Olink Holding AB (publ) (OLK) 2022 Q2 法說會逐字稿

Good day, and welcome to the Olink Proteomics Second Quarter 2022 Earnings Conference Call. (Operator Instructions)

I would now like to turn the call over to Jan Medina, Vice President, IR and Capital Markets.

Thanks, Michelle, and good morning, everyone. Thank you all for participating in today's conference call. On the call from Olink, we have Jon Heimer, Chief Executive Officer; Carl Raimond, Chief Commercial Officer; and Oskar Hjelm, Chief Financial Officer. Earlier today, Olink released financial results for the second quarter ended June 30, 2022, a copy of the press release and an updated corporate presentation are available on the company's website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the U.S. Federal securities laws, which remain pursuant to the safe harbor provisions of the U.S. 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 Olink's business, please refer to the Risk Factors section on Form 20-F, commission file number 001-40277 filed with the U.S. Securities and Exchange Commission on March 17, 2022, and in our other filings with the SEC. 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.

Also in our remarks or responses to questions, management may mention some non-IFRS financial measures. Reconciliations of adjusted gross profit and EBITDA, constant currency revenue growth and certain other non-IFRS financial measures to the most directly comparable IFRS measures are available in the most recent earnings press release available on the company's website.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 11, 2022. Olink 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, except as required by law.

And with that, I will turn the call over to Jon.

Thank you, Jan. Good morning, everyone, and thank you for joining Olink's second quarter 2022 earnings call. I'll begin with the quarter's highlights, discuss a few areas where Olink is driving the science of proteomics, then I'll wrap things up by discussing our outlook for the remainder of 2022. I will then turn the call over to Carl for more details on our performance during the quarter.

It was a very strong 2Q for Olink, benefiting from our industry-leading execution and building on our very positive start to the year. We remain very confident that we head into the back half of 2022 and are well positioned with customers and prospects within biopharma and academia. The impact of the pandemic environment was largely as we expected, settling into a manageable workflow that remains conducive to strong growth for Olink.

Furthermore, as we consider the broad dynamic industry environment and macro cross-currents, Olink's execution remained strong. And our customer base appears healthy with high interest in proteomics and project funding remained solid. We delivered quarterly revenue of $27.5 million, 56% growth over the second quarter of 2021. Growth from kits and services was both strong and we remain confident in the continued shift of revenue towards kits with our 2022 outlook supported by the performance during the first half.

In high-plex, we've been very encouraged by the clear signals of robust customer demand and we believe that the opportunity with Explorer continues to show that it's more sizable than we originally anticipated. Olink have in a very short period of time driven proteomics to unprecedented scale, quality and throughput, allowing for the first time ever, the scientific community to add proteins as a clear strategy to overcome the challenges we face in healthcare and drug development.

Protein data is proving to be an immensely valuable addition to the genomic data sets that we have developed over the last couple of decades, driving invaluable insights on novel course of drug targets, clearly defining subgroups of patients more likely to respond to both new and existing drugs. This is defining modern healthcare and opening up new opportunities, both for the industry as well as healthcare providers and patients.

Another layer of our confidence is that we continue to expand our reach within the low and mid-plex proteomics market with Signature, which began deliveries to customers late last year. The ability of Olink's product platform to address multiple use cases within the same customer is increasingly clear with multiple Signature customers also being Explore customers.

Also towards expanding our customer reach, in June, at the AGBT General Meeting, Olink's mission to democratize proteomics and enable Explore broadly across the NGS market enter a new phase. We announced collaborations with 3 NGS premiers; Ultima Genomics, Element Biosciences and Singular Genomics. Olink's efforts in NGS are meant to provide customers with as many options as possible in picking the sequencing platform that is optimal for their needs. We expect our efforts with each of these companies to be additive to our existing and very productive relationship with Illumina.

