SEER - NASDAQ

Good day, and welcome to the Seer, Inc. Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kelly Gura, Investor Relations. Please go ahead.

Thank you. Earlier today, Seer released financial results for the quarter ended June 30, 2025. If you've not received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to [email protected]. In addition, during today's conference call, we will be referencing a slide presentation that can be accessed on the Events and Presentations section of Seer's Investor Relations website. Joining me today from Seer is Omid Farokhzad, Chief Executive Officer and Chair of the Board; and David Horn, Chief Financial Officer and President. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section titled Forward-Looking Statements in the press release Seer issued today. For a more complete list and description, please see the Risk Factors section of the company's quarterly report on 10-Q for the quarter ended June 30, 2025, and in its other filings with the Securities and Exchange Commission. Except as required by law, Seer disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, August 6, 2025. With that, I would like to turn the call over to Omid.

Thanks, Kelly, and thank you, everyone, for joining us this afternoon. I will begin our call today by providing updates on our business, and I will then turn the call over to David to provide more details on our financial results for the second quarter of 2025 as well as our outlook for the full year. Beginning with Slide 3. Q2 was a pivotal quarter for Seer as we continue to execute with discipline, advance key commercial and product milestones and accelerate the validation and impact of our platform. The Proteograph Product Suite is unbiased, meaning it's inherently untargeted and enables the scientists to view an unprecedented breadth of the proteome from the most abundant proteins to the least abundant proteins. This deep unbiased proteomics platform is based on our proprietary engineered nanoparticles that is core to the Proteograph Product Suite. In the second quarter, we launched the Proteograph ONE workflow, announced a landmark 20,000 sample population scale study with Korea University and continue to build commercial momentum with strong instrument placement and continued traction with our Seer Technology Access Center or STAC. We also saw increased third-party validation through high-impact publications and compelling data presented at major industry conferences. Back in January, we laid out 4 core growth catalysts for 2025, and I'm proud to share that we've delivered progress across each one. We have always believed that our technology would redefine the trajectory of proteomics and make a meaningful impact within the scientific community. We believe our progress in the second quarter is a clear demonstration of this impact. We ended the quarter with $4.1 million of revenue, representing 32% year-over-year growth and a strong balance sheet of approximately $263 million in cash, cash equivalents and investments. We continue to make highly concentrated and impactful investments in R&D to execute on our product roadmap, and we're continuing our share repurchase program as we believe there is a significant dislocation between our core value proposition and what our stock price reflects today. As of June 30th, we have repurchased approximately $20 million of our Class A common shares under our $25 million share repurchase program that was authorized in May 2024, reducing our net total shares outstanding by approximately 13%. We recognize the policy environment remains fluid and continue to closely monitor how emerging U.S. policy development may influence our customer base. Near-term macro pressures, including evolving tariff implementation and continued uncertainty around government funding are likely to weigh on market visibility through year-end. Despite these headwinds our customers are facing, our strong performance in the first half of the year gives us confidence to reiterate our full year 2025 revenue guidance of $17 million to $18 million, representing 24% year-over-year growth at the midpoint. Now I'd like to walk through our recent progress in our core initiatives of validating our platform, enhancing access, driving innovation and enabling larger cohort studies in more detail. Starting with product innovation on Slide 4. This quarter marked a major inflection point for Seer with the launch of our high-throughput Proteograph ONE assay and SP200 automation instrument. This is a transformative step forward, not just for Seer, but for the entire field of proteomics. Our vision is to enable deep unbiased proteomics research at scale. And with this launch, we're empowering researchers to move from poorly powered small studies that may not replicate to larger core studies that are adequately powered to uncover novel biological insights and