Somalogic Inc (SLGC) 2021 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the SomaLogic Fourth Quarter 2021 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Marissa Bych with Gilmartin Group. Please go ahead.

Thank you. Today, SomaLogic released financial results for the year ended December 31, 2021. 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 forward-looking statements during this call within the meaning of federal securities laws, which are made pursuant to the safe harbor provision 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.

All forward-looking statements, including, without limitation, those relating to our market opportunity, gross margin and future financial performance, protein content and database growth, customer base, diagnostic pipeline, hiring expectations and growth in our organization are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 10-K filed with the Securities and Exchange Commission today.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, March 29, 2022. SomaLogic 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.

And with that, I will turn the call over to Roy Smythe, Chief Executive Officer.

Thank you, Marissa, and good afternoon. Welcome to our 2021 earnings call, summarizing an incredible fiscal year. We are tremendously proud of our progress this last year and look forward with a great deal of excitement to the rest of 2022. I'd like to start off by expressing my sincere gratitude for all who are contributing to our success here at SomaLogic. We're working every day to relieve human suffering and prolong meaningful life by harnessing and applying the power of the proteome and this unequivocally requires the efforts of many.

SomaLogic's strong fourth quarter capped off a transformational 2021 for the company, which included, among many other accomplishments, a successful public listing on NASDAQ, several new product launches and growth of our commercial team. Our continued execution is reflected in our strong financial results, generating revenue of $23 million for the fourth quarter and a record $81.6 million for the full year, representing 46% year-over-year growth.

For those who are newer to SomaLogic, I'll start out with a summary of the importance of proteomics followed by our business and key differentiators. Until now, measuring and identifying a sufficient amount of the human proteome and leveraging that data to create useful clinical tools has been more challenging than the human genome. The evolutionary path of genomics moving from measuring a few things to measuring many things and finally to the measurement and identification of all things and along the way, harvesting the information garnered from that ability to power applications with both financial and human value is now being repeated by proteomics.

However, the evolution of proteomics will result in objectively more powerful and much larger number of applications in a total addressable market currently valued at up to $90 billion, which in time will be larger than genomics as well.

It is simply not debatable that SomaLogic has traveled further and faster down that evolutionary path than any other company with a demonstrated and proven ability to measure more protein biomarkers of interest to identify vastly more genome proteome correlations and to create first-in-class high-plex protein pattern recognition diagnostic and prognostic tests.

Rather than just products, we offer a meaningfully differentiated platform consisting of a foundational technology with the ability to measure and identify 7,000 proteins, a database containing almost 1.5 million human samples, our bioinformatics team and the bespoke tools they've created over the course of more than a decade.

Our flexible synthetic foundational technology can be used in a number of protein measurement and identification contexts as evidenced by our recent NGS collaboration with Illumina, and our reagents can be scaled and customized very quickly without the need to work in living systems.

We are heavily scientifically validated illustrated by the facilitation of the publication of more than 400 manuscripts, some of these collaborative landmark articles in human proteomics rather than just method citations.

Knowledge, unlike raw data or information, implies an ability to create applications and we have done so. Our database currently gives us access to 1.5 billion individual human protein measurements with approximately 15 million clinical data points. And by the end of 2022, we expect to have 30 first-in-class, very impactful protein pattern recognition, SomaSignal diagnostic tests to move into clinical and commercial use.

We are also heavily market validated and trusted. More than 400 customers have been on our platform and some such as Novartis have entered into long-term agreements, and we are adding more customers rapidly as we grow our field team and our commercial footprint.

In 2021, we achieved several milestones to augment our platform, capabilities, relationships and balance sheet. In May, we announced our Proteomics for Precision Medicine Initiative. We have since partnered with Emory Healthcare, Intermountain Healthcare, CommonSpirit Health, University of Colorado Health, University of Pittsburgh Medical Center and University Hospitals Cleveland Medical Center to facilitate market update as well as our regulatory and payment strategy for our unique diagnostics pipeline.

In June, we announced new disease-specific and custom proteomics panel products, which demonstrate our continued dedication to cover the continuum of protein measurement identification needs of our customers and to facilitate their work on a single platform. We also announced new customer collaboration agreements with companies such as Novo Nordisk.

In July, we announced the relationship and deployment of our assay capabilities to Beth Israel Deaconess Medical Center in our general program for deployable SomaScan kits.