Further to addressing our customer needs, we expect to continue to build out our library of antibodies, commensurate with the ambitious goals in clinical and diagnostic research and remain on track to expand to 4,500 protein biomarker targets by year-end and further beyond that. Towards advancing the science of proteomics, we're encouraged by the achievement of more than 940 carefully planned and executed retail studies involving the use of our PA technology, published in high-impact peer-reviewed publications to date. Publication count continues to accelerate from 2021. And the increase we saw in just the first half of '22 exceeds the increase we saw during all of 2020.

Another milestone was the first study published that cited the use of Olink Target 48 cytokine for researching COVID-19. As a reminder, Target 48 has pushed proteomics in the mid-plex space to new levels, using unparalleled multiplexing and providing the highest data quality with absolute quantification. This is critical for studies in clinical settings generating more protein data points from the same sample and for informing additional patient insights such as efficacy prediction, stratification or safety assessment. All these efforts represent activities by thousands of researchers across the globe, covering every major therapeutic category from research and discovery to the downstream clinical settings.

I'd like to focus on a couple of recent high-impact publications that highlight the differentiated value of the Olink product platform. In June, the U.K. Biobank Pharma Proteomics Project published early results from its groundbreaking proteomics research to the bioRxiv preprint server. Underpinned by more than 54,000 participants, the data are an open access, population scale resource of unprecedented breadth and depth to help inform biological mechanisms underlying genetic discovery.

The study also highlights the strength of Olink's Explore assay for pQTL detection and downstream biological discovery with a high proportion, 82% of the proteins tested had cis association, evidence of Olink's highly specific assays that measure their intended protein. Measuring thousands of proteins at population scale can accelerate the development of novel biomarkers and therapeutics. And we are extraordinarily grateful that Olink's Explore platform can be part of this tremendous journey.

We eagerly await the full data release to the scientific community, expected by the end of this year. It will be published using Olink's unit of protein expression, NPX or Normalized Protein Expression, providing a unique opportunity to shape the language of next-generation proteomics. These data will also be available to researchers around the world for download, where we expect them to capitalize new thinking on proteome genomics, determining the role of new drug targets and exploring hostility, defining more homogeneous patient populations for clinical use, predicting the likelihood of disease progression and identifying more relevant safety biomarkers. As a reminder, the data published this year are from Explore 1536, and in 2022, we began running the expansion phase on the Explore 3072 platform.

In inflammatory bowel disease, a team led by Dr. Andres Lorenzo-Hurtado, Vice President, Translational Research and IBD Ventures at the Crohn's & Colitis Foundation, recently ran a study to find prognostic markers to determine if children with Crohn's disease will develop serious complications like fibrosis or fistula, and to find predictive markers that determine whether they are likely to respond to more aggressive anti-TNF therapy. Using machine learning, the team was able to identify a plasma protein signature that can predict at diagnosis the likelihood of a child with Crohn's disease to develop complications within 5 years.

Beyond U.K. Biobank, Olink is part of an additional consortium exploring the role of protein biomarkers. This includes SCALLOP for disorders like coronary artery disease, rheumatoid arthritis, bipolar disease, heart failure, dementias or metabolic syndrome. Also CORAL for neurological conditions and COLLIBRI for inflammatory bowel disease. We believe that these efforts will be important contributors to the field of proteomics and provide meaningful new data points for drug discovery and development efforts.

Our considerable progress anchored in strong execution across our platform, including multiple product launches, our robust revenue growth, new collaborations in NGS, our partnership with Octave in MF and advancing the science of proteomics would be impossible without the talent and dedication of the entire Olink team. We remain steadfast in our goal to strengthen this already broad and deep talent pool and to further improve our lead in the proteomic field. We started the second quarter with 465 employees and reached 516 upon entering the third, including 186 full-time employees in the commercial team.

Turning to our expectations. We are reiterating our 2022 revenue guidance range of $138 million to $145 million. As we previously discussed, given the procurement and budgeting cycles of many of our customers, the majority of Olink's revenues secured during the second half of the calendar year. We expect this trend to continue over the near-term with the heaviest weighting towards the fourth quarter. We expect our seasonality to become less pronounced over time as we continue to broaden our customer activity. We also expect continued progress this year towards our goal of increasing our sales mix towards kits.

