Akoya Biosciences Inc (AKYA) 2022 Q3 法說會逐字稿

Good day and thank you for standing by. Welcome to the Akoya Biosciences Third Quarter 2022 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Priyam Shah, Head of Investor Relations.

Thank you, operator and thank you to everyone who is joining us today on this call. I'm Priyam Shah, Head of Investor Relations at Akoya Biosciences. On the call today, we have Brian McKelligon, Chief Executive Officer; and Joe Driscoll, Chief Financial Officer. Earlier today, Akoya released financial results for the third quarter ended September 30, 2022. A copy of the press release is available on the company's website.

Before we begin, I'd like to remind you that management will make statements during this call that includes forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. For a list and description of the risks and uncertainties associated with Akoya's business, please refer to the Risk Factors section of our Form 10-K filed with the Securities and Exchange Commission on March 15, 2022. We urge you to consider these factors and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 7, 2022. Akoya disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

We would like to inform listeners that Akoya will be participating in the upcoming Stephens NASH 2022 Investment Conference in Nashville. Additionally, we will be participating in the Canaccord MedTech and the Piper Sandler Healthcare Conferences in New York this month. Please see our Investor Relations page for pertinent dates and webcast information. Lastly, we will be hosting our second Annual Spatial Day Virtual Event on December 15. Registration information can be found in our press release today and we hope to see many of you attend.

And with that, I'll now turn it over to Brian.

Thank you, Priyam, and good afternoon to everyone, and thank you for joining us today. Akoya had a very strong third quarter of 2022 and continues to demonstrate success in revenue, total instruments placed and publications spanning the discovery, translational and clinical segments of the spatial biology market.

We reported record revenue of $18.9 million in the third quarter, representing a 40% growth compared with the third quarter of 2021. Akoya's robust growth quarter-after-quarter is a byproduct of 3 key drivers: strategic product development; commercial execution; and a balanced portfolio of revenues by product category, by market segment and geography. We sold a total of 55 instruments in the third quarter, consisting of 17 and 38 PhenoImagers, representing a 67% growth in placements from the prior year period. And we ended the quarter with an installed base of 863 instruments on track to reach a 1000 in the next few quarters.

The rapidly accelerating publication volume featuring Akoya's platform now, over 690 to date and near doubling from a year ago, is a key leading indicator that the adoption of our platforms will continue. Akoya's product portfolio is setting the industry standard for spatial biology and delivering meaningful value to our customers. Imaging-based approaches now dominate in spatial biology, which gives affirmation to Akoya's foundational cycling and imaging-based in-situ technology on which the company was founded. We have built on the success now delivering second generation solutions that provide single cell phenotyping through industry leading optics and the fastest workflow available. Our platforms are each purpose-built for the discovery, translational and clinical market segments, delivering meaningful discoveries in immunology, oncology, neurobiology, infectious disease, transplant medicine, and more.

At the upcoming Society of Immunotherapy of Cancer Conference, or SITC, taking place this week in Boston and also announced today, we will be unveiling our new PhenoCode Signature Panels previously referred to as our universal protein chemistry. The commercial launch will take place by year-end, and at SITC, we will outline these new validated antibody panels for use on the PhenoImager platforms. The PhenoCode Signature Panels were created for the rapidly advancing immuno-oncology therapy landscape that includes nearly 6,000 ongoing clinical trials. With tissue-based biomarkers central to these trials, the need for a robust, rapid, whole slide multiplex tissue imaging and analysis solution to identify prognostic and predictive biomarkers has never been more important.

The PhenoCode Signature Panels are designed to run on our PhenoImager platforms. These pre-designed panels focus on distinct areas of tumor biology and response to therapy that are of greatest interest to translational and clinical researchers. Extensively tested by Akoya and available in modules with the flexibility to customize, the PhenoCode Signature Panels will rapidly accelerate biomarker assay development and validation for our PhenoImager customers, particularly in the fields of cancer and immunotherapy. With the launch of these panels, Akoya now provides a complete end-to-end solution for our translational and clinical customers now including the full suite of necessary antibody and reagents.