In August, we announced the collaboration with Twist Biosciences to probe our database and other proteomics data for new therapeutic antibody targets.

In September, we successfully completed our business combination with CM Life Sciences, which provided substantial capital, over $619 million in gross proceeds to our balance sheet in support of our ongoing growth objectives. As a result, we are uniquely well capitalized in our sector.

As evidenced for accelerating scientific interest in our platform, during 2021, we powered the publication of a record number of manuscripts, more than 100 in the biomedical literature from customers and collaborators around the world and in journals such as Science and Nature, spanning a broad gamut of areas of investigation from autism to Alzheimer's, to COVID, cardiovascular disease and cancer.

Our strong momentum has carried into 2022. For example, in the past several months, we have added several accomplished commercial, technical and strategic leaders to our management team, including Steven Mermelstein as our Senior Vice President of Mergers and Acquisitions, a role he previously held at Agilent; and Adam Taich is our Chief Business Development and Strategy Officer following several important executive leadership roles at Thermo Fisher.

We've also brought on board a new Senior Vice President of Licensing and IP strategy, Ken Kaskoun from Qualcomm; a new Lead Executive for Manufacturing; Shawn Walsh, who most recently held a similar position at IDT; and a new Vice President and Engineering Lead Executive, (inaudible) Asylum Research at Oxford Instruments.

We're also pleased to share that we recently added a Senior Vice President of Investor Relations and Strategic Finance, Lauren Glaser, he joins us from Assembly Biosciences and brings over a decade of experience in IR and related functions.

Early in the new year, we announced the co-exclusive partnership with Illumina, effectively combining genomics and proteomics technology to empower and enable the future of multiomic's research. The partnership combines the power and scale of Illumina's global commercial infrastructure and installed base with our unique proteomics platform to develop co-exclusive, co-branded, next-generation sequencing-based deployed proteomics kit products.

And while this partnership accelerates our NGS-based capabilities over time, we plan to deploy a variety of protein measurement solutions on several different platforms, including NGS, arrays and emerging chip-based approaches to best meet the needs of our customers and collaborators regardless their technology, cost or throughput needs and preferences.

Our comprehensive combination of a powerful enabling technology, flexible synthetic reagents and an ability to leverage proteomics data to create powerful diagnostic applications offers us a substantial first-mover advantage and a large number of near- and longer-term opportunities to leverage these advantages capabilities and proprietary tools to both diversify our sources of top line revenue and to substantially expand our share of the rapidly growing proteomics field.

Notably, the realization of these opportunities does not require us to spend significant capital over time on new development. Many of the assets needed already exist and are part of one uniform platform we work within every day. One near-term opportunity is the continued deployment of (inaudible), array-based SomaScan kits to complement our current service offering.

Our early access program for academic institutions and research partners was successfully initiated during 2021, and we are planning an open access launch later this year, one that will give our customers the option to either access our robust, in-house service business capabilities or run and benefit from the advantages of SomaScan in their own laboratories.

A second major opportunity comes from our clinical diagnostic development capabilities and the diagnostic assets we have already created as a result. As proteomics technology scales and adoption increases, our capability to develop these high-plex protein pattern recognition clinical applications will increasingly and rapidly differentiate our business. We have over 20 validated SomaSignal tests currently available and as many as 10 new tests scheduled to launch in 2022 as well as the capability and time to develop between 100 -- 80 and 100 tests based on the current database.

Given the number of test products already developed and those in our pipeline, we intend to accelerate time to market for these SomaSignal test products via licensing and business development and are now pursuing very active near-term opportunities for both of these approaches. Our existing and planned test product menu spans a variety of indications with initial tests addressing liver disease, heart disease and diabetes to name just a few.

Our unique reagents themselves also present a considerable opportunity for the creation of scientific and financial value. We are the inventors of aptamer technology and the world's most sophisticated developers of these tools. Aptamers can be used in many contexts where antibodies are currently employed, such as other proteomics platforms and a number of use cases in clinical and experimental pathology and all represent revenue-generating opportunities.

We have created thousands of these proprietary modified reagents and are currently creating more of them at a pace of approximately 500 new constructs to go on to the SomaScan menu each and every quarter.

