Welcome to the Q2 2019 Personalis Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's conference, Caroline Corner. You may begin. .

Thank you, Operator. Welcome to Personalis' second quarter 2019 earnings call. Joining me on today's call are John West, President and Chief Executive Office, Aaron Tachibana, Chief Financial Officer, Clinton Musil, Chief Business Officer and Rich Chen, Chief Scientific Officer.

This call will include forward looking statements including statements regarding the markets in which we operate, including potential market sizes, trends and expectations for products, services and technology trends of demand for our products. Personalis' expected financial performance, expenses and position in the market.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. We encourage you to review our most recent filings with SEC particularly the risk factors direct described in our 10Q filing for our second quarter ended June 30, 2019.

The forward looking statements we provide during this call, including projections for future performance are based on our reasonable beliefs and expectations as of today. Personalis' undertakes no obligation to update these statements except as required by applicable law.

Our press release of our second quarter 2019 results is available on our website www.personalis.com under the investor section and includes additional details about our financial results. Our website also has our latest SEC filings, which we encourage you to review.

A recording of today's call will be available on our website by 5 PM pacific time today. Now I'd like to turn the call over to John for his comments and second quarter of business highlights. .

Thank you, Caroline, and good afternoon everyone. It has been a tremendous journey for Personalis' from 2011 until now. We have a mission to help cancer patients by providing comprehensive data and analytics to biopharmaceutical companies so they can develop more effective cancer therapies.

I am very proud of the hard work and accomplishments of the Personalis' team and I am pleased to be able to speak today as CEO of a newly public company.

In June, we raised $140 million in our initial public offering, net of underwriting discounts and fees and expenses payable by us, which will allow us to continue to expand research and development and build out our commercial infrastructure to deliver high value genomic information to customers.

I'm really pleased with all of that recent progress, yet I want to take a chance to step back and introduce the company to those of you who don't know us yet, and to explain our vision and what we hope to accomplish with our pharmaceutical partners.

As you know, cancer is a global challenge weighing heavily on patients, families and our healthcare system. Scientists and doctors are hard at work running clinical trials with potential new therapies to help patients. According to third party research, the pharmaceutical industry spends approximately $60,000 per patient in oncology clinical trials.

While genetic sequencing and related technologies have enhanced research and development efforts substantially. We believe the current tools aren't good enough. Many cancer diagnostic tests analyze a relatively narrow range of 50 to 500 genes and often miss key pieces of information about the immune system or other aspects of a patient's biology.

Today, many pharmaceutical companies still use a disparate set of tests to compensate for the missing information which results in a fragmented and pieced together view of the tumor biology. Along with logistical complexities, and also increased costs.

At Personalis' we have developed our platform to provide a comprehensive solution to help our biopharmaceutical customers generate the information they need to drive productivity from their drug development programs.

Using our testing and analytical services, biopharmaceutical companies can generate comprehensive molecular data about an individual patients cancer and immune response or genomic makeup. With this information our customers are working to develop next generation therapies.

Our proprietary and highly differentiated platform enables our customers to analyze all of the approximately 20,000 human genes as well as the immune system from a single small tissue biopsy.

Over the past several years, we have continuously innovated bringing compelling new technology to market that will help our customers develop drugs, enabling cancer patients to live longer, fuller lives. Over the last several years, we have grown our customer base to include many of the leaders in the cancer drug discovery.

In the second quarter of 2019 we generated revenues of 15.8 million, up from 8.8 million in the same quarter last year. This builds upon our full year 2018 revenues, which were 37.8 million, which was an increase of more than 300% compared to 2017. In addition to our biopharma business, we have a very important customer in the U.S.

veteran administration's Million Veteran Program, landmark research effort aimed at better understanding how genetic variations affect health broadly.

MVP is one of the largest and fastest growing population sequencing efforts in the world and we are proud to be contributing to this leading medical research effort that is now expected to enroll over a million veterans.