advance our understanding of human health. With the Proteograph ONE, we've more than doubled throughput to over 1,000 samples per week with an approximately 30% reduction in run time to approximately 4.5 hours compared to Proteograph XT. The Proteograph ONE enables the identification of up to 10x more proteins than traditional mass spec workflows, achieving industry-defining precision. In addition to the performance improvements, we believe our customers could achieve a meaningful reduction in cost per sample for the full workflow. As evidenced by the initiation of multiple large-scale studies that I will expand on shortly, the combination of Proteograph ONE attributes is translating to an increase in the size of the studies that our customers are running, which we believe will be an important catalyst for revenue growth. We also recently launched the Proteograph DIRECT assay, enabling customers to run cell and tissue samples on our SP200 instrument. This assay was introduced in response to the strong demand from customers to use our automated instrumentation on other workflows that don't leverage our proprietary nanoparticles. Proteograph DIRECT streamlines sample prep by drastically reducing manual processing time to just 60 minutes for AV samples without compromising depth or reproducibility. Looking ahead, we plan to continue broadening our menu, expanding the capabilities of our platform and innovating on our workflow to provide the best solutions for our customers. Now moving on to larger cohort studies on Slide 5. Over the last 3 years, Seer has helped redefine deep unbiased proteomics by enabling researchers to move from small-scale studies of tens of samples to those involving up to tens of thousands of samples, which were previously only possible using targeted proteomics approaches. This quarter, we announced a landmark population scale study in collaboration with Korea University, representing the largest deep plasma proteomics study of its kind. This 3-year study intends to identify novel blood-based biomarkers for young adults in their 20s and 30s using samples from 15,000 cancer patients and 5,000 healthy subjects sourced from Korea's leading cancer institutions. Powered by our newly launched Proteograph ONE assay, the SP200 automation instrument and Thermo Fisher's Orbitrap Astral mass spectrometer, this is the first large-scale plasma proteomics studies to leverage mass spectrometry and AI-driven analytics for early cancer detection. Korea University selected our platform for its unique ability to deliver the depth, scale and reproducibility required for such ambitious study. This collaboration highlights our belief that the Proteograph is unlocking the next generation of sensitive, scalable and personalized diagnostics, laying the foundation for earlier interventions and improved outcomes in young adult cancer patients worldwide. Importantly, this follows our announcement on our last earnings call that Discovery Life Sciences, one of our centers of excellence and a leading omics service provider in collaboration with us, secured a significant contract from a new customer to run a 10,000 sample study on the Proteograph Product Suite and the Orbitrap Astral mass spectrometer. Taken together, these population scale studies demonstrate our belief that Seer is uniquely positioned as the only truly unbiased scalable and deep proteomics platform to power the next generation of proteomic discovery. We expect to see a growing number of population skill studies in the near term. Moving on to the validation of our platform on Slide 6. Validation of our technology continues to grow with 52 customer publications, preprints and reviews, many in high-impact journals, highlighting the unique capabilities of the Proteograph Product Suite. This adds to hundreds of abstracts, presentations and talks showcasing our platform's differentiated biological insights. At recent industry conferences, an increasing number of studies further demonstrated the Proteograph ability to generate unique biological insights. At the American Society for Mass Spectrometry, or ASMS, our customers, collaborators and Seer scientists unveiled new data generated from the Proteograph across 14 poster presentations and multiple researchers presented compelling findings from their early access experience with the recently launched Proteograph ONE workflow. Now turning to Slide 7. At ASMS, Dr. Gary Patti, a Professor at Washington University in St. Louis, presented a study using the Proteograph ONE to analyze the plasma proteomes of metabolically healthy lean, metabolically healthy obese and metabolically unhealthy obese individuals. He identified distinct protein signatures in the metabolically healthy obese population, including 3 novel biologically relevant protein biomarkers undetectable by an affinity-based assay. These biomarkers suggested that metabolically healthy