To facilitate the development of our near-term test product opportunities, we have recently announced our engagement with the European Prospective Investigation for Cancer and Nutrition or the EPIC Biobank, a cooperative project between Imperial College London, the International Agency for Research on Cancer and the World Health Organization.

We will begin to analyze what will be a total of 210 million protein measurements from 30,000 samples from this biobank, the world's largest oncologic proteomic study to date, and we'll both use this to develop a suite of planned cancer prediction SomaSignal tests as well as share the data back with a consortia for its own scientific use.

We will also be assaying the biobank specimens from the Multi-Ethnic Study of Atherosclerosis or MESA, a study sponsored by the National Heart, Lung and Blood Institute in the NIH. The 105 million protein measurements we created in this process from 15,000 samples spanning 15 clinical years of clinical applications will represent the world's largest proteomic study of an ethnically diverse population.

To support our ongoing commercial growth, we are actively recruiting and hiring with great success. We began 2021 with 10 and ended the year with 39 sales field team members, a 290% increase. We also continue to grow our marketing team in support of our commercial expansion. We began 2021 with 2 marketing team members and ended the year with 17, a 750% increase.

We've also added additional members of our commercial team and customer support in product management and intend to end 2022 with a combined total commercial team of roughly 125 employees as we align our commercial capabilities with the heft of our research and development assets.

Great people who are motivated by purpose and want to work for great companies with an aspirational mission no matter what is going on in the world. Our mission is to leverage the power of the proteome to relieve human suffering and extend meaningful life, and we are unequivocally doing this with great people working toward these ends.

2021 was a transformational year for SomaLogic. We've only begun to fully realize the full commercial potential that comes with 20 years of tireless innovation. And with the people and resources in place, we are incredibly and uniquely well positioned to continue to do so.

In that regard, 2022 should be even more remarkable. We will continue to grow our commercial team to support and facilitate the growth of our customer base as we continue to add new customers to our platform and deepen our relationships with existing customers and collaborators. We will develop the capability to identify and measure 10,000 human proteins, up from the 7,000 we currently measure. We will pursue new partnerships in both life sciences tools and diagnostics, the latter will include both licensing the existing proprietary SomaSignal tests and agreements to develop new ones for other customers.

We will begin to collect, evaluate and discuss early study results from our Proteomics for Precision Medicine Initiative. We will develop new impactful SomaSignal tests in several disease areas, but with a focus on tests that can actually predict your biologic risk of developing cancer before you have it, even before early detection technologies such as cell-free DNA can be effective.

Our cash position provides an opportunity to evaluate inorganic opportunities, which can add to, augment or synergize with our current capabilities. And we will continue to execute on our current revenue growth plan. I'd like to now turn the call over to Shaun to review our current and recent financial performance and our 2022 outlook. Shaun?

Thanks, Roy. We are immensely pleased to report a record revenue year in 2021, contributing to a 40% top line CAGR over the last 3 years as we have continued to execute on our growth plan, through the continued expansion of our commercial team and continued reinforcement of the benefits and value of our platform. We expect these investments to continue into 2022 and beyond, supporting our commitment to ongoing success and strong growth ahead.

Starting with our financial results for the fourth quarter and full year. Revenue for the 3 months ended December 31, 2021, was $23 million, an 18.5% decrease from $28.2 million in the same period of the prior year.

I would point out that the fourth quarter of 2020 benefited from 2 large onetime events of approximately $9 million combined as well as slightly higher royalties associated with COVID-19 testing in 2020 relative to the fourth quarter of 2021. Adjusting for these, we saw approximately 30% year-over-year growth for the fourth quarter.

Revenue for the full year of 2021 was $81.6 million, a 46% increase from $55.9 million in the prior year. Revenue growth was driven by a significant expansion of our core sales organization whose efforts led to substantial growth and broadening our customer base. Over the course of the year, we added 77 new customer accounts, representing over a 200% increase in our number of new customers for the year.

With these additions, we continue to significantly derisk our business by diversifying our revenue base. In 2022, we expect to continue expanding our customer base as we scale toward roughly 125 commercial personnel by the end of the year. Gross margin for the fourth quarter of 2021 was 54.5% compared to 63.7% in the fourth quarter of the prior year. Of note, the corresponding prior year period benefited from a onetime revenue recognition of $4 million at 100% margin.