To summarize, Akoya's new PhenoCode Signature Panels will, one, provide ready-made and customizable panels for our PhenoImager customers. The panels address distinct areas of tumor biology and response to therapy that are of greatest interest to translational and clinical researchers in cancer immunotherapy. And two, they will simplify and accelerate biomarker assay development and validation by delivering a full end-to-end spatial phenotyping workflow. And three, they will drive higher system utilization and an increase in revenue per sample resulting in expanded pull-through on our PhenoImager platforms.

We are progressing several additional initiatives in the downstream translational and clinical markets and our advanced biopharma solutions CLIA Lab out at Marlborough has become a valued resource for our biopharmaceutical partners, resulting in a material expansion of our pipeline and programs with leading oncology companies.

As discussed last quarter, our agreement with Acrivon Therapeutics to develop and commercialize a first of its kind spatial signature companion diagnostic for Acrivon's targeted oncology agent is an important milestone in developing an expanded clinical menu offering and indicates a clear path towards addressing the large spatial biology clinical TAM.

Turning now to the upstream discovery market, we have several product innovations underway, including adding new applications, further platform advancements to drive additional speed at productivity and enabling expanded software solutions. First, we will be completing the automation of Bio-Techne's RNAscope on the PhenoCycler Fusion by year-end. RNAscope is the industry's leading spatial transcriptomics technology with a focus on targeted applications with nearly 6,000 publications date and a massive customer base. By automating RNAscope on the PhenoCycler Fusion and co-marketing the shared offering with Bio-Techne, Akoya and Bio-Techne can accelerate the adoption of both platforms to drive incremental growth.

In parallel, we are on track to complete our upgrade to the PhenoCycler Fusion by year-end. We will begin implementing this upgrade into production builds for new instruments by year-end, and initiating field upgrades in early 2023 for existing customers. This upgrade further increases the platform's speed and capacity and includes improvements to the hardware, fluidics and software. For example, we will be delivering a multi-slide carrier for parallel processing of tissue samples. The result will be a near doubling of sample throughput. This upgrade is also required to support the RNAscope integration, so the launch of both is synchronized.

These PhenoCycler Fusion speed and capacity increases and the addition of the RNAscope spatial transcriptomics application are part of Akoya's ongoing efforts to simplify and accelerate our workflow, while simultaneously expanding available applications. It is the combination of the 2, more speed and more applications that are central to driving increased utilization and system (inaudible).

Simultaneously, we continue to further develop our proprietary RNA technology, which we demonstrated at the AGBT conference in June. We highlighted a proof-of-concept for a 100 plex on the PhenoCycler Fusion. At the conference, we also showcased the industry's first proof-of-concept of 100 plex RNA and protein on the same tissue section. In the months following AGBT, emerging market surveys suggest an overwhelming demand for multiomic analysis on the same tissue sample. We will be providing more details on our RNA portfolio and the timing for early access and commercial launch at our spatial day in December. We do anticipate initiating early access by year-end.

To summarize our third quarter, we are very pleased with our strong financial and commercial performance year-to-date as we continue to expand our leadership position in the spatial biology market. As we have outlined, we are focused on the following targeted initiatives for the balance of the year. First, drive the continued adoption and improvements of the PhenoCycler Fusion as the best-in-class in-situ imaging platform. Second, continue to deliver new applications and drive further workflow and speed improvements across the instrument portfolio to drive expanded pull-through. Third, expand and advance our partnerships with leading biopharmaceutical companies and medical centers to drive the adoption of the PhenoImager HT in translational research and clinical diagnostics.

As Priyam noted, Akoya will be hosting our second Annual Spatial Day on December 15. It will include a review of our new product introductions and presentations from top researchers in the discovery, translational and clinical markets, all of whom have found tremendous value in Akoya's product offerings.