obese individuals may buffer oxidative stress better, regulate their glucose levels better and clear more lipids from the plasma compared to the other 2 cohorts. Though a small study, it highlights the Proteograph ONE's ability to uncover novel biology and advance metabolic disease research. Dr. Josh Coon, a Professor at the University of Wisconsin-Madison, presented his findings from the pilot study that validated the high performance of the Proteograph ONE workflow on monkey samples, delivering a meaningful increase in the amount of unique protein groups versus neat methods. Turning to Slide 8. At the third Annual Symposium on Human Proteome and Health in Oxford at the end of June, Dr. Claudia Langenberg and Dr. Maik Pietzner from Queen University of London presented compelling data from 1,500 individuals in the genes and health cohort run on the Proteograph XT. We believe there are 3 key takeaways from the proteogenomics study that highlight the power of the Proteograph platform. First, the Proteograph detected a high number of proteins previously not found using affinity-based methods. Out of the more than 8,000 proteins detected in plasma, over 2,300 of these proteins represented a quote "previously unexplored proteome" unquote, according to study lead, Dr. Maik Pietzner. Second, the Proteograph detected a high number of protein quantitative trait loci or pQTLs that were previously not found by affinity- based technologies. Over 1,200 pQTLs were detected with over half of them not detected to date by studies up to 40x larger. The Proteograph detected 140 of these novel pQTLs in proteins that were measured by affinity-based methods. However, the pQTLs were not detected by these technologies. 690 of the pQTLs we detected were co-localized with strong disease loci from phenotype-wide association studies or PheWAS. Third, the Proteograph uniquely confirmed the absence of some proteins in plasma that had lost their function. These findings demonstrate the Proteograph's ability to generate meaningful biological insights through a superior depth and unbiased approach, most recently highlighted by Drs. Claudia Langenberg and Maik Pietzner in the GenomeWeb webinar. We continue to partner with leading investigators and host webinars that showcase how researchers are using our platform to generate novel biological insights, further strengthening our growing body of evidence and reinforcing Seer as a trusted partner in the proteomics community. Now moving to Slide 9 to take a closer look at the progress with accelerating access to the Proteograph Product Suite. We continue to see strong demand for STAC, which lowers the barrier of adoption of the Proteograph Product Suite. STAC allows a Proteograph user to run samples in their own lab and have Seer run the mass spec or alternatively provides end-to-end services from sample to a proteomics data and analysis. In Q2, over half of our instrument shipments were acquired by customers who had previously accessed our STAC, representing another solid quarter of STAC to instrument conversion. STAC remains a strong revenue contributor as a strategic asset, giving users hands-on experience with the Proteograph and in some cases, leading to in-house instrument adoption. With the increased throughput enabled by the Proteograph ONE workflow, we have expanded STAC's capacity to meet a growing number of demand without additional investments. We look forward to serving more customers as they generate critical data for their ongoing studies. Our strategic instrument placement program, or SIP, remains a key driver of adoption. By leveraging available operating budgets, SIP helps capital-constrained customers, particularly in the current macroeconomic environment, access our technology. Under this program, we loan an instrument to a customer with an upfront purchase of a consumable kits. Our expanded partnership with Thermo Fisher Scientific to co-market and sell the Proteograph Product Suite alongside their Orbitrap Astral mass spectrometer has been progressing well. This powerful pairing enables population scale deep unbiased proteomics for the first time with exceptional robustness and reproducibility. In addition, this partnership further strengthens our commercial reach and makes it easier for our customers to access a seamless end-to-end solution for unbiased proteomics. We've completed training across Thermo Fisher's U.S. and European sales forces and are beginning to see this partnership translate into advanced stage opportunities. We continue to see traction in several regions, and we are actively pursuing additional population scale opportunities together, reinforcing our confidence in the ability of this partnership to drive adoption. I'm deeply proud of the team's execution this quarter as we lay a strong foundation for the rest of the year and beyond. With that, I will now turn the call over to David.

