placements as well as consumable revenue, but the caveat on that is on the capital sales. We anticipate a lot of them to have this credit towards Proteus for future acquisition of a Proteus model that has deferred revenue that, that will be impacting our overall margin as well. So I don't think we're going to have specific guidance for margin specifically. But having said that, I think you can expect reasonably it's going to be lower than that kind of 40% to 50% range that we've had for the full year. And it will evolve and be impacted simply on the number of credits that we provide for Proteus for the actual capital equipment sales, if that helps, Kyle.

In the entire -- Kyle, maybe I can add one additional piece of color. I think consumable volumes in terms of production volumes are still rather modest today for us. And obviously, in our industry, getting to scale on that is a key component to achieving sort of the desired gross margins for consumables. I'd say that, though, and just remind us all that and we've talked about this on other calls, and we talked about it extensively at our Investor Day, one of the reasons to move to the new architecture with Proteus was not just sequencing output and automation, but the consumable architecture, moving from a CMOS-based chip to a passive nano-well array. There's a significant advantage to us in terms of our cost of producing those, not only at scale, but even in the earlier days of building that product. So I think there's a couple of factors in play here, the consumable architecture we're on and being at fairly low volume. And again, we factored both of these things into that technology decision as we sought out to develop Proteus and the associated consumable architecture.

Okay. And then Jeff Hawkins, I want to ask like a Proteus question for you. So what would be the biggest risks, I guess, to launching Proteus this year? Like in this R&D ramp that you got going on, what could happen to the downside that could cause that to slip out to '27, for example? And then secondly, I'm just wondering how important is to actually obtain that 20 amino acid kind of milestone because maybe that's not like a big driver in '27, '28, but maybe that's more critical to like the long-term aspect -- like the long-term growth drivers such as de novo sequencing or PTM detection and things like that.

Yes, Kyle. So I'll work backwards with you on this one. So I would agree with you that I don't think the 20 amino acid detection is the key driver, certainly in the early days of the Proteus launch. I agree with you that coverage is obviously -- it's always a net positive to customers when you can detect more amino acids. It's obviously clearly important as you try to get to de novo sequencing. But I would agree with your general thesis that the 20 is not -- 18 versus 20 is not going to be the major driver of customer adoption of Proteus when we launch it. I think in terms of risk of launch, I always break product development programs down into sort of 2 key things. One is have you gotten through the innovation and invention phase of the program, meaning the technical risk, has been taken off. And for us, the answer to that is unequivocally yes. The invention occurred, the big innovation leaps have been made. We've demonstrated sequencing on prototypes. We've got multiple running. We're getting integrated units and expect to communicate sort of progress on those over the coming months. So I feel like that technical risk component of the development where you still have to get that big breakthrough come up with that aha moment, that's behind us now. This is really now a focus on the second phase I see in product development, which is really the hardware integration, the bringing up of the manufacturing capabilities, working on things like optimizing performance and reliability, these what I would call more classic system integration or sort of hardware engineering. That's where we're at, and those are the things we're doing. Could you hit a bump in the road and that take a little bit longer? Sure, that could happen. But I think when those -- when you're in that phase of development, if you get delayed, you're talking about delays sort of on the level of a few months, you're not talking in quarters and years like you are if you're back in that innovation phase. So again, we feel good about launching by the end of 2026. But if you want me to paint for you what the risk is, I think the risk is some of those steps of getting the performance where we want it to be, the reliability where we want it to be, the manufacturing quality where we want it to be. If any of those things get delayed, again, I think we're talking about a much shorter time scale than some of the big chunks of delays you see with technologies that are still back in that innovation and invention sort of phase of development.

Awesome. And then just final one. I think you guys are one of the last tools companies to report earnings here, and it's timely given the White House OMB, the Office of Management and Budget. They've been slow to authorize the release of NIH awards. We obviously have had this new budget that you referenced, Jeff. There might be a deadline kind of soon for this for OMB. So are you hearing anything on that front? And maybe any risk or more uncertainty with respect to kind of NIH academic funding like this year?

We haven't heard anything new beyond the color I gave. I think we're aware of what you're describing. We haven't heard that though through the customer channel, meaning people saying they need to get a budget in by a certain time. I think what we're focused on with customers are often -- sometimes it's related to NIH, but often it's just what's the capital budgeting cycle of their institution. They have to have their request in by April or May in order to be funded in a certain time frame or tenders internationally, they have to be in by a certain time in the summer to fund the next year. So we're dealing more with like sort of financial calendars than we are sort of a push right now related to anything out of OMB or out of the NIH. But I think we'll keep a close ear to the field as that unfolds. But nothing coming yet inbound from customers. We'll have to sort of see if that changes as the information works its way through the market and to our customers.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jeff Hawkins for any further remarks.

Thank you for joining our call today. We look forward to providing more updates on the Proteus program and the continued progress towards commercial launch on our next earnings call. Thank you.