Overall, Olink's business broadly across our product platform, high-to-low-plex and customer base remained very strong as we enter the second half of 2022. Beyond this year, we remain optimistic about our strategic and financial outlook, our path to return to profitability and prospects for continued strong growth.

I will now turn the call over to Carl to provide a few more details on the quarter.

Thank you, Jon. It was a strong second quarter for Olink, and I'd like to thank the entire commercial team for their incredible work during the first half of the year. Overall, growth was driven by buying activity across our customer base. Each revenue segment performed quite well and within our plan, setting up a healthy trajectory for the second half of the year.

Second quarter 2022 revenue grew 56% on a yearly basis to $27.5 million, led by our services business, which was largely in line with our expectations given deliveries to the UKB-PPP. Revenue was comprised of $7.1 million in kits revenue, $17.9 million in analysis services revenue and $2.5 million in other. Q2 kit mix improved sequentially, reaching 26% of total revenue and growing 42% year-over-year, while analysis services revenue grew 51%. Other revenue tripled on a yearly basis, largely due to Signature sales.

Looking at Explore, total Explore revenue of $18.5 million was 67% of our total revenue in Q2 2022 versus 53% in the year prior. And on a trailing 12-month basis, Explore represented 68% of total revenue. We expect Explore to continue performing strongly, benefiting from robust pull-through at existing sites and a significant expansion of externalization in the second half.

On Explore externalization, cumulative installations during the second quarter reached 29 for a total sample volume potential of roughly 640,000 samples per year. Total sample volume potential is a metric we've discussed in the past and is defined as the number of samples our entire installed base of Explore sites, numbering 29 as of the end of Q2, could theoretically run over the course of a year. Explorer pull-through at external sites has surpassed initial expectations from last year. And we believe this metric better represents the market that Olink could serve with its cumulative Explore externalization as well as the tremendous headroom for growth that remains.

We also delivered 14 Signature instruments to customers for a total of 51 by the end of Q2. We are really encouraged by the adoption of Signature, our strength in the mid-and-low-plex segment and uptake by new and existing customers. We believe our execution with Signature really speaks to our ability to identify and successfully address the new opportunity with the new product and to do so in a relatively short period of time.

Looking broadly from Olink's perspective, customer buying behavior remained strong across our major geographies and from high-to-low-plex with continued appetite for proteomics projects from new and existing customers. Recent data featuring the Olink platform are being well received by the community, driving more interest to our products and strengthening our competitive position. The drive for new insights to improve human health is stronger than ever. And we believe modern proteomics and Olink NPX data specifically will be one of the key enabling technologies to unleash a new era of biological understanding.

I'll now turn the call over to Oskar to provide additional financial details.

Thanks, Carl, and hello, everyone. Second quarter revenue continues to grow very well, up 56% on a yearly basis even with FX headwinds. Driven by continued investment in alignment with our strategic plan, adjusted EBITDA was negative $7.9 million for the second quarter as compared to negative $6.3 million for the second quarter of 2021.

As Carl mentioned, at the end of Q2, we had 29 externally placed revenue-generating Explore installations. This installed base achieved about $700,000 in average customer pull-through during the 12 months ended June 30, 2022. During our early experience with Explore, we have seen average annual pull-through range from $500,000 to $750,000 with individual spend ranging from less than $100,000 to multi-million-dollar orders. We continue to expect variability in quarter-to-quarter pull-through, which will be further impacted by our customers' spending seasonality, but overall, expect a continued strong growth.

Kits revenue for the second quarter of 2022 grew 42% to $7.1 million as compared to $5 million for the second quarter of 2021. Target was a bigger contributor to kits revenue growth during Q2, and we are really excited about the strength of the mid-plex segment. Analysis services revenue in Q2 grew 51% to $17.9 million as compared to $11.8 million for Q2 of 2021. The mix of kits versus analysis services revenue improved sequentially and was in line with our expectations. Olink continues to expect progress throughout the remainder of 2022 and beyond in increasing the mix towards kits.