Gross margin for the full year 2021 was 59% compared to 59.5% in the prior year. I want to reiterate that the service business is a mid-50s percentage margin business, give or take with mix, with our total margin also affected by royalty revenues. In the short term, our continued customer diversification will provide modest ASP expansion but the bulk of the future margin improvement will come with cost out in our (inaudible) and future product expansion, such as additional tailwinds from price elasticity of diagnostic testing and the development trajectory of using synthetic nucleic acids as our reagent.

Total operating expenses for the fourth quarter of 2021 were $51.4 million, an 84% increase from $27.9 million in the fourth quarter of 2020. Operating expenses for the full year 2021 were $154.9 million, a 72% increase from $90.2 million in the prior year. R&D expenses for the fourth quarter of 2021 were $11.2 million compared to $7.6 million in the fourth quarter of 2020. Full year 2021 R&D expenses were $43.5 million compared to $30.7 million in the prior year.

Sales, general and administrative expenses for the fourth quarter of 2021 were $29.7 million compared to $10.1 million in the fourth quarter of 2020. SG&A expenses for the full year 2021 were $78 million compared to $36.9 million in 2020. The increase in our expenses was primarily associated with headcount additions as we continue to invest in our technology platforms, the commercial team and related functional support as well as public company readiness.

Adjusted EBITDA for the fourth quarter of 2021 was a loss of $27.7 million compared to an adjusted EBITDA of $1 million in the fourth quarter of 2020. Full year 2021 adjusted EBITDA was a loss of $64.3 million compared to an adjusted EBITDA loss of $31.5 million in 2020. Please see our press release on file with the SEC as of this afternoon for a reconciliation between GAAP net loss and non-GAAP adjusted EBITDA. We ended the year with $657.7 million of cash, cash equivalents and short-term investments.

As Roy mentioned, our cash position provides substantial capacity and flexibility to execute our strategy. Now turning to our 2022 outlook. Based on ongoing strength in our business and the development of our sales pipeline, which is progressing as expected, we are reaffirming our formal 2022 guidance of $105 million to $110 million in revenues, representing growth of 29% to 35% over the 2021 revenue of $81.6 million. We are often asked about quarterly trends in our business. So I do think it's worth providing incremental color on our expectations on how 2022 could roll out.

As our historical results show, our first quarter tends to be seasonally lighter relative to the other quarters of the year as many of our customers finalize their internal annual budgets, just as our fourth quarter tends to benefit from customers' year-end spending before the end of their budget year. Consistent with these trends, we generally expect to see an upward trend from Q1 to Q4 of 2022. I would also like to provide some color on our operating expenses.

In 2022, we expect general and administrative and R&D spending to slightly outpace revenue growth. But most of our expense growth will continue to be in sales and marketing, which, as Roy mentioned, is growing substantially. Overall, you can expect our operating expenses to increase about 70% in 2022 over 2021, in line with our strategic investment and cash burn expectations.

In summary, we are keeping our foot on the pedal by accelerating our commercial team build-out while continuing to invest in our technology platform as part of our plan to drive the business towards profitability.

Finally, I would like to review some more details of our co-exclusive partnership with Illumina which included an upfront premium $30 million payment. We expect to recognize this upfront payment as revenue tied primarily to the provision of reagents. I expect these amounts will be nominal in 2022 while the NGS products are being developed, and the vast majority of the revenue recognition will ramp with commercialization of the NGS products.

As Roy highlighted, we are thrilled about this partnership and see this as a meaningful opportunity to expand our impact and growth prospects over time. At this point, I would like to turn the call back to Roy for closing comments.

Thanks, Shaun. Before we close and go to Q&A, I'd like to highlight a story that clearly drives home the power proteomics, the story of Dr. David Fajgenbaum Dr. Fajgenbaum took part of our recent Analyst and Investor Day on February 4, where he recounted a very personal experience with our technology.

With his life literally on the line from a severe form of Castleman's disease, a cancer-like condition that affects the body's lymph nodes, David brought new meaning to personalized medicine as he worked against time to understand and attempt to treat his own ailment, one that was considered untreatable at that time.

Using SomaScan, David was able to identify an mTOR inhibitor therapeutic that would prove life-saving for him and put his disease into remission. Dr. Fajgenbaum emphasized that when faced with this poignant and urgent challenge that high-plex proteomics and especially SomaScan offered him the most specific actionable insights into the pathogenesis of a disease, which had previously been completely mysterious.