MVP provides researchers with a rich resource of genetic health, lifestyle and military exposure data collected from questionnaires, medical records and genetic analysis. By combining this information into a single database MVP promises to advance knowledge about the complex links between genes and health.

With over 770,000 enrollees today, MVP already far exceeds the enrollment numbers of any single VA study or research program in the past, and is in fact one of the largest research cohorts of its kind in the world.

Personalis' has been working with the VA since 2012, and has thus far been contracted to deliver genomic information for approximately 80,000 samples in connection with the current program.

We are in coordination with the MVP, we are in coordination with the MVP and continue to build out capacity that would allow us to deliver on additional or an additional order received in the second half of this year.

This has enabled us to invest in technology as well as build considerable scale in automation, allowing us to deliver high quality genomic information to the MVP, and the rest of our customers. We look forward to maintaining this relationship as they continue to deliver on their ambitious goals.

Given recent correspondence, we expect to accelerate delivery of genomic information to the MVP over the next several quarters to fulfil their near term needs. In the second quarter of our biopharma customer revenue represented 7.3 million of our revenue, while the MVP accounted for 8.5 million.

Looking ahead, we expect the MVP to continue to be our largest single customer for the next few years. Our whole genome work with MVP allows us to continue to operate with considerable scale and positions us for the day when whole genome sequencing becomes the standard in cancer.

As we continue to grow our overall top line revenues, we expect to see growth in both our biopharma and MVP business over the long term. As we've previously noted, we will work to manage capacity and sample order flow so that the contributions from the two line items may vary from quarter to quarter. Well, overall top line revenue continues to grow.

Given the current backlog of MVP samples in house, and their needs for delivery of data, we expect the MVP to utilize a substantial portion of our capacity for at least the next two or three quarters. So as we continue to build our business and drive our top line, we're focused on delivering on key strategic objectives.

While we are commercializing our existing products, we're investing in new product innovations and enhancements to maintain our leading position. We're driving adoption of our platform by establishing and expanding relationships with current customers, as well as new customers who are leading developers of oncology therapeutics.

At the same time, we are innovating and scaling our operational know how an infrastructure to growing capacity. We continue to expect to launch the diagnostic for use by biopharma customers conducting clinical trials later this year.

Finally, in 2020, we expect to commercialize the circulating tumor DNA product, offering biopharma customers a comprehensive view of 20,000 genes using plasma samples from patients with cancer.

This quarter, we also announced several important customer and partner relationships, including agreements with the Parker Institute for Cancer Immunotherapy, RAPT Therapeutics and the New Mexico Cancer Care Alliance. We continue to drive adoption in our personalized therapy segment with several customers moving into larger clinical trials.

We are seeing initial adoption of our universal cancer immunogenomics platform, ImmunoID NeXT which is now being evaluated by a growing number of customers.

As those who follow our story already know, our ImmunoID NeXT platform builds upon the technology from our ACE platform, our ACE technology allows our customers to fill in the sequencing coverage gaps to get high quality sequencing across the [indiscernible].

Our ImmunoID NeXT platform builds upon the ACE technology to include the immune repertoire as well, including elements of both the adaptive and innate parts of the immune system. We've also added analytical tools that help researchers drive more value from the data and we will continue to innovate there as we further evolve our technology.

We're very excited about ImmunoID NeXT and we expect this platform to be a driver for revenue growth in 2020 as existing ACE customers move to that platform. We continue to innovate and in the second quarter, we received two additional U.S. patents, and recently we received notice of a third.

All patents were related to our ACE technology and methods which support our differentiated products and service offerings. Our operations team is keenly focused on automation initiatives for higher quality, reduced cycle times and higher throughput.

We're continually working to both grow our capacity as demand versions, through the addition of instruments and lab space, and driving operational efficiencies through multiple incremental process improvements.