Thanks, Omid. Turning to Slide 10. Total revenue for the second quarter of 2025 was $4.1 million, representing an increase of 32% compared to $3.1 million in the second quarter of 2024 and was primarily due to higher product and service revenue. Revenue recognized primarily consisted of sales of Proteograph instruments, consumable kits and service revenue. Product revenue for the second quarter of 2025 was $2.7 million and consisted of sales of Proteograph instruments and consumable kits. We were pleased by the traction we saw in terms of instrument shipments and the purchase of consumable kits in the quarter despite the continued pressure we are seeing on CapEx budgets and elongated sales cycles for the outright purchase of new instruments. Service revenue was $1.2 million for the second quarter of 2025, including $409,000 of related party revenue and primarily consisted of revenue related to STAC service projects. We remain encouraged by the strong customer interest in running projects through STAC, particularly as more users gain access to Proteograph data. Sample volumes increased again this quarter on a year-over-year basis. We may continue to support projects for key strategic studies and marketing initiatives that will result in additional presentations and publications in the near term. These efforts, while impactful, are offered at lower price points than our typical STAC service projects. Other revenue was $119,000 for the second quarter of 2025 and consisted of leasing and shipping revenue. Total gross profit was $2.1 million for the second quarter of 2025, representing a gross margin of 52% compared to $1.7 million in the second quarter of 2024, representing a gross margin of 56%. Gross margins were driven by higher consumable and service revenue in the second quarter of 2025, offset by an increase in instrument installation and training costs relative to the second quarter of 2024. We continue to expect variability in our gross margin on a quarter-by-quarter basis since the proportion of instrument, consumable and service revenue fluctuates in any given quarter. At scale, we continue to believe our long-term gross margins will be in the range of 70% to 75%. Total operating expenses for the second quarter of 2025 were $22.6 million, including $3.7 million of stock-based compensation, a decrease of 21% compared to $28.8 million, including $7.3 million of stock-based compensation in the second quarter of 2024. Research and development expenses for the second quarter of 2025 were $12 million, a decrease of 6% compared to $12.7 million in the second quarter of 2024. The decrease in R&D expenses was primarily due to decreases in stock-based compensation and allocated costs. Selling, general and administrative expenses for the second quarter of 2025 were $10.7 million, a decrease of 34% compared to $16.1 million in the second quarter of 2024. The decrease in SG&A expenses was primarily due to a decrease in stock-based compensation and professional services expenses. Net loss for the second quarter of 2025 was $19.4 million compared to $22.9 million in the second quarter of 2024. Free cash flow loss, defined as net cash used in operating activities in the period less purchases of property and equipment in the period was approximately $27.3 million for the quarter ended June 30, 2025. We continue to expect free cash flow loss to be in the range of $40 million to $45 million for the year. In addition, we continued our share repurchase activities in the second quarter of 2025 since we continue to believe that there is a significant dislocation in our share price. In the second quarter, we repurchased approximately 3.9 million Class A common shares at an average price of $1.92 per share. As of June 30, we have repurchased approximately 10.7 million Class A common shares at a VWAP of $1.86 per share, utilizing approximately $20 million of our $25 million share repurchase program authorized in May 2024. As a result, we have reduced our net total shares outstanding by approximately 13%. We ended the quarter with approximately $263.3 million in cash, cash equivalents and investments. Importantly, we believe that with our current cash, cash equivalents and investments on hand, we have sufficient capital to reach cash flow breakeven. Turning now to our outlook for the year on Slide 11. We continue to expect revenue to be in the range of $17 million to $18 million for 2025, representing growth of 24% at the midpoint over the full year 2024. Our guidance range reflects the assumption that our customers will continue to face headwinds from budget constraints, ongoing uncertainty around government funding, particularly related to the NIH and broader macroeconomic volatility, including potential tariffs. In 2025, we believe we will have approximately the same exposure to academic and government entities in terms of our overall revenue, which is in the range of 30% in 2024. In the first half of 2025, the majority of our academic and government revenue has come from academic customers. Any changes in their funding may impact their ability to make purchases in 2025. Tariff and most favored nation pricing proposals, which would affect pharmaceutical companies has introduced uncertainty for our commercial customers with the full impact yet to be determined. We were encouraged by our results in the second quarter with launches of new products and multiple population scale studies powered by the Proteograph, increased third-party validation through compelling data and strong instrument shipments. That said, we also saw some customers delaying purchases amid this backdrop. As such, we remain cautious given this macroeconomic uncertainty, but are reaffirming our revenue guidance at this time. At this point, I would like to turn the call back to Omid for closing comments.