With that, I will turn the call over to Joe to discuss our financial results. Joe?

Thanks, Brian. Hello, everyone. As Brian highlighted, total revenue for the third quarter of 2022 was a record $18.9 million as compared to $13.5 million in the third quarter of 2021, representing 40% growth. Year-to-date revenue of $53.6 million represents 38% growth over the prior year period. We see this as extremely strong performance year-to-date, given the challenging macro environment and gives us increasing confidence that we are in a high growth market that continues to be relatively insulated from the broader economic slowdown.

Product revenue, which includes instruments, reagents and software, was $14.4 million for the third quarter compared to $10.9 million in the prior year period, representing 32% growth. Within product revenue, instrument revenue was $9.5 million compared to $7.1 million in the prior year period, an increase of 34%. We had another strong quarter with 55 instruments sold, of which 17 were PhenoCyclers, and 38 were from the PhenoImager portfolio. This is 67% growth compared to 33 instruments sold in the prior year period. We have sold 166 instruments year-to-date, and the total installed base of instruments is now 863, which includes 229 and 634 PhenoImagers.

As of September 30th, a total of 83 Fusion instruments have been shipped since the commercial launch at the start of the year, and we now have a total installed base of 72 for the combined PhenoCycler-Fusion system sold either directly as a combined system or upgraded from a previous standalone PhenoCycler instrument. The number of combined units is an important metric because this combination is projected to drive significant increases in reagent pull-through over the next few years. We continue to track a very impressive Fusion to PhenoCycler attach rate of over 75% on directly-sold combined systems, which is ahead of our expectations of 50% to 60% long-term.

Reagent revenue was $4.7 million for the quarter versus $3.4 million in the prior year period, an increase of 38%. With an annualized pull-through in the mid-$30,000 range per instrument for both the PhenoCycler and the PhenoImager HT today, we project the pull-through to increase significantly by as much as 2 to 3x over the next several years across the instrument portfolio based on the following factors: first, as researchers become fully trained and expand the use of our rapidly expanding installed base of PhenoCycler Fusions; second, new multi-slide and RNAscope upgrades on the PhenoCycler Fusion are up and running; third, the new PhenoCode Signature Panels are utilized on the HT system; and finally, as our higher plex multiomic content menus are rolled out commercially. We continue to project annual reagent revenue growth of approximately 40% per year for the next several years.

Services and other revenue totaled $4.4 million as compared to $2.6 million in the prior year period, representing 69% growth. Our advanced biopharma solutions CLIA Lab continues to gain significant traction directed to large pharma and other meaningful clinical partnerships. Gross profit was $10.9 million in the third quarter compared to $8.5 million in the prior year period. This resulted in gross profit margin of 58% for the quarter, consistent with the first half of this year. We continue to make investments in the CLIA Service Lab to support clinical trial enrollment and secure clinical diagnostic partnerships such as Acrivon Therapeutics, which has a near-term impact on margins. We have also experienced some impact on margin from inflationary cost pressures, consistent with what most other companies are experiencing. Instrument pricing continues to improve compared to the promotional pricing on Fusion in the first 6 months of the year.

Operating expenses for the quarter totaled $27.6 million as compared to $26.7 million in Q2 and $25.7 million in Q1, maintaining a consistently moderate increase in OpEx since the start of the year. Through the remainder of 2022 and in fiscal 2023, we will continue to make targeted investments in the company with a near-term focus on the commercial rollout of the PhenoCode Signature Panels and an R&D focus to further enhance our assay to analysis speed, multiomic content menus and CLIA service capabilities.

We ended the quarter with approximately $82 million of cash and cash equivalents. We project that cash will be more than $70 million as of the end of fiscal 2022, which provides us ample runway to continue to invest in the business. Common shares outstanding are 37.9 million as of September 30 and fully diluted shares, including the impact of outstanding options and unvested restricted stock awards, totaled 39.7 million.