We saw quarter over quarter improvement in gross margins, which is beginning to reflect some of these efforts and note that we are currently focused on top line growth and building out capacity. Our MVP relationship has been particularly helpful on this front.

We continue to build our sales and business development teams, and we use the capital from our IPO to continue to expand our commercial efforts going forward. Our enterprise sales model is very efficient with our biopharma customer focus.

We expect to continue to add sales professionals and are building out our business development function to drive additional integration at higher levels with our biopharma customers. Finally, during the first half of 2019, I'm pleased to report that we added three seasoned executives was CEO experience at leading companies to our Board of Directors.

Blaine Bowman joined us in May 2019 and was previously on the Board of Directors of Illumina for 10 years and before that on the Board of Solexa. Earlier in his career Blaine was President and CEO of Dionex prior to its sale to Thermo Fisher Scientific. Dr.

Alan Colowick joined us in May 2019 and previously held multiple executive positions at Celgene and was Chief Executive Officer of Gloucester Pharmaceutical Incorporated, an early stage cancer pharmaceutical company until it was acquired by Celgene.

Paul Ricci joined us in February 2019, and was previously Chief Executive Officer of Nuance Communications Incorporated, a leading provider of speech recognition and artificial intelligence solutions with 14,000 employees worldwide.

We are thrilled to welcome them all on board and look forward to leveraging all of their expertise as we continue to build our business. With that, I will now hand it over to Aaron for more details on our financial results and guidance. .

Thank you, John. Revenues for the second quarter of 2019 were $15.8 million at 80% from 8.8 million in the same period of the prior year. The 15.8 million was a new record high for quarterly revenue.

The second quarter revenue growth was driven by an increase in volume for testing an analytical services provided to biopharma customers, and also the Veterans Administration Million Veteran program.

In the second quarter, the MVP accounted for 8.5 million or 54% of the total revenues, and the remaining 7.3 million or 46% of the mix was primarily from biopharma customers. As is the case with certain companies selling diagnostic panels to biopharma customers, we expect to see some variability from time to time for our quarterly biopharma revenue.

For example, we just had a relatively strong second quarter in our biopharma revenue, biopharma business and revenue increased approximately 27% from Q1, due to some of the planned first quarter samples arriving later than originally anticipated.

Since our customers conduct both perspective data analysis with steady sample flow and retrospective analysis with bad samples and order flow, our revenue mix varies on a quarterly basis while we push towards our longer term growth objective.

Given the biopharma sample delays in Q1, we recognized more revenue from our biopharma customers in Q2 than expected. We expect sample flow to normalize in Q3 which may result in less biopharma revenue than in Q2.

Well, our biopharma revenue normalized in Q3 sample flow for MVP continues to increase and we expect our total consolidated revenue in Q3 to grow sequentially. Gross margin for the second quarter was 37.3%, an increase 10.1 percentage points from 27.2% in the same period of the prior year.

The gross margin increase was a result of favorable operating leverage from higher volume, favorable mix from the increase in biopharma volume, efficiencies from linear sample flow and sample testing throughout the quarter and cost reduction from automation of manual path.

Going forward, our gross margins may vary from quarter due to the same factors just noted. In the second quarter, we also added additional capacity in the form of new equipment and automation. We have been automating manual tasks that typically lead to quality improvement and reduce cycle times per sample processing.

Our focus over the next couple of years will be to grow revenue and scale our business. In order to support this objective, there could be times when we may add capacity in advance of our needs to ensure that we can maximize revenue. Our MVP relationship has been particularly helpful as we plan capacity growth.

Operating expenses totaled $10 million or 63% of revenue compared with 6.1 million or 69% of revenue for the same period of the prior year. R&D expense was 4.5 million in the second quarter, an of increase of 1 million from 3.5 million for the same period last year. Majority of the increase in R&D was attributed to headcount growth.