Our ardent hope and substantial belief is that proteomics will soon become as impactful to millions of others as it was to David. Actually, this eventuality is inevitable. It's beginning to happen right now.

Melody Harris, our President; and Steve Williams, our Chief Medical Officer, will be joining Shaun and I for the Q&A session. I want to thank all of you for joining us today, and I'll turn it now back over to the operator.

(Operator Instructions) Our first question comes from Dan Arias with Stifel.

Roy, on the new customers taken on in '21, it sounds like those played a pretty important role in performance for the year. I'm just curious how much of the business development that you're doing at this point is influenced by the change in data sharing and the requirement there.

Are you still communicating that message to some folks where at this point, is there sort of an understanding that's a policy for SomaLogic is not what it was? And then if I could ask a follow-up. If you remove those accounts, does it feel like assay utilization amongst the existing customer group is going up?

So in regard to the change in our policy around data sharing and data contracting, I do believe that the majority of the market understands that this has taken place. sometimes it takes a little longer for everyone to catch on. But I would say that the vast majority of our customers do understand that. And can you repeat the second part of your question, please, Dan?

Yes. I was just curious whether -- if you take out -- I think it was almost 80 new customers, if you remove those new guys from the picture, whether it feels like your existing customer base is just doing more work with SomaLogic than they had prior?

I'll make a brief comment about that, and then I'll let Melody Harris, our President expand. But in general, the progression that we see is that most of our customers come on to the platform with relatively small pilot studies to start. And then with a very high percentage of success, we convert those to larger studies and then obviously, over time, we hope to convert a number of those to larger enterprise relationships. And certainly, a lot of the new customers start with smaller studies and then move up the chain. Melody, would you care to elaborate on that?

Sure. Thanks, Roy. So absolutely, with 77 of those customers, and we know roughly what that initial bite is looking like from those customers. Revenues from those new customers on the platform accounted for less than 25% of our annual revenues this year.

So the growth that you're seeing is certainly coming from existing customers on the platform that we're seeing in recurring revenue. So we're happy with the growth, both on diversifying our customer base, but we're also happy with the growth that we're seeing from recurring customers.

Yes. And I would add that, again, because of this high success rate of moving people into larger studies over time based on how they view the data product that they get with those early studies that, that 25% contribution to this year's revenue bodes well for the future.

Yes. Okay. Helpful. And then, Roy, on the product development side, any change to the update for the plans for the 10,000 marker assay launch, is the end of '22 looking any more or less likely than early '23? And then on the kit of assays, should we still expect that by year-end?

The current plan is for us to have the reagents in hand by the end of the fiscal year 2022 and to create that 10,000 flex product as we have mentioned previously, and for that product to be launched sometime in the first half of 2023.

As far as our kits, again, a successful early access program with academic and basic researchers, and we plan to be by the end of the year in full access as well.

And our next question comes from Brandon Couillard with Jefferies.

Roy, maybe just on the EPIC study, how long will it take to run those 30,000 samples? Do you expect to complete that all this year? Will some spill over into '23? I'm curious if pricing is similar to the core business. And bigger picture, just curious how many more studies like this do you think are out there with a similarly large sample size opportunities?

Sure. I'll make a couple of comments, and I'll ask Steve Williams, our Chief Medical Officer, who proctors studies like this to comment. The first comment is that EPIC actually is an investment for us in this -- in the context of this set of samples. In other words, we're running these samples on our own investment to create new clinical product. And as we've mentioned before, we believe that there will be substantial benefit from this in regards to creating a number of new cancer prognostic tests that should have significant market interest. And I'll answer the third question and I'll let Steve talk about the timing of running these samples over the next year.

The third question is there are a lot of these opportunities out in the market currently, both opportunities for us to make investments in biobanks. Part of the reason we were interested in -- our raising a large amount of capital in our public transition was to have the opportunity to do projects like EPIC, where we could make investments in those biobanks and create clinical products, which obviously would have downstream revenue for us.

There are also a number of these that represent revenue generating top line revenue-generating opportunities around the world, and we are actively engaged in pursuing many of those over the next couple of years. Steve, can you expand on that and maybe comment on the timing of running those EPIC samples?