With growth driven primarily by Signature Q100 instruments, other revenue was $2.5 million for the second quarter of 2022 as compared to $0.8 million for the second quarter of 2021. By geography, revenue during the second quarter of 2022 was $12.5 million in Americas, $12.6 million in EMEA and $2.4 million in China and rest of the world.

Consolidated adjusted gross profit was $17.9 million or 65% of revenue in the second quarter of 2022 versus $12.5 million or 71% in the second quarter of 2021. Adjusted gross profit for kits was 91% in Q2 of 2022 as compared to 90% in Q2 of 2021. Q2 2022 adjusted gross profit margin for analysis services was 58% as compared to 64% in Q2 of 2021. The decline in analysis services margin was primarily driven by deliveries to the U.K. Biobank and our continued build-out of lab capacity. We continue to expect service margins to revert to normalized levels we've observed historically in the second half of this year.

As we consider total COGS, we expect our strategy of increasing kits revenue as a percent of total revenue will have a positive impact on gross margin over the long-term and quarter-to-quarter variation should be expected given the seasonality of our business and our ongoing product launches. Furthermore, the continued adoption of Explore 3072 should provide support for margin expansion over time, leveraging our internally-built antibody library.

Adjusted gross profit margin for other was 45% in Q2 of 2022 as compared to 44% for Q2 of 2021. Total operating expenses for the second quarter of 2022 were $31.7 million as compared to $23.3 million for the second quarter of 2021. The increase was largely due to continued and accelerated investment into Olink's commercial organization, research and development and driven by cost as a public company as well.

Operating expenses are broken out as follows. Selling expenses for Q2 of 2021 were $10.6 million versus $7 million for Q2 of 2021. Administrative expenses for Q2 2022 were $14 million versus $12.2 million for Q2 of 2021 and R&D totaled $7.3 million and $5 million for Q2 2022 and Q2 2021, respectively. Other operating income was $239,000 in the quarter as compared to $868,000 in Q2 of 2021.

Net loss for the second quarter of 2022 was $4.8 million as compared to a net loss of $10.6 million for the second quarter of 2021. Net loss per share for the second quarter of 2022 was $0.04 based on an average number of outstanding shares of 119,101,120 shares as compared to a net loss per share of $0.09 in the second quarter of 2021 based on an average number of outstanding shares of 119,007,062 shares.

We ended the quarter with a strong balance of $100 million in cash and cash equivalents with the strong cash position shows our ability to responsibly balance investment needs with efficient use of capital. And consequently, we believe Olink remains sufficiently capitalized to achieve our return to profitability and to fund our existing strategic plan.

Moving to our outlook for 2022. Olink's strong performance to date has continued according to plan, offsetting FX headwinds successfully. So we're reiterating our yearly revenue guidance of $138 million to $145 million and anticipated fourth quarter seasonality in 2022 to be slightly improved over Q4 of 2021 when considering the midpoint of the range. This guidance also anticipates the pandemic environment similar to what we've experienced to date and the impact of the geopolitical environment remains nonmaterial overall.

As we consider 2023, we believe we remain very well positioned to return to profitability and continued strong growth as well.

I'll now turn the call back to Jon for his concluding remarks.

Great. Thank you, Oskar, and thank you, Carl. It was a great first half of 2022 broadly. Our leadership position in proteomics is seeing even greater recognition and the company is benefiting from robust adoption across our entire portfolio of products and services, selling into a broad, diversified and growing customer base across multiple proteomics use cases.

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

(Operator Instructions) Our first question comes from Matt Sykes with Goldman Sachs.

Maybe my first question, just given the back half of the year and you expect to see improvement there. Just wondering if you could help us maybe with any additional color on Q3, just given the Biobank revenues rolling off, maybe some view as to what implied growth or kind of some of the metrics for Q3 might look like so we can help with modeling?