We continue to invest heavily in R&D in order to bring new products to market expeditiously. SG&A expense was 5.5 million in the second quarter, an increase of 2.9 million from 2.6 million for the same period last year. The primary reason for the increase was related to headcount growth, and preparation for the initial public offering.

Going forward, we will be investing in sales and business development headcount as well as marketing programs to drive revenue growth, and also our public company infrastructure.

For the second quarter, total other income and expense, which includes interest, with a net expense of 1.8 million compared with a net expense of 3.6 million for the same period last year. The components were as follows, interest expense was 0.7 million in the second quarter compared with 0.6 million for the same period last year.

The interest expense was related to the $20 million of debt held on our balance sheet. Interest income was $200,000 in the second quarter compared with $71,000 for the same period last year. Other expense was 1.3 million in the second quarter, compared with 3.1 million for the same period last year.

The second quarter other expense was for a non-cash fair value mark to market expense related to outstanding warrants. Second quarter tax expense was approximately $2000 and related to state and foreign jurisdiction taxes. We currently do not pay any US federal tax due to our cumulative loss position.

Net loss for the second quarter was $5.9 million, compared with a net loss of 7.3 million for the same period last year.

The net loss per share for the second quarter was $0.89 and the weighted average basic and diluted share count was 6.6 million, compared with the net loss per share of $2.39 and a weighted average basic and diluted share count of 3.1 million for the same period last year.

Now under the balance sheet, we exited the second quarter with cash and cash equivalents of $163.3 million after completing our initial public offering during the third week of June. We raised a total amount of $140 million net of underwriting discount, fees and expenses payable by us and issued 9.1 million shares of common stock.

The recent IPO strengthens our balance sheet and provides us with the capital needed to drive future revenue growth. Our second quarter cash flow from operations was negative $10.9 million, and we invested 2.3 million in capital equipment of which 1.8 million was paid for during the quarter.

The cash usage for operations in the second quarter was higher than normal, due to approximately $5 million of cash disbursements, which included IPO related expenses and payout of annual bonuses earned in 2018. In addition, second quarter cash receipts were approximately $5 million lower than Q1 due to the timing of customer payments.

Our business model is capital efficient and is a fee for service with recurring revenues. Customers generally prepay a portion of the order value up front. Going forward, we intend to increase investments in our commercial infrastructure and new products and therefore cash usage will increase compared with historical amounts.

Now on to our guidance, please note that we will be providing annual guidance only. For the full year 2019 we projected revenues to be in the range of $60 million to $62 million, representing a 59% to 64% annual increase over the full year of 2018. Now I will turn the call back over to the operator to begin the Q&A session..

[Operator Instructions]. And our first question is from David Lewis from Morgan Stanley, Your line is now open. .

Aaron just one for you and then John, a couple of quick, quick questions. Aaron, your commentary on third quarter was pretty clear. Just two follow ups on that.

If I think about MVP, it's pretty clear that's up into the third quarter, should we also expect it to be up into the fourth quarter or more stable? And then for pharma bio, are you confident that absolute dollars in the second half are up over the first half?.

In terms of MVP. So, you know, sample volume, as we had mentioned, have been coming in at a fairly good pace over the last three to four months and so that definitely is the possibility that could it could continue to be up sequentially quarter on quarter. In terms of the pharma business.

So in terms of the you know, the reason for the, it being lower here in Q3 is really, you know, sample delays from Q1 into Q2, in terms of the full second half being lower than the first half that is a possibility at this point in time based upon what we see but in terms of just to be clear, the total consolidated revenue is going to continue to be up because of MVP, MVP, you know, today we have the sample volume to be able to utilize our capacity and drive continued top line growth of the company.

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Okay, very clear. And then John, just two for me. The first is just I know, it's early days on NeXT but any customer feedback you can offer, or potential customer enthusiasm for the expanded analytics would be helpful and then just a quick update on liquid biopsy. We still thinking you know, 2020, or any more specifics around the launch date there.

Thanks so much. .