To summarize, we had another record breaking quarter with $18.9 million in revenue, a 40% increase over the third quarter in 2021. We sold 55 instruments across the product portfolio this quarter, 166 instruments year-to-date, and now have a total installed base of 863 instruments. The sale of 83 Fusions in the first 9 months of the launch demonstrates the robust demand for our new instrument offering. We remain very confident in our ability to deliver continued growth this year and are increasing our full year 2022 preliminary revenue guidance range to $73 million to $75 million as we continue to see tailwinds for our business in the spatial biology market.

Now, I'll turn it back over to Brian for closing remarks.

Thank you, Joe. In summary, we're pleased to report a strong quarter and announce exciting new developments across the portfolio. We're thankful for the hard work of our fellow dedicated Akoyans as well as for the support of our customers and shareholders. Akoya remains very well-positioned for growth, and we are excited about the opportunities that lie ahead as we deliver new spatial solutions from the discovery to clinical markets.

At this point, we will open the call up for questions. Operator?

(Operator Instructions) Our first question comes from Mason Carrico with Stephens.

Maybe to start off here, how are demand trends across geographies in Q3 and how have they trended in the fourth quarter so far? Have you seen any strengthening or weakening worth calling out, or has demand across most geographies been relatively steady sequentially?

Yes, I mean, I don't think we'll really comment on Q4 yet, but I think what we're seeing in the relative geographies is I think sort of reflective of our numbers. North America, really strong, and EMEA and APAC delivered solid performance. I think, as you noted from others, and I think as we had indicated prior, there's some increased scrutiny on capital purchases that's more a commentary on sale cycle versus demand. So there's nothing that we're seeing in either direction, certainly, in terms of headwinds that would cause us meaningful concern. And I think that's why we took our numbers to the point where Joe talked about in raising our guidance slightly.

Got it. That's helpful. And then maybe just a follow up here, 2-part question. One, with the Fusion 2.0 launch, universal chemistry RNA and multiomics, what are your expectations for throughput per instrument next year as much as you can give there and maybe even qualitatively? Are you thinking about that increase over the next 2 to 3 years to be more linear, or should we expect a more moderate step-up next year and more material ramp in 2024 and 2025 starting to rollout?

Yes. I think what you'll see is, with all of those things sort of additive to driving application utility to driving samples through in a time to driving dollars per sample, given that we're sitting on an installed base of HTs plus Fusions, that's in the 380 and 230 PhenoCyclers out there, it's going to be a conversion process for all of these things to get out and drive utilization. So with that, we expect the pull-through to grow consistently over time. And I think we've talked about that before. And with the Fusion 2.0, there's a pretty big range and this is where -- I mean, it gets difficult for you all. There's a pretty big range on throughput as you think about number of markers and tissue size. But you can maybe just think about the Fusion 2.0, you making your kind of 10 to 15 whole slide samples a week fairly straightforward. I'm talking about a kind of a whole tissue slide at single cell.

Our next question comes from Tim Chiang with Capital One.

Brian, I wanted to just ask you, obviously, you guys are doing well with the PhenoCycler Fusion launch. So could you talk a little bit or provide a little bit of granularity on how you expect that product to ramp, not only in the U.S., but outside the U.S.? I mean, it seems like you're doing pretty well with that ramp-up in the States, but I was just curious how much visibility you can provide outside the U.S.

Yes. I mean, I'll let Joe chime in. We don't really break down units ex-U.S., but I think we expect it to ramp with equal contribution, given the numbers I just mentioned, Tim, on the large installed base. Still lots of room to upsell our existing customers, but also kind of driving into new customers. So I don't think there's any sort of material or meaningful regional difference in terms of how we think about scaling the product. Just differences in scale, frankly, Tim. It was about 50% of our revenue kind of in North America and the rest equally split between EMEA and APAC.