Thanks, Matt. Yes. No, super excited, of course, coming out of the first half very strongly. As you probably see and realize from the narrative here that proteomics is increasingly getting higher on the strategic agenda on the global research community. And in particular, all in proteomics and PEA is becoming a very important tool for all of this research and adding to the genomics data sets that we have generated over the past few decades.

On top of that, as you also realize that or recognize with the -- how we designed our product portfolio, covering all the various use cases from high to mid to low plex, with Explore, Target and, of course, the Signature platform.

So with all that said, Olink is sort of in a sweet spot on where the research community is focusing their attention at this point in time. So as we look into the second half and with our externalization strategy, which is being very well received, we see a very healthy pipeline looking into Q3 and beyond that. So yes, in my years as CEO, since we started a company, I actually haven't seen us being in a better situation. So we are super excited leaving the first half of the year moving into the second half. And yes, look very healthy to everything what we've communicated over the past few quarters.

Got it. And then maybe a high-level question. You've shown is probably stronger than expected growth at least in our view, in terms of low and mid-plex, particularly mid-flex with Target. Could you just maybe help us out a little bit with customer behavior, customer activity in mid and low plex relative to high-plex, just given what our expectations were, I think mid and low has grown a lot faster than we expected. High-plex is maybe not growing from an installation standpoint as fast as we expected. So maybe help us out in terms of what your customers are saying and the level of activity in each of those areas to kind of help us understand that dynamic.

Sure thing. No, thanks for picking that up, Matt. Yes. So we worked together now for roughly 18 months, I guess. And I guess you also sort of start to recognize the strength and value of the PEA technology. And also Olink capacity to sort of understand customer workflow and how these processes -- development processes are executed.

So the high-plex is per hour script. You heard that it represents 67% of the business, which is quite remarkable. It's only sort of 18 months we've had Explore as a product on the market. But all these researchers, they scale their researchs. You start off sort of capturing that broad net and sort of an unbiased or hypothesis -- and hypothesis driven. And then everyone is hoping for a golden biomarker. We often see that you find rather a signature of proteins, and then you want to advance your research with those. Here, our technology is truly unique with this scalability. But we've been honestly sort of hampered on the mid- to low plex market based on the readout. That's why we were so excited. We invested in the Signature product or readout platform. And as we launched that last year, now you're starting to see that it's not only in the high-plex that this research market is becoming to appreciate and value the uniqueness of PEA in unparalleled multiplexing with unparalleled high-quality, we can trust every data point. This is now similar into the mid-plex segment well with a very competitive, cost-effective signature readout.

So a bit of a long-winded answer, perhaps, but I wanted to give you the full sort of scope. And it's very early days for Signature. We're seeing good progress there, and this is just our starting point. So we are super excited, as we mentioned, across high, mid and low-plex.

Got it. And maybe one last follow-up, if I can. I'll get back in the queue. Just Oskar, just -- I know you said in the past that the Target and Focus relative to Explore, the margins are relatively similar. I just want to make sure that if we continue to see strong growth in mid and low plex that the margin uplift that we could see from that mix shift going more into kits is still intact those are sort of the mid- and low plex are some of the drivers of the kit growth?

Yes, that's a really good question. So that sort of correct to sort of summarize that if we look across sort of at a high level across Explore and Target kits, the margin profile is very similar. So sort of either product going sort of up and down in sort of relative contribution is not going to sort of materially impact our gross margins.

Our next question comes from Tejas Savant with Morgan Stanley.

Jon and Oskar, maybe to kick things off on the Analysis Services piece picking up on an earlier question here. Outside of U.K. Biobank, it sounds like growth was essentially flattish quarter-over-quarter. And so what I'm wondering is as you think about the overall business, you've talked about kits being an increasingly important part of the mix on a go-forward basis. So is that mix shift something you're envisioning sort of really kicks into high gear here in the second half? And is there a risk here that service revenue might sort of scale off a little bit? And then I have a couple of follow-ups as well.