Thank you, David. Moving on to Slide 12. I'm proud of our team's execution in the second quarter as we brought new products to market and drove deep unbiased population scale studies in plasma that were not possible before Seer. We are operating in a challenging and dynamic macro environment, yet we continue to position ourselves for strength ahead. We remain focused on advancing our 4 key growth drivers in 2025, and I look forward to keeping you updated on our progress. With that, we will now open it up for questions. Operator?

[Operator Instructions]

Prior to our first question, I just wanted to clarify one comment in my prepared remarks. Free cash flow loss of $27.3 million is for the 6 months ended June 30, 2025, rather than the quarter ended June 30.

Our first question comes from Daniel Brennan with Cowen.

This is Kyle on for Dan. I guess maybe to start, can you share any early feedback you're getting on the new Proteograph ONE assay? I guess what's the uptake and usage looking like so far in that new assay?

Yes, Kyle, thank you. As you know, we launched the Proteograph ONE assay and the high-throughput SP200 automation instrument at the ASMS in June. It was an important inflection point for us because it became possible for customers to do very, very large-scale studies. It doubled the throughput, reduced the assay run time on the instrument to about 4.5 hours. It could easily sit within an 8-hour workday. And then the precision, excellent, and you could run 80 samples at once in a 4.5-hour run. And because the assay went from 2 mass spec injection per sample to 1, it also then increased the throughput on the mass spec side. The feedback that we've received so far, Kyle, has been fantastic. KOLs love it. We had done early access of the instrument to some KOLs, and they did present some data on the -- at the ASMS and the data was great. And then importantly, because of the enhanced throughput, this is now enabling large-scale population scale studies to be done with the mass spec. And of course, you heard that we had done the DLS study that was 10,000 samples. And then we just announced also the -- at ASMS a 20,000 sample study with Korea University. And there's other population skill studies that are on the launch pad, Kyle, and none of it would be possible if we had not increased the throughput. So the feedback has been great and the impact of it is already becoming evident.

Got it. And then maybe just moving over to STAC. It seems like that's really starting to bear some fruit here. You mentioned half of the instruments you placed in the quarter were from customers that had used the STAC program. Can you discuss your pipeline of potential customers who are currently using the STAC program, but are an opportunity to place an instrument in-house? I guess as a percentage of your expected placements for the rest of the year, how many of these do you think are coming from these STAC customers versus otherwise?

Yes, Kyle, it's David. Thanks for the question. Yes, you're right. STAC continues to be a great pipeline for placing instruments and as well as the SIP program as well. So the 2 together kind of work really well. Hard to quantify. I think if you look at the first half of the year, it certainly was the majority of shipments were former STAC customers. So I think as STAC continues to build, we get new customers taking our first step through the STAC, doing a project and then wanting to bring the technology in-house. I think we'll continue to see the benefits. I think we'll continue to see strong benefit of having that STAC to drive the follow-on instrument shipments. And I would expect -- no reason to expect that the second half of the year wouldn't look a little bit like the first half of the year and that most of our customers have first experienced the technology through a STAC project.

Our next question comes from Rachel Vatnsdal with JPMorgan.

This is Jaden on for Rachel. So my first question is regarding your co-marketing partnership with Thermo. Could you provide a little bit more insight on how much revenue is attributed to this partnership compared to other sources such as your large-scale study revenues? And then how meaningful do you expect this partnership and programs to become for you in the near future?