Joe, I don't know if you want to add anything beyond that.

No. I think that's right on the money. I think we would expect this rollout to be comparable to the rest of our business. As Brian just said, 50% North America, 25% EMEA, 25% APAC. So that's the way we're looking at it right now.

Okay. Great. And just one quick follow-up. I noticed your ASPs, they did increase. Actually I think they were, what, north of $170,000? I mean, is this a number that you expect to continue to grow as we head into 2023?

Yes. Joe, you want to take that?

Yes. Sure. It's -- we had promotional pricing in the first 6 months of this year on the Fusion launch to really try to get -- take market share and get a lot of excitement in the marketplace. So yes, the ASPs did go up in Q3. I think you'll see them tick up again in Q4 and then probably stabilize after that. I think we're finding where our sweet spot is in terms of pricing.

Our next question comes from Mark Massaro with BTIG.

Congrats on your third straight beat and raise this year. Maybe the first question is for you, Joe. You just put up 40% growth here in Q3. Recognizing that you guys are doing a great job executing this year, but I do want to ask about the outlook for Q4. It looks like it's a range of about 20% to 32% for Q4. So is there any reason for us to kind of use some degree of caution because you're coming off of growth rates in the mid to high 30%s to low 40%s. So how should we think about the slight decel in Q4?

I think there's a couple of factors there and one is last year's Q4 was extremely strong and that makes a little bit of a tougher comp. And this year the revenues have been I guess more balanced by quarter and so you're not seeing the massive spike between Q3 and Q4 that we've seen in prior years. So I just think we've gotten more regular streams of business throughout the year this year as opposed to last year where there was a pretty big discrepancy between Q3 and Q4 last year. So we're not concerned or anything like that. We're just trying to maintain a conservative posture in our guidance.

Okay. Great. And nice to see the PhenoCode Signature panels rolling out here. So recognizing that the plan here is to now increase your region pull-through per box on the PhenoImager HT. Can you give us a sense for how you're thinking about pricing this and then how should we think about incremental contribution to growth in 2023?

So to the pricing question, maybe just directionally as you look at let's say one of our customers on an HT system that is building a panel and prior to PhenoCode, they would just get the fluorescent detection reagents from us and largely source the antibodies themselves. So in terms of their total spend, again antibody prices can vary quite dramatically, but assume it's somewhere between 23%, 35% our kind of portion of that revenue. So as you look at the pricing of the PhenoCode knowing that we're going to price additional value into those because a lot of the validation work that we've done, I'm not going to give you a dollar price yet, but that should give you kind of a directional sense as we drive conversion of some existing panels. But primarily, Mark, it's going to be people developing new panels where this will help kind of accelerate that work. So I think it's going to be, similar to Mason's questions, kind of a step function as we walk through the year and see those conversions, but also getting new HT customers up and running a little bit faster.

Okay. Great. And just last one for me maybe for you, Brian. Can you just speak to any other developments going on in companion diagnostics with your business and any next catalyst to look for with the Acrivon partnership? And then final question is I know you have links to some of the events at SITC, but is there anything in particular we should be looking out for?

So in terms of Acrivon specifically, we're going to follow obviously their lead as they reveal advancements of their clinical program because we're really sort of tied at the hip to that. In terms of milestones, I think it's going to be kind of more qualitative commentary from us. As we noted in the earlier comments that since the launch of ABS last year, the capabilities highlighted and codified with the Acrivon announcement, it's really just about, Mark, just expanding that portfolio of clinical trials we participate in so that we have a higher, higher probability of another CDX deal while most importantly, at the same time it's driving additional revenue, service revenue, but it also drives additional system placements. So that's kind of how I would address that again qualitatively. And then at SITC, there's just going to be a lot of detail around these PhenoCode panels and their validation and their work. There's a large number of poster presentations so I think that would be probably the core event. But I'd invite you to look at our earnings press release. There's a link there to the SITC event and what we're doing.