I'd say the feedback we've heard so far on ImmunoID NeXT has been very encouraging. People understand that it's improving biology that they haven't seen all together in a single platform before and so I think that that's quite encouraging.

We actually are in the middle of having a kind of mid-year update with our sales folks all been in town and I would say, you know, they're all engaging with customers on this and I'd say this is definitely interesting that as in any new product in that we bring to pharma, particularly something that's different from what they've heard before.

There's a period of time where they're assessing and going through pilots and that kind of activity but I'd say I'm pretty encouraged with that we've always thought of ImmunoID NeXT is something that would likely drive our revenue up in 2020.

I think the, you know, what I see today that's still likely to be the case and appropriate in terms of kind of timing for that but I would say, I mean, one of the reactions we hear fairly often is people finding it almost incredible that it is actually possible to get all those different elements of the biology from a single small FAPE [ph] sample is, you know, almost kind of wow, I didn't know that was possible kind of reaction.

So I think that part is kind of we're on track. With that, as you will have seen, we're also in the process of sort of filling out the feature set there. You know, the core assay is what we've said all along, the analytics continue to expand, we had a press release on that the other day was sort of the next wave of those analytics.

And I think you'll see, continue to build out along that line so I think that will also help drive the interest in the demand as we get into 2020. So I'd say that's probably our biggest driver there liquid biopsy. As we've mentioned, you know, we're on track for product in 2020.

I think we'll probably have more to say about that when we get closer to that. Right now we really have a lot of focus on the next side of things. That's really the big driver for us, and really quite a breakthrough. .

Thank you. Our next question is from Derik De Bruin from Bank of America Merrill Lynch. Your line is now open..

So if you mentioned this in the prepared remarks, please forgive me.

How should we think about? Can you give a little bit color in terms of your -- what your existing pharma customers are buying from you, Basically I'm just looking for the question of how much is whole genome, exome, whole transcriptome versus some of the other offerings and where I'm going with this question is like, now that your got NeXT fully launched have you seen an increase in terms of the amount of services that the pharm customers are looking at or considering basically, it's questioning about how the mix is shifting in the business.

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So I would say our whole genome sequencing business is almost entirely for the VA at this point, we do think that long term, the cancer sequencing will move to whole genome but I think given what that would look like from a cost standpoint, today we're really focused on looking at all 20,000 genes, and frankly looking at moving the field up from the kind of classic 500 gene panel up to up to 20,000.

Our [indiscernible] platform is essentially an integrated [ph] transcriptome we really, next really leveraging those together. They're not -- they can be run as separate essays but a lot of the informatics actually goes back and forth between the two.

So there's a mutation in a gene that you see in the DNA, you'd like to know whether that mutation was expressed or not and you see it in the RNA, we have the informatics to tie those two together. So we do tend to see it as an integrated platform, not just as kind of a list.

On the other hand, we do have customers who have a variety of different needs and who are developing different kinds of drugs and so we also work with them on the basis to make sure that what we're delivering to them is what they most want.

So there's a core platform, but then we draw on that, in some cases, customers will use a subset of that sort of one part or the other. We also see cases where customers will combine the elements and just sort of more than our standard.

So our flagship product would be include both the transcriptome as well as the exome both thing augmented with the immune repertoire, and so forth and that would be one tumor sample and one normal sample but we do have customers who ask for us to process multiple tumor samples from the same patient than with a single normal, for example, and there are others who have samples that they are measured tissue samples at multiple time points on the patient and so our approaches to be accommodating of them.

They are important customers to us, and we want to make sure that we're focused on what's really needed for their clinical trials. .

And as a follow up, you know, I believe during the roadshow for the deal, you talked about I think it was 45,46 current customers that have used the product.

Can you -- any idea? Can you talk about new customer adds, or people, you know, as a metric on like, who's new within 2019? What does -- I mean were new in the quarter different question about how your book of business is expanding beyond people have already tried your products and service..