Well, as I sort of alluded to, proteomics is getting higher and higher on the strategic agenda. Proteomics is for the first time ever at scale and quality, driven by OLK. And we are getting a lot of new customers as well. Our Analysis Service is a great sort of first step and opening the door to new customers. So that's also why we see a lot of new activity, new customers, and it's a great onboarding. It's a first step for them to get acquainted to proteomics, to our technology to the NPX data, et cetera. And I could actually kick this question also over to Carl and he maybe can elaborate a bit on what we see a very healthy pipeline in terms of the kit business in the second half of the year. And I actually believe that we already in Q3 have more expectations than we did in the second quarter. So I don't know, Carl, if you want to elaborate.

Yes, sure. Thanks, Jon. Yes, for sure, I think we're seeing actually sort of broad success across the portfolio from, as you mentioned earlier, from Explore all the way down to the mid and low plex. And I alluded to this in my comments, we have a strong pipeline for Explore externalization in the second half. So I think reiterating guidance we provided earlier, we will continue to shift the mix more toward kits, certainly in the second half of the year. And as you saw, they were having good success with the Signature instruments, I mean the low plex, the mid- and low plex space as well. As Matt was asking about as well, you can see we're doing quite well on the kit revenue there. So where we feel like we're executing our strategy actually exceptionally well at this point to sort of push the technology out into the world. And then as Jon said, to continue to support our customers who rely on the service part of our business as well. So we'll continue to meet that demand, but the mix will continue to shift as projected.

Got it. That's helpful color, Carl. And actually, that's a great segue into my follow-up here. So was there any -- are you sensing any sort of delays or longer decision time lines as far as these kit externalizations go? 2 units was a little bit below where we were. And then, Carl, is it still entirely NovaSeqs? Or are you seeing NextSeqs get activated as well? I'm curious as to any commentary on any early traction with customers using non-alumina instruments at this stage.

Yes, sure. So the Yes, the externalization has been going well. It's nonlinear. I think is a good way to describe it. So it's sort of in line with our expectations and that metric I mentioned around total market capacity, we think is an awfully good way to look at it. That 640,000 sample capacity that I mentioned would sort of exceed the capacity needed to sort of meet our targets for now. So we feel good about that. And as I mentioned, again, we have a very strong pipeline in the second half for externalization. So we expect that trend to continue in a very positive way, as Jon mentioned in the second half. We're already sort of exceeding that early here.

As far as NovaSeq-NextSeq mix, yes, we're continuing to see NovaSeq being the dominant platform, although we do have some NextSeq customers as well. So there's mix there, but it is definitely predominantly NovaSeq. And then for the non-alumina sequencers, as Jon mentioned, we're still collaborating and it's still to be determined in terms of what future volumes and throughput, et cetera, will come from these next-gen sequencing platform. So that is to be determined, but again, we're quite optimistic about that potential and again sort of reaching our customers no matter which platform they choose to use.

Got it. That's very helpful, Carl. And one final follow-up for Oskar here. It looks like you burned about $20 million in cash in the first -- in the second quarter here. And obviously, cash burn is on everyone's radar given the market environment. Can you just walk us through any internal plans here for extending out your cash on way a little bit and how you're thinking about sort of investments at this stage?

Yes. Great question, Tejas. Thank you. So I think sort of, first of all, as we've alluded now for a couple of quarters, I mean, sort of we are really sort of reverting back to profitability, and we see sort of 2023 as being a key year. And it was not that long ago that we ran a high-margin, cash-generative business. So I think in terms of sort of cash runway, I mean we are comfortable that the cash we have at hand today will sort of take us through this plan and as we return to profitability next year and cash flow breakeven after that. And clearly, we are prioritizing sort of investments, but I think we've always been responsible in how we spend our cash, where we invest. But I think as you've also heard sort of today from both Carl and from Jon, that this sort of the opportunity here in front of us is big.

Our next question comes from Puneet Souda with SVB Securities.