Our next question comes from Tejas Savant with Morgan Stanley.

This is Neil on for Tejas. So considering the strong demand some of your peers have begun to see as they begun to launch in in situ images of their own, any color on how this growing interest is translating for your own order books? And what gives you confidence that your incumbent [bandwidth] in terms of using an imaging approach will continue to resonate just as strongly going forward even after these new in situ platforms launch on the market?

Maybe to your last question regarding is imaging kind of the longstanding methodology? Just for clarity. Our approach and our imaging methodology, we think that on its own the way we do the imaging is a significant competitive advantage. The underlying microscopy technology, again I'm a little bit biased, is arguably -- but not even arguably, I think it's the best fluorescent imager system on the market in terms of speed, resolution and quality. And with that imaging system tied to our assays, that's what gives us the power and the speed and the quality from the HT to the Fusion. And the commentary on imaging, what I would say is every single platform that's getting launched is an imaging based approach. So that's sort of now universally what's accepted in terms of next generation spatial biology is doing it via imaging.

With respect to the competitors, a growing competitive environment, largely I would assume that we are still going to be highly competitive and preferred with those that come in with a cell biology, protein-based approach and will become increasingly competitive for those customers in spatial that are focused on RNA and spatial transcriptomics with the paired solution we've talked about historically. So I think the competitive environment is sliced differently depending upon the different market segments there specifically within discovery. But I would reiterate that our platform, the PhenoImager HT, the new systems that are coming out from our friends at 10x and NanoString, those are really competing in the discovery market largely within genomics segment. The HT system is decidedly different and that sort of stands on its own in the translational and clinical markets.

Got it. And given the recent revision to the product timelines, can you speak to what underpins your confidence in that decision? And any updates on that thinking over the last couple months and what are some of these moving pieces in the macro?

I'm sorry. Which changes are you referring to, Neil?

The reprioritization on the product roadmap?

I think the product roadmap has -- I apologize if there's some confusion, that's on me. But the roadmap, the priorities have remained really solid. So I think what we announced today with the Fusion 2.0 heading into production and that being tied to RNAscope, I think that's a refinement of our timeline. So hopefully you see that as consistent with prior. And then the second part of your comment, Neil, was what -- your question rather?

I guess just kind of an idea on how that thinking has evolved over the last couple months in light of some of these moving pieces in the macro, whether it be budgetary concerns in Europe or some of the reagent headwinds in China.

Yes, it's a good question. Nothing has really changed in terms of how we prioritize. Obviously as we all kind of are looking in the face of a recession just during our current strategic planning and budgeting process, you just become even more focused on every dollar in and the return on capital that comes out of that. It just is forcing a lot more rigor. And I think you see that reflected and that decision making is already reflected in the commentary Joe gave around our [asentatic] spend quarter-over-quarter -- quarter-after-quarter rather sequentially in terms of our OpEx this year.

Got it. And then 1 last for me. So as you begin to make that push into the genomics market segment, what do you see as the key drivers there to really start building awareness around the offerings given that this customer set is likely less familiar with Akoya? And would that introduce another ASP dynamic thinking about 2023 or...?

Yes. So you're kind of right with your money question. I think you said spatial transcriptomics is the market segment you're asking about.

Correct.

So I think for us, the way we look at that is how can we deliver with our existing core capabilities and expertise to protein? How can we think about delivering something that has differentiated value? And some of the feedback that I alluded to coming out of AGBT in the opening comments is really part of our current voice of customers and product roadmap decision making, which is how do we build a platform that leverages the best of our capabilities with proteomics and our growing capabilities in the RNA both in the discovery setting and the validation setting with our own technology and RNAscope respectively. So with that, we've been really exploring and doing a lot of work on exploring multiomic solutions where you contemplate your protein content and your RNA content simultaneously so that they become really catalytic in terms of the value they both bring to the scientist. Not so much focused on some sort of arbitrary plex more, but really focusing on the science and the panel development.