Yes. Thanks, Jaden. I think we're continuing to see a lot of benefits from the Thermo partnership. As Omid mentioned in his prepared remarks, not only from a population scale study perspective, but also active opportunities. I can say that we have seen some of those opportunities come to fruition. But I will say that the revenue is still extremely modest. So again, I think we'll continue to see that probably pick up in the back half of the year. But to date, it's been very modest. Remember, we only fully trained the sales force at the end of the first quarter, beginning of second quarter, and then it's been rolling out kind of globally for them. So it's kind of right on the time frame we expected. And so again, I think we'll continue to see that momentum build. But most of the revenue is coming from our own direct sales team as well as some of these of our population scale study work that we're doing. And so again, I think we'll continue to see both our own direct efforts as well as the efforts with Thermo drive revenues in the second half.

And I would just add, I mean, I think you can expect that, for example, in Q3, we'll begin to recognize the first revenue from the collaboration come to fruition. But importantly, the pipeline of the opportunities, remember, they've been only added for less than a quarter, is growing. So I'm very encouraged by that, but we are being cautious and modest in terms of our assumption for the guide for the year. But I do expect the first revenue from the collaboration to come to fruition this quarter.

Okay. Yes, that's perfect. And then just on competition, could you discuss the competitive landscape regarding customers choosing to use your technology in a research setting compared to other existing proteomic technologies that might be more aligned with a biased proteomic method, just given that the space has seen more interest from other companies within the past year?

Yes, of course. Look, I think if you look at the competitive landscape at a very high level, I always frame them into 3 buckets, those that consider a mass spec not to be a good detector and therefore, they're developing their own novel detector. That includes Quantum- Si, Nautilus on the public side; Erisyon, Encodia on the private side. And then there's a targeted ones, you know them all too well. On the public side, Soma, Olink, now part of Thermo and then maybe Quanterix; on the private side, [ Alamar ]. And then there is unbiased proteomic and scale. And I think Seer uniquely sits in that space, and that's a space that we pioneered. That's the space that we've continued to execute on, and that's a space that is now allowing large-scale studies to be done. Now we are relatively new to this game because technologies like SomaScan or Olink have been around for many, many years. In the case of Soma, almost 20-plus years and Olink 10 or 15 years. Seer is relatively new. And so the publications and the customer validations are just emerging. Now before Seer, it was just not possible to do large-scale studies. And so biobanks and any investigator that needed to do large-scale studies was forced to use the only available tool to them at the time, which was a targeted approach. And so those technologies scaled. Seer fundamentally changed the arc of proteomics, making unbiased proteomics, deep unbiased proteomics be scalable. Before Seer, the largest deep unbiased proteomic that was published was a study of 48 samples. And the deepest study, by the way, from Broad Institute was on a study of 16 samples that went to a depth of about 4,500 proteins. We've now had in just in 2025, just the first half of the year, multiple customers that are now doing large-scale studies. And by that, I mean 10,000 plus. So this Korea University one that we announced is 20,000 samples. There's other studies of that scale that are kind of on the launch pad, and we're in discussions with them. And by the way, this followed the Q1 announcement of the Discovery Life Sciences 10,000 sample study with a customer. So now it changed, and it changed not because we could scale, but also in terms of our improvements, cost went down, depth went up, throughput went up, mass spec utilization time went down. So it's a confluence of a lot of innovation that we worked on and collaborated with our colleagues that now makes it completely possible to do large-scale studies in an unbiased way with proteomics. And now the question is, if you're a customer and you can spend your dollars in a targeted way where the discovery potential is very limited or in an untargeted or in an unbiased way where the discovery potential is unlimited, which one do you choose? And I think the evidence is that customers are leaning towards the untargeted unbiased. This is not to say that targeted approaches are not good. I actually think they're very complementary. No different than the way arrays were when next-generation sequencing came about. I think targeted approaches are excellent when you know what you're looking for in small panels, for example, like the Alamar technology or some of these smaller Olink platforms or kits. But when you're looking for large content and you're looking for discovery, the only way to do it and to do it well and to do it effectively is to do it in an untargeted way. So I think we are just at the very, very beginning of this massive content generation that is going to be enabled by Seer over the course of the very near term and the coming years.