I just wanted to clarify the contribution in the quarter for UK Biobank and what's left to go at this point. Just to be clear, what sort of contribution we should be expecting there in the third quarter. Obviously, a big project for you and an important one in terms of publication and significance wise. So also wondering if that benefited you in sort of new customer additions or folks, researchers who looked at the impact of this publication?

Thanks, Puneet. Yes, I love to lead with the science, right? So I'll start by answering the question there. And it's amazing the feedback that we're receiving on the proteogenomics approach and in particular, by the value Olink and NPX. The root of that is basically that you are customers here that participants in this fantastic project in UK Biobank is now being able to either confirm hits from genomics or actually roll out targets. So it's crucial information providing immensely valuable and increasing interest in what we do. So fantastic.

To go into more tactics, I mean, first of all, I can take this opportunity to congratulate our team at Analysis Service, who actually just past week delivered the last QC data from the running of the complete expansion part of the project. So we have now executed the full 3072 on all samples in the UK Biobank, an amazing milestone and achievement from the Analysis Service team at Olink. So huge congrats to them for that.

And in terms of, as you know, we have not been sort of communicating the exact financials around this based on our agreement with the consortium. So -- but you know that it's been quite aggressive pricing from our perspective. This is also a very important project and in rating awareness and important and significant of both proteomics and Olink. So -- but it's great that this project is behind us, as Oskar alluded to, and you would see our service margins going back to more historical levels as we move forward.

And then on Explore, Oskar mentioned that the average pull-through is around $700,000. Sort of how should we think about that trending as you add more Explore? I'm assuming there's going to be meaningful more additions this into the second half. Obviously, you had only 2 in the last 2 quarters, I mean, back-to-back. So just wanted to understand how should we think about that line trending as new accounts come online in Explore?

Sure, Carl, I don't know maybe you're closer to that. Do you want to comment?

Yes, sure, sure. Yes, I think that last 12-month metric is a good one to look at just for the reason you mentioned. As I stated earlier, it's a bit nonlinear. So as we add -- again, we have a strong pipeline in the second half as we add more, you're going to change the math there a little bit. So I'd keep an eye on that last 12-month metric, as I think that will be -- that will be telling. But yes, the pull-through, as mentioned earlier, has exceeded expectations, and we're doing quite well at our sites and the adoption has been robust. We've had sites expanding their capabilities, so increasing throughput during the quarter as well. So I think these are all, again, very sort of positive trends for the continued growth and success of the Explore business and the externalization of it.

And then just for -- maybe this is for Jon. On the antibody development side, I mean you talked about the 4.5k launching at the year-end. I mean how should we think about the productivity on the new antibody development and internalization of that? And sort of maybe a question for Oskar too in there sort of, as you continue to develop those, how should we think about the gross margin trend line as you bring those -- more of those antibodies internally? So just help me through that.

Great. Puneet, thank you. And thanks for teeing that one up as well. I can take the opportunity to -- I'm not sure if we have any colleagues on here from Olink Holding, [Bagasara] team that we acquired a couple of years back. But huge shout out to them as well. We have, as I communicated, over quarters as well, continue to improve the processes of success throughout the workflow in -- from antigen immunization to harvest to purification and eventually PEA development. So we are actually doing extremely well and a bit ahead of our internal target and so forth. We are in very good shape to hit the targets and milestones that we set out. So extremely good work by all the fantastic scientists within Olink, achieving that.

And Oskar on the gross margin side, it's also good news?

Yes, absolutely. So I mean -- Puneet, as we expand our own library, we will expect to sort of -- the Explore kit margin to expand up to a couple of percentage points when we sort of approach the sort of 4.5k product. Clearly, that will sort of take time as sort of the mix will develop within the Explore segment, but it's definitely sort of a tailwind for the gross margin.

(Operator Instructions) There are no further questions. I'd like to turn the call back over to Jon Heimer for any closing remarks.

Thank you very much, and thanks for joining us today and for your continued interest in Olink. We look forward to keeping you updated on our progress and wish everyone a great day.

This concludes the program. You may now disconnect.