Got it. I appreciate the time and congrats on a strong quarter.

Our next question comes from Ruizhisn Qin with JP Morgan.

This is (inaudible) on for Julia. So first, congrats on the quarter. Very impressive. So I did a quick math about the placement for Fusion this quarter. It seems like it's like 21 compared to the last two quarter, it's a slightly drop. So I'm just curious like how should we think about the driver for Fusion placements moving forward? Is it more relying on the attachment with the Cycler or it's more relying on the stand-alone orders?

So we don't really report out the Fusion separately, but I'll let kind of Joe take it from there. I think what you see, as Joe alluded to, we have a fairly consistent total instrument number each of the quarters this year. There's always going to be a slight mix shift as you go from a Q1 to Q2 to Q3. But overall I think what we look at is that overall instrument number. And the Fusion placements are being driven both from paired with PhenoCyclers, but also to some extent selling it to our existing install base where they're upgrading from a third-party scope to the Fusion. Joe, I don't know if you want to add anything.

So really the first 6 months of this year we really went out with promotional pricing on the Fusion to really try to get market share, really try to convert existing PhenoCycler users to buy a Fusion. So that was really the driver of kind of the units that you're looking at for the first 6 months of the year versus Q3, I'd say Q3 is a more normal quarter I guess in terms of Fusion placements. And once again just to reiterate when we are selling a PhenoCycler, the attach rate with a Fusion to sell at the same time is exceeding 75% right now, which is way above our expectations. So we're selling a lot more bundled PhenoCycler Fusions than what we had expected. But in the first 6 months of the year, you're really seeing the impact of that promotional pricing to really try to drive market share.

Okay. That's very helpful. My next question is about the ramp for the universal chemistry and the [DAR] panel next year. So I'm just curious like how should we think about their adoption on the Cycler Fusion customers compared to those Fusion or hydro stand-alone customers?

Yes, I really appreciate that question to help provide some more clarity. So just a little bit on the science. So the PhenoCode chemistry is really essentially a hybrid between some of the underlying codex chemistry that runs on the PhenoCycler and the historical opal chemistry. And that assay, the PhenoCode assay, is really for the high plex capabilities not the -- I'm sorry, the high throughput capabilities not the high plex. So that PhenoCode chemistry is really -- it will probably be most widely adopted on the HT system. And so you can think about the adoption of PhenoCode again qualitatively happening the fastest with new customers as they get new panels up and running and with existing customers as they migrate over from the historical opal chemistry to the new PhenoCode chemistry. So it really is about -- it really is a solution for the HT system and the Fusion to some extent.

Okay. I have 1 last question. I haven't had the chance to look at the CT posters. Maybe you guys can share with me on a high level about the PhenoCode like how many biomarkers are there, how many are fixed, how many are customizable? Are the customizable panels specific to tumors or patients, any stages or is it scalable to clinical in the future or to other diseases such like infectious or neuro diseases? Just give me a high overview.

The high level I'll tell you is that we looked across several hundred publications and what you see is this histogram where 10 to 15 particular antibodies dominate the cancer landscape and many of those are deployed across multiple cancers. And what we have are a series of panels that are generally about a 5 plex, which allows you to customize an open position or so and they're designed to answer specific questions. For example one is designed to look at immune cell exhaustion, another one is to look at macrophage polarization, another one is to look at tumor infiltrating lymphocytes. So they're sort of thematically designed, but really highly validated. So you can pick across 1 of those themes and then plug in kind of an antibody or so for yourself to customize. So it's sort of a hybrid between fixed panels and hybrid -- and customizable panels that are designed to really accelerate the time to get those new panels up and running.

Our next question comes from Kyle Mikson with Canaccord.

This is Alex Vukasin on for Kyle Mikson. So concurrent with the earnings release, you also announced the mixed shelf offering of $150 million. So I was just curious, based on your current operating cash flow burn of roughly $10 million to $20 million per quarter, do you expect to obtain any other financings for the near term?