Yes, so we continue to add new customers. We're not reporting out on new customer numbers on a quarterly basis.

But we do have a number, you saw the press release we had from RAPT Therapeutics, for example, you know, this is the first year where we've worked with them, obviously, a lot of enthusiasm in their case because they're just getting, you know, starting with us, they don't have prior work with the earlier versions of our platform.

So they're starting right in using the ImmunoID NeXT platform and then there are others as well. We don't disclose every new customer we have, but it's a growing effort to add new customers..

And our next question from Doug Schenkel from Cowen. Your line is now open..

Just to start with a quick follow up on the earlier liquid biopsy question.

Can you just talk through what steps you need to complete the before launching that test? You know, basically, what do you need to do as we sit here today to get that product to market?.

I would say that the there's a series of steps involved in product development. We probably won't disclose all of those. I would say that we have shown data on that, on the basic assay from that at conferences and it was also part of our presentations in terms of the IPO roadshow deck and so forth.

Our focus there is on liquid biopsy being used together with our tissue biopsy results. We see that liquid biopsy and tissue biopsy complements each other in many ways. So liquid biopsy makes it easier for us to have multiple time points.

The tissue biopsy gives us access to RNA and it also gives us access to the immune cells that are inside the tumor and those are both pretty critical in terms of understanding what's happening in the growth and evolution of a tumor.

So we see them complementing each other in terms of the development program, you know, we have a lot of the core elements together. But any product that's like that we're sort of pushing the state of the art to be doing this at the whole exome scale.

So I would anticipate that once we have that running, that the level that we're comfortable with internally will probably work early on with some initial collaborators and so forth to make sure it works well in their hands, and then figure out what we're going to do in terms of a release date.

I would emphasize that a product like that is a combination of the assay, and the informatics for it and they're both really important parts of it.

So there is ongoing effort to make sure that that product is everything we wanted it to be by the time that we launch it, but I'd say you know, right now, again, our primary focus is on driving revenue through the ImmunoID NeXT product and bring that out filling out all the features and getting adoption from customers with next. .

And just to be clear that, you know, in terms of the 2020 launch, that would be exclusively for your biopharma partners, rather than something that would be positioned as more clinical that that would be something that would be on the potentially down the line?.

Yes, I think what we've said is, is that we expect the first customers for our liquid biopsy product to be biopharma customers and using it when in clinical trials, again, you know, this is we're looking at 20,000 genes and so that's tremendous from Translational Medicine Research standpoint, clinical utility for 20,000 genes is probably a little bit further out.

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In the quarter, what was the split between retrospective and prospective samples? And how do you see that evolving over time?.

So in terms of the split, so more would be weighted towards the retrospective. We're not giving the exact percentage but more weighted towards retrospective in Q2. In terms of customer of that are focused on new [ph] antigens that's roughly 10% of our business today in terms of pharmaceutical business..

And then acknowledging it's still early in the current contract. When's the earliest we could get an update on either, I guess call it a renewal or the next MVP contract? I guess I'm just wondering when we could expect some update there. .

The mechanism that the VA has is they, because they get their budget from Congress once a year.

They can only allocate funds against the contract sort of one year at a time, they set up a contracting mechanism, which they can then extend out over multiple years and then what the way that they term it is that they add what's called a task order, which is essentially committing additional funds to pay for additional samples.

Your pricing has already been agreed, some years out. Like we've mentioned, this current contract that we're on which we just started sequencing on at the beginning of this year, has the potential to be a four year contract.

So far, there have been task orders for two years and we would expect to hear about the possibility of a task order for the third year, in the second half of 2019. Obviously, when we hear news like that, I'm sure we'll be happy to share it that would be very positive for us..

Our next question is from Kevin DeGeeter from Oppenheimer. Your line is open..