Yes, the rate limiting step is not SomaScan assay capacity because we could run 30,000 samples in less than 2 months. The rate limiting step for EPIC is the samples themselves are stored in straws in liquid nitrogen in Lyon in France, and it's a slow and difficult job to extract them and claw them out. So that's what we'll take -- we anticipate that they will be run during 2022, but that's the rate-limiting step, not our capacity.

Okay. That's helpful. And then maybe it's a good question for Melody. Just curious of what the top 3 customers that sometimes disclose in the Qs. Just curious what that percentage was for '21 for the fourth quarter, and expect that to be exiting the year '22.

So you asked the question about the customer concentration?

Yes. Just kind of how you see the evolution of kind of the diversification of the customer base or revenue base evolving in the next year.

Yes. We definitely have seen a significant decrease in customer concentration, especially compared to 3 years ago . Melody, would you care to comment on the percentage difference over the last several years? I think 3 years ago, our largest customer represented in the neighborhood of 20% of total revenues, and now that's down below 16%, 15%. Is that correct?

That's right. That's right. And we -- the nice thing about bringing on as many new customers as we have is that the loss of any 1 single customer is not fatal to SomaLogic at this point. And so being able to bring down that largest customer as far as their impact on our overall revenues, has put us in a more comfortable position as far as managing our own future.

And I would add that another benefit of adding all these new customers is that for pre-existing, very large customers, some of those have obviously first favored nation pricing considerations. And so our ASPs go up basically every time we add a new customer to the platform. So less concentrated, higher ASPs, both as we grow the business.

Got you. And then just 1 clarification for you, Shaun. I think you said 70% growth in terms of OpEx for the year. Was that for sales and marketing or OpEx in total?

That's total operating expense. I'd point out that our R&D and G&A will slightly outpace revenue growth and then the -- to get to the 70%, the rest of it is the commercial investment.

Our next question comes from Dan Brennan with Cowen.

Maybe on the first one, Roy, just on the diagnostic strategy. Obviously, a lot of excitement there and a lot of investment going into that. Just can you give us a sense or just an update on how we think about the revenue contribution from diagnostics, whether in '22 or '23 and '24? Or kind of what are the key milestones to see this strategy begin to contribute?

Well, we're certainly hoping to see some revenue this coming year from our diagnostic strategy, primarily from partnership deals where we either enter into a licensing agreement with a customer for an existing asset that we've already created or enter into development agreements with customers that have access to the clinical material or have an idea that dovetails with the material that's in our database such that we can develop new tests for them. And of course, those agreements will include some upfront payments as those are realized.

Certainly, for larger areas on the bar graph for revenue over the next few years, we're really talking 2023, 2024, 2025 time frame before I believe we really begin to see the potential top line revenue generated from our diagnostics. But we do think it's important this year to give the market a reason to believe. And we also believe that the strategy of -- it's unusual for a company to start out with a diagnostics platform with 30 assets.

It's usually one that we have -- by the end of 2022, we'll have around 30. And so we feel like we can begin to monetize in this year in these licensing and development relationships. And we are just beginning to do business development for those and already have small pipelines developed for both of those approaches, primarily just from those potential partners and customers reaching out to us prospectively. So we are quite excited and confident about the ability to do that over the next year or 2.

Great. And then I guess, I just had a quick follow-up to EPIC, presumably MESA is similar where you guys aren't collecting revenues on that, but I'd just like to confirm that.

That's correct. Steve, would you like to talk a little bit about the MESA study and the benefits of that for us?

Yes. What's special about it, as Roy pointed out earlier, that it's multiethnic. We'd like to be able to show that our tests are generalizable across ethnicities and the models that we develop, the proteomic models don't have race in them, and they tend to be race-blind, but we need to be able to demonstrate that.

But the other special feature of MESA is its longitudinal. It has sequential samples from the same individuals over time. And so you can see as diseases and diagnosis develop or get more severe, you can see the proteomic changes within individuals. And so that's what's particularly good about MESA.

And we've talked in the past about -- actually, back before we made our public transition when we were talking about potential uses of capital, we talked about making these investments in the biobanks to grow both our database and our clinical product components. And so we're just making good on those promises.

Great. And the kind of kit launch this year, is there any way to help think about what the impact from that could be? And obviously, it sounds like it will pick up traction more in '23, but just what's kind of the opportunity there in terms of growing your customers and/or pull-through on kits versus a centralized service? Just any color on that would be helpful.

Sure. Melody, would you care to comment on that?

Sure. So our strategy with respect to this is to have GA towards the back half of this year. And we are targeting what we would anticipate to be larger labs with larger pull through as those first customers that come on in the GA you won't see a material impact from revenues from this year given that we won't get that launch until the second half of the year, but we do anticipate those revenues to ramp in 2023.

And we have a question from Kyle Mikson with Canaccord Genuity.

Congrats on the year. About a year ago today, the stock merger announcement was announced. And at that time, you had this '22 revenue projection that was about $89 million. And your Current guidance stays roughly 20% above that original estimate. So could you talk about like how you're thinking or your guidance philosophy has changed in these last 12 months or a year or so that's resulted in that upside of almost $20 million? And I'm just kind of wondering like was that primarily driven by the increased sales team, the buzz around SomaLogic given the marketing may be funded by the stock merger or just the solid core execution.

We'd like to think it's all 3 of those. And in fact, I believe it is. We have been an incredibly serious research and development enterprise for more than 20 years, and we have the technology to prove that. We've been a really serious commercial business for around 3 years. And so certainly, a couple of years ago, a little more difficult to project what the future might hold.

We've been pleasantly surprised. I think that changing the business model a year ago was important in regards to pent-up demand in the market for customers that wanted to come on to the platform but perhaps, in the past, had decided not to because of old business models.

And then, of course, growing the commercial team, it's hard to have a customer conversation when you've got no one on your end to have it. And we certainly believe that this incredible growth in our commercial team and our hiring success. I didn't mention this, and I don't believe Shaun did either, but we've actually doubled the size of the company in general over the last year.

We celebrated our 400th employee just a few weeks ago at SomaLogic and of course, we started fiscal year last year with about 183. So having feet on the street is really important. The reception for what we do has been stronger than we had predicted. And of course, that's all good news.

Okay. Sounds good. kind of expanding on some of the diagnostics commentary that was touched on before. You obviously have a very large number of tests that have been validated or like in development or like in the pipeline, I guess. But out of those, like what's the killer app of the SomaSignal tests?

And I understand protein pattern recognition, like it's obviously a very attractive opportunity. But like what in there gets you most excited? And what could be like the biggest maybe financial contributor over time?

Well, I'll make a couple of comments, and then Steve Williams, who's the father of SomaSignal tests or if not the father, at least the uncle, I'll ask him to comment. It's a question we get asked fairly frequently about what's the killer app. And I think the killer app for proteomic diagnostics is not a single test. It's the breadth of things you can measure and identify and predict with proteomics.

Genomics has been incredibly impactful. It's not arguable. But genomics is largely limited to dominant mutation diseases in oncology because the tumor cells escape the germline imperative and have a lot of differences that can be identified and capitalized on clinically. But we're talking hundreds of potential tests for genomics where in proteomics and using protein pattern recognition, we believe it's thousands, maybe even over time more than that.

And so in my mind, the killer app is the breadth of capabilities that proteomics diagnostics will bring to the market into, more importantly, clinicians and patients that need them over time. Steve and his group focused initially on, I think, very wisely common diseases where interventions can have an impact. So they focused initially on cardiac and metabolic diseases followed up by cancer.

But it's really the breadth of things that clinical proteomics can do that I believe is clinical -- I know that you like to hear that this one is going to be the one that is the leading tip of the spear, but this is a lot of spears at once. Steve, would you care to add to that?

I like what you said, Roy, of course. The -- what I think the killer app is this intersection between our 2 businesses that within the Life Sciences business, what Roy just talked about is how much do you know about the participants in your clinical trials? How fit are they? Are they secretly smoking? Are they drinking too much? Are they prediabetic? Are they going to have a heart attack or a stroke during your study?

And of course, those things are all important in preventative health as well. And so when we look at the business opportunities, we think we've got this near-term business opportunity in life sciences for knowing your participants in clinical trials. But that rolls into preventative health. And if I had to single out one test, it would be the composite prediction of heart attack, stroke and death and heart failure.

But this test that we've now validated in over 40,000 people can find roughly 20% of the population who are going to have an event in the median time to event in about 18 months, and the commonest type of event is death. That's pretty catastrophic.

In the Life Science business, validating that as a surrogate endpoint has huge upside opportunities for enriching clinical trials and monitoring drug safety and monitoring drug efficacy. Whereas in the medical realm, it also has immediate application in allocating medical resources and expensive new drugs. So I'm really picking on the intersection between the 2 businesses as a sweet spot for the near to medium term.

Okay. That was great. And then just talking about the kind of the pipeline updates. I know there was the time lines for the 10,000 flex were discussed. But in terms of something else you've discussed previously, the offering multiple aptamers per protein. Is there going to be development work this year for that type of functionality? Or when does that really start -- those efforts really start to kind of ramp up?

Yes. Those efforts have already started. We've actually been working on that for several months already. And of course, the good news is that we're not starting from scratch. One of the interesting things about this ability to create these constructs using synthetic biology is that we can do it very rapidly, first of all.

The example I'd like to give is at the beginning of the pandemic, we obtain some purified protein from the spike protein of SARS-COV-2, the Alpha variant. And within 3 months of receiving that protein, we generated 200 aptomers that bound all over that spike protein to various epitopes.

So we've already started that project. We also have a substantial percentage of aptamers where we've got alternative constructs already stored away in the freezer. That's the comment about not starting from scratch. So we haven't announced a launch of that product or what that product will look like exactly, but we look forward to talking about that more during the course of the year. But the R&D efforts are well underway and, of course, this isn't speculative.

It's something every time we make an aptamer, we make hundreds. And so the technical risk for this is low. And of course, the benefits for this over time the ability to bind to multiple epitopes on each protein, the ability to do that very rapidly when you're not having to stand in front of a bioreactor or a GOAT to do that are significant.

Okay. Great. And then just last question for me. Could you walk through the steps toward more international expansion in the near-to-medium term? And I know that you grew substantially in places like Europe over the past year. I guess will the growth of the kind of international commercial force decelerate in the near term, like I said? Or will that increase more meaningfully? And are there any kind of CapEx implications given that expansion internationally?

We've had -- I'll make a couple of comments then ask Melody to expand. We've had significant success -- early success in recruiting in both EMEA and APAC. And hopefully, that's going to bear fruit relatively soon. Not hopefully. It will bear fruit relatively soon. So Melody, can you talk a little bit more specifically about our recruitment efforts in those areas and expansion?

Yes. So in the first quarter of the year, we've already hired our regional leads for both EMEA and APAC. We've also added double-digit sales folks outside of the U.S., and we anticipate that growth will continue throughout 2022. So we're looking for reasonably impactful contribution from international revenues during the course of 2022. It takes us about 4 to 6 months for a salesperson to become fully productive as they learn our technology and learn how to make those value propositions to customers.

And given that we've been hiring so rapidly in the last 2 quarters, we anticipate to see an enormous amount of that ramp in the back half of the year as all of those of bodies start to become highly productive in the back half of the year for us.

And to think about the potential for this, again, at the beginning of 2021, we had 10 commercial field team salespeople. We ended the year with 40. At the beginning of 2021, we had 1 person in EMEA and no one in APAC. So the upside potential for this, we believe, is significant. 8 of the top 50 -- actually about 12 of the top 50 biopharma companies in the world by total revenue are in APAC, for example. So the upside for this is substantial, we believe, over time.

I would intersect that with our kits strategy that I mentioned earlier that we're looking at these large volume sites that can process samples for others. And we are certainly targeting locations for that in EMEA and APAC so that we can drive more volume into those core lab kit sites starting in the back half of the year.

With fewer issues of data or sample movement across international borders, which this will ameliorate to some degree.

Thank you. And that concludes the Q&A portion of today's call. I'd like to turn the call back to Roy for any closing comments.

Thank you very much, and thank all of you for joining us today. I'd like to, again, thank all the participants in the call on our side, Shaun, Steve and Melody, I'd like to thank Marissa from Gilmartin and our operator as well. We're looking forward to seeing some of you both virtually and hopefully even in person this next year at upcoming conferences, including Jefferies in June.

As a closing comment, I'd like to ask that all of you who have the ability that you work to facilitate peace in Ukraine. We are intending to make a corporate donation to refugee relief in this region in the coming days. And as Martin Luther King once said, unarmed truth and unconditional love will have the final word in reality. Have a good week, and thanks again.

This concludes today's conference call. Thank you for participating. You may now disconnect.