I appreciate the question and I appreciate you kind of seeing all that come out today. So maybe just to reiterate. As Joe noted, we've got $82 million in cash at the end of the quarter so really, really strong cash position. So we do not have any pressing need at all for additional cash. But I think as we noted in prior calls, we've been indicating that we sort of intended to be opportunistic and 1 of those mechanisms is really non-dilutive capital. And we announced with that filing our expanded Midcap facility that provides really cost effective capital. They've been really a longstanding partner of Akoya and we worked with them recently, as you'll note in the filing, a restructured debt facility that provides not only access to additional funds, but a longer interest only period. So that Midcap restructuring sort of further solidifies our cash position. But until today we didn't have a shelf registration in place and so the filing today with that ATM is really commonplace and we sort of look at it as simply sort of good corporate housekeeping. But again I just reiterate, we don't have a pressing need for cash. There's nothing immediate. It's really, as I noted, taking advantage of our partnership with Midcap to give us another path for non-dilutive capital, restructuring that interest-only period and just being prepared and staying close to watch the markets if there's an opportunity.

And just 1 last one. So you previously discussed that the promotional pricing was 1 of the key drivers for this higher attach rate that we're seeing for this PhenoCycler Fusion. I was just curious how much longer do you think that we should expect to see this higher inflated attach rate of 70%-plus range, which is above that 50% to 60% range that you quoted previously in terms of trying to think about how we should model it out?

Joe, you want to take that?

Yes, sure. It seems like that attach rate has been relevant now for the last several quarters. So we're still watching it closely, but I believe we are going to end up kind of increasing our 50% to 60% long-term attach rate to something more like 70%, maybe even more to 70% to 80% attach rate over time. That's what we're seeing now. People really see the value in buying the PhenoCycler and the Fusion as 1 combined unit. And so I think that attach rate is going to be probably higher than what our long-term estimates have been.

(Operator Instructions) Our next question comes from Jon Petersen with Piper.

This is Jon on for Dave. Could you just tell us about any differences in pull-through between the customers who have Fusions versus those who aren't currently utilizing them?

Thanks for the question, Jon. I think as we said on the last quarter, it takes a few quarters to get sufficient data to be quantitative around the pull-through differences. But what I would say is that directionally we're seeing a pretty active shift now within many of our larger customers from running some of their larger projects on the PhenoCycler versus the PhenoCycler on the Fusion. You don't really want to change platform midstream. But I think as we get into perhaps next quarter, we could start being a lot more at the end of next quarter, increasingly quantitative around tracking those differences. But we do expect, as we've noted, for the pull-through number on the PhenoCycler Fusion to be higher than the PhenoCycler alone just because of the speed, the increased plex capabilities, et cetera.

Great. And could you just talk about the appetite for pharma spending currently?

The appetite for what? I'm sorry.

For pharma spending?

So the pharma spending, our HTs are actually increasingly going into large pharma. That's an area we're actually seeing more penetration than historically. Whether it's pharma or other market segments, as I noted, there's some increased diligence around capital spend. We're not heavily reliant -- and I assume this might be kind of behind the question. We're not really heavily reliant nor largely penetrated in some of the small emerging biopharma. It's overwhelmingly the large kind of more well-funded biopharma that have multiple projects in queue and multiple biomarker projects where we're seeing a lot of our penetration. Not a lot of the emerging biotech with this, but some commentary around funding challenges.

At this time, I am showing no further questions. I would now like to turn the conference back to Brian McKelligon for closing remarks.

We already kind of spoke a little bit on the closing. I just wanted to reiterate and thank everybody for their time, their attention, the insightful questions. And Michelle, thank you for your help and support. So we'll talk to you all soon. Thank you so much.

Thank you. This ends the conference call. Thank you for participating. You may now disconnect.