I just want to follow up on your comments with regard to fourth quarter roll out as a diagnostic assay, and you specifically, you know, how should we think about any of the potential contribution towards guidance in kind of 2019 of that introduction, and just kind of probably more relevant kind of what do you think about a typical customer -- should we think about that product offering as being almost solely incremental revenue or does this sort of work into the model I think you've implemented with a number of your customers where you're providing, you know, significant incremental improvement in function, but not necessarily driving that all through in the form of incremental revenue..

Yes.

I would say, I think it would be conservative to think about it as a product where we're introducing the capability in 2019, those things always take time for pharma to assess, you know, somebody was going to include that, particularly if they wanted to use it prospectively at a trial, that would have to have to be something that would be have to be baked into the planning for a trial, typically, that gets locked down, you know, can be six, eight months before a trial actually starts and then there's a patient enrollment period of time.

So I think that it's a an attractive capability may add to the adoption of the broader ImmunoID NeXT platform and that may be part of the up swell that you see, next year with ImmunoID NeXT. But I wouldn't think about it being a 2019 major revenue event, it's an introduction of a capability.

I'd say, it's also, you know, it's really the first time ever, that there's been anyone who's offered this capability to have 20,000 genes scale, translational research data, you know, exome and transcriptome, and simultaneously to have from that a clinical diagnostic report.

And so there will be some work needed to work with pharma on the best way to integrate it in that in with their clinical trial workflow. That's all part of what we'll do working, you know, collectively with our customers on that. I think there's interest, but I think it's quite early days.

And I think what you would see is it would be, we won't talk offer separate guidance on that or anything of that type. But it is one of the elements that we think will help NeXT driver pharmaceutical revenue in 2020. .

And then maybe a question for Aaron. I did see in the 10Q, where you break out customer concentration and Pfizer was significant customer in the quarter 23% of total revenue kind of color roughly, looks like about half of the pharma revenue.

Can you just kind of comment on how we think about customer concentration going forward? And we put bolted third quarter results in your commentary with regard to trends and biopharma for the second half of '19.

How does customer concentration in the second quarter sort of as a baseline figure into that discussion?.

In terms of the customer concentration as noted in the 10Q, we have a certain 10% reporting threshold, as our, you know, revenue continues to increase and we broaden our customer base, as we go forward we believe that the concentration will start to diminish going forward, with the exception of the VA, MVP, obviously, that's going to be a large customer for several years to come but in terms of the biopharma customers over time the concentration should start to diminish as we add to our customer base.

In terms of going from discussions to early pilots, which we're in today with our ImmunoID NeXT platform it does take several quarters, before you start to see uptake and traction and volume. So I wouldn't see the concentration changing overnight but over time, it'll start to diminish. .

And then maybe just one more for me and you know, the company was very successful through it's IPO process and accessing some more capital than was originally planned.

Can you just comment on, incrementally any initiatives you may be able to invest in investment more aggressively and given the relative improvement of access to capital?.

Yes. So Kevin, in terms of the capital raise so we were able to raise more than we had originally planned for and so we're going to be very aggressive in terms of investing in sales, business development marketing programs, because that's going to be a direct correlation to driving top line growth.

We're also going to accelerate R&D programs and try to bring new products to market even faster than our internal schedules that we've already planned for. In addition, we have $20 million in debt on our balance sheet.

And so, you know, that's something we're going to look at potentially paying down here in the third quarter as well, which is a little over $20 million and so it's high cost debt and so since we raised more money, it probably makes sense for them to pay that down..

Thank you. At this time, I'm showing no further questions, I would like to turn the call back over to John West for closing remarks. .

Thank you, Operator. I would like to thank our customers for their business and partnership. I would also like to thank our employees for their hard work and putting us in an excellent position for long term growth. We regularly discuss our business at Investor Relations events.

These events are listed on our website in the investor relations section and regularly updated. This concludes our call for today. We'd like to thank everyone for attending and we look forward to talking with you again in another three months. .

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect..