Good afternoon, everybody. Welcome back to the 44th Annual TD Cowen Healthcare Conference. I'm Kyle Boucher, an associate on the Life Science and Diagnostic Tools team, and it's my pleasure to introduce Michael Egholm, CEO of Standard BioTools. He's gonna walk through a presentation for you guys, and then might have a little bit of time for some Q&A. So with that, Michael.
Yeah. Thank you, Kyle, and really appreciate the opportunity to present our story here today. And I will stand over here. I will be looking forward-looking statement. So here's our safe harbor statement. And then, assuming you're all read it and agree, I'll, I'll go on. Standard BioTools was founded with a vision of creating a diversified tools player here in a space where not many companies exist or a size. We believe that the key to success is not being a one-trick pony, so one technology, hoping for breakthrough, and then create a company from that, but instead to acquire highly unique technologies that have businesses but have multiple ones of those on a platform. We believe that we need seasoned operators to run the company, so stress the operating experience over scientific expertise.
If you have both, it's an advantage, obviously. We are a strong believer in lean. Many of us come from Danaher, where we all learned the lean operating system. Our version of the operating system is called SBS, Standard BioTools Business System. Then we need access to capital. We'll talk a little bit more about that. Initially, we were backed by Casdin and Viking for the first deal. Obviously, we'll do this through disciplined M&A. We reached $106 million on what was Fluidigm, now Standard BioTools, last year. We grew. We took a broadly declining business, grew it. We grew instruments, which is a leading indicator, 46% year-over-year. Our proteomics portfolio had a healthy growth rate.
On top of that, we also did a little bit of work on the side and completed the merger with SomaLogic and closed on January 5th. So strong execution and disciplined M&A was the deal here. With this combination, we took two companies that were both burning a lot of cash, had highly differentiated technologies, customers want. We took combined those. We're not quite near break-even, but within a couple of years, we're gonna be cash flow positive and maintain the healthy growth rate. And we're really creating a scale here, $200 million-ish, $200+ million this year in revenue and enough G&A synergies to actually pay for all this. And so we believe we're really uniquely positioned here with hundreds of millions of dollars in revenue, high growth margins, and a healthy growth rate to do that.
With the combination, we now have a very seasoned leadership team. I have two of my colleagues with me here. I have my CFO, Jeff Black, on the first row here, and Adam Taich, our Chief Strategy Officer. He was interim CEO for SomaLogic for a brief period and now part of a team here that have a lot of external folks, but Thermo, Illumina, and other places, all deep operating experience. So a team that was shovel-ready and ready to go to work. The way we got here was through a couple of deals. In April of 2022, we identified Fluidigm. Actually, we identified it in, so I guess, summer of 2021. Did a lot of work on it, closed the deal, $250 million PIPE, by Casdin and Viking into what was Fluidigm. We changed the name. We changed the management team.
The management team, you see you saw on the previous page, has one overlapping member with who was there two years ago. So a lot of investment in developing talent, top-grading positions, and really developing a team what we saw in Fluidigm, which is a company that had been around for a couple of decades, fantastic technology, highly differentiated. I'll come back and talk a little bit about it. But spotty execution in terms of growth rate, gross margins, and OpEx, as plagued many of the companies in this space, very high. We did have a global commercial organization that we could leverage. We were public. And there was a state-of-the-art manufacturing footprint in Singapore and Toronto that we have now gotten into shape but now are running. And this is part of how we got the growth margin up.
In just January here, so two months and one day ago, we closed what is the SomaLogic merger, a merger of equals this time. And with that, in addition, getting access to a very attractive proteomics technology, we also combined and ended up with a very high amount of cash. Now, I'll come a little bit back to the cash position, but in excess of $500 million once we have paid all the bankers, transaction, restructuring, etc., what we were about to go through. What we found out in the process, there's no bad PR. Any mention and any publicity turns out to create a lot of interest in the company. So we're basking in that glow here today. But super happy that we have closed and are well underway here.
With this combination, we now have a very unique portfolio. We have four product lines, three in proteomics, one in genomics that actually has a proteomics application also. And what is really unique here is that they're all highly differentiated, all best in their class. It does not mean you have a good business, but nobody else can do what we can do in any one of these four legs of the stool. So the SomaScan technology that we're from SomaLogic does 10,000 proteins, 11,000 measurements with a CV of 5%. It is far, far so at least twice the content and half the CV of the next-near competitor and a very clear path to keep going towards covering most of the proteome. We do all this from 55 microliter sample.
And it is like, the data I've seen here, now two months under the hood, I am more excited about the deal than I was on January 5th, where I have to admit, I showed up a little bruised, but we, we got the deal closed. And, and now, having seen how much this technology can actually do, we're so excited about what, what, what comes next here. So stay tuned. We do flow cytometry. We do this in 50 colors. We use mass tags. We use a mass spec instead of measuring fluorescence. Normally, you can only detect four colors and separate those. We have 52 colors now to deal with. And you're like, "Why is that important?" It turns out, to inventory or immune profile cells, you need 25, 30 markers for doing all the immune cells.
But then you need to figure out what actually goes on inside the cells, the functional state of what those cells are doing. And only we can do the combination of cells or markers inside and outside the cell. So really interesting. From half a milliliter blood, we can do both of these here. So look forward to combining these in the offering. The last spatial biology, the last proteomics technology we have is our imager, which is this instrument plus an instrument that can basically do shoot a laser at a slide and then introduce us a sample that way. We can do imaging now in 42 colors with many more to come. What's new about the Hyperion XTi that was launched a little less than a year ago is that we solved the two issues we had.
One was reliability, meantime between failure, and order of magnitude less than the legacy instruments. Effectively, the instrument is 10 times faster, solving the two main issues. So glowing feedback from customers, super excited where this can go in the exciting area of spatial biology. So we, again, here uniquely positioned. We're the only one that can do up to 40 slides a day but in a very, very high quality, very high signal to noise that's simply not achievable with fluorescence. So, last but not least, we have our what was the legacy Fluidigm original technology out of Stanford, microfluidics, where we have an ability to do 96 samples, 96 probes, for a very, very low cost if you have those throughputs.
We now found we cleaned up the portfolio, made the instruments robust, and have now found new niches where we can grow, grow, grow this business. So the other thing that happened when we combined the two businesses is we got the biopharma reach of SomaLogic. 65% of the revenue was in biopharma, most of it in discovery. But what's really interesting, a clinical expertise expert organization led by our Chief Medical Officer, Dr. Stephen Williams, that are now having conversations with clinicians, something we never achieved in Standard BioTools. And we're gonna leverage that and begin to talk to both clinicians and the technicians to operate the instrument. You need both to be successful in business. What we are bringing to the table here is expertise in developing and making instruments, field-based service, and producing consumables.
And today, SomaLogic is almost exclusively a service business. We have the expertise to eventually automate all that. And so stay tuned for more here. But very, very exciting combination. So switching back, so why should you believe in us? And we'll lay it all out up here. First, Standard BioTools 2023 scorecard. Talk a little bit about SomaLogic performance. But we grew revenue 9% last year. We took a declining business, grew revenue 9%, 900 bps improvement in gross margins, and with OpEx reduction and a 53% improvement in operating cash. So set it up really nicely. We could have cut deeper, but we found that balance between cutting enough to make it meaningful, walk towards profitability, and enough to maintain growth. Okay? We could also have grown more, but it would have been at the expense of much, much more cash.
And so we really prioritized that balance. And it's what we're gonna use here for SomaLogic. And as I said, we just closed the merger. So quite a busy year. I hope next year is gonna be a little more quiet, but I somehow don't think so it's gonna be the case. Our revenue mix is sort of this near-ideal combination. It fluctuates a little bit. But like on average, the third instruments, the third consumables, the third field-based services, grew instruments 46% year-over-year. Some of those consumables will now come online, and you'll begin to see service contracts kick in towards the second half of this year. Really a very good predictor of future revenue, high fraction of recurring revenue. Double-clicking on proteomics, we launched the Hyperion XTi, grew the combined proteomics business flow and imaging 22%.
Just coming out as we shared last week, we are adding a slide loader to this, the only one in spatial biology access slide loader that can do 40 slides in, depending on the mode you're running in, 24-72 hours on supervised. So a lot more throughput and pull-through eventually coming through these instruments. Still very, very early. It's not an inexpensive instrument at a list of $895,000. But when people ask me, "How do you sell those?" It's the same. You still sell both airplanes and bicycles. They're both means of transportation. One will get you a lot further and obviously cost a lot more. But for some, it's very cost-effective. On our genomics business, we had a business traditionally been focusing on a number I should not say focused. Had been trying a number of things.
We took an extreme focus, took five instruments down to one instrument. We basically dramatically reduced spend. We also invested in top-grading commercial team, etc., and now have a much, much more targeted approach on, on, on how we are selling this. All that effort led to, while we had a 7% decline or, or the products have remained 4% decline, so flat-ish, we went to near break-even at $100,000 loss versus a $25 million loss in, in the in the prior year. So quite a lot of, of, of burn reduction there. And I'm happy to do that at the slight expense of, of, of, of a revenue loss. Eventually, we think this business is gonna believe this business is gonna come back to, to growth. And last but not least, we, we just announced the deal, a second, long-term OEM arrangement, with Next Gen Diagnostics.
Our CEO sits down here, Paul Rhodes. So thank you, Paul, for coming. But it actually a relationship that won't yield a lot initially, but longer term would help to propel this business into strong growth and continued accretion. Also very, very exciting. So SomaLogic, switching gear. So SomaLogic and all previously announced had a 21% core revenue growth last year when excluding certain non-recurring royalty payments. So just sort of apples to apples, 21% growth. It is a project-based business. So a handful of customers are responsible for a disproportionate amount of revenue. The timing of that can be lumpy. So we can look like geniuses or fools depending on how we project that. But it's one of the many things we navigate.
It is, like the mass cytometry and like the microfluidics, highly validated technology, 20 years in the making, so many studies out there. And as I said before, ever more excited, even more excited than I was two months ago. And I'm seeing what this technology is truly capable of. We did also double the authorized sites or more than double from 8 to 17 authorized sites. So eventually, we'll get a more distributed revenue basis and hopefully a little bit more predictable. And then last but not least, Illumina, this quarter starting early access to a distributed model and full commercial launch in 2025, another backend growth accelerator here. We gave a guidance of $200 million-$205 million, implying a 4%-7% top-line growth. Business very lumpy, as I said. It just gives us limited visibility or precision of what we do.
You probably heard this many times, macroeconomic headwinds, like pharma prioritizing running a $10 million project this year versus next year can move the needle quite a lot. And it's tough slogging. We did put up 40%, 46% instrument growth last year against the same headwinds. But hopefully, we'll get out of it one day here, and life will be good again. We are integrating two different organizations. It's not trivial. And we do expect there will be interruptions. And we will fix that. And then we are really set up, if you look at all the underlying dynamics, a very strong growth profile towards the end of the year and as we end of 2025, including getting the consumables revenue and service contracts online for all the instruments we inherit installed last year. And obviously, disciplined execution here.
This is, like, between growth and cost-cutting, like trying to find and thread that needle. As I said, we have a very good cash position on a pro forma basis, $565 million as of 12/31/2023. We obviously need to pay a bunch of bankers, lawyers, consultants. All everybody's gotta get paid. That's how the world works. Obviously, a lot of restructuring and pieces coming here. So we expect heavy cash use here, Q1, Q2. And then towards the second half, we expect to see particularly in G&A, sort of dramatic improvement. And then, even though we're set we're gonna cut, so $80 million total, $40 million in G&A, $20 million in R&D, $20 million in sales and marketing, the R&D and the sales and marketing expenses, we cut in a much more careful way and in a stepwise way.
G&A, we're getting after it and doing it now. But you see all that begin to flow through here, second half of 2024. And then into 2025, we should get the last of all that cash out. We have set at least $40 million by the end of this year. And we're hard at work. And we'll do it the second half next year and then hit 2026 and become profitable. What to look for next? We closed. We're doing strategic review now. Once we are through the strategic review, obviously, restructuring the business will be as transparent as we can about that on our May earnings release. And then the $40 million takeout. So that's what to look for. So in summary, we think these two companies are much better together, unique technology leadership here, very lucrative end market.
Proteomics is growing. Spatial is growing. A good place with good technologies. We have a great management team in place. And, we end we hope to be up and running as one seamless company here by the end of the year. And with that, I thank you for your attention.
Thanks, Michael. I wanna start with a question here, on the guidance. You know, sort of the sort of the philosophy around the guidance, right? You're aiming for $300 million total revenue by 2026. You know, if you look at the guide this year, 4%-7%, that implies, you know, over 20% growth in 2025 and in 2026. Is there any components of that? And what gives you confidence in that, you know, revenue growth beyond 2024?
My crystal ball. No. So, like, as I just walked through how the underlying organic growth rate of SomaLogic, 22% year-over-year, again, lumpy. But zooming out, with the project. But then you have authorized size and Illumina kicking in as an accelerator. Our legacy proteomics business grew 22%, really driven by the spatial part, the flow part. We had to work through a number of issues. So we actually expect towards the end of the year acceleration in that. Then in genomics, we had a decline last year. And there's still stuff we need and year-over-year, unfavorable comps. Again, back-end, acceleration as our now two OEM partners will begin to gear up. So assuming we hit the high end, a two or five, it's 21% CAGR. It's not crazy.
We're not hung up on whether we meet 300 or 310 or 290, but a healthy, very healthy growth rate in the businesses. And then obviously, M&A navigating the integration, macroeconomic headwinds and all that good stuff.
Got it. So, you know, if we think about the different sides of the business, on the proteomics side and the core lab business, what's the main focus of, you know, in terms of driving growth in that business? Is it really, you know, incremental placements on the imaging platform? Or is it, you know, driving more growth in people who are already using the Hyperion?
Yes. Yes and yes. So we have an installed base out there. We have not talked to a single customer, just chatted with one here before we got started, that have Hyperions that does not want a Hyperion XTi. So imagine showing somebody that had a version one or version four of the iPhone, showing them a version 10 or 15. It's like there's just no way that you don't want it if you can afford it. So that, that's the good piece. Since we now can do 40 slides unattended, we also expect with time, the utilization is gonna really come through. Historically, you had to load one slide at a time. And the instrument needed to rest overnight and all that stuff. All that is done away with. So we really think longer term that they're gonna get up and running.
We do have CRUK, the Cancer Research UK, having several of these instruments, running them day and night, and just can't wait to then begin to publish the amazing data that they're generating to drive growth. And on the flow cytometry side, probably earlier, we'll begin to do some co-selling, but not, like, or at least offering of services for flow cytometry. It's out of that same tube of blood that we get the plasma serum from. And so I think the combined offering will be very compelling. So those are the growth drivers.
Right. What do you, I think you said in the past, last year, somewhere over just, you know, 100. All based on the Hyperion side. What do you think the ultimate opportunity is for placements of Hyperion? And I think the pull-through today is somewhere around, you know, $25,000-$30,000. What did that ultimately go to over time?
Yeah. So yes, we only get round numbers in placement. Unlike my peers, I don't wanna get judged on every single instrument I do because the business goes up and down. But yes, historically, $25,000-ish, $20,000-$25,000 annual pull-through. You do the math, 40 slides a day, $500-$700 a slide. In theory, we can do that in one day. That's not what we are projecting. But I would expect as Hyperion XTis come in, you'll see a dramatic step up. Even we, by the way, are competing against technologies that cost $5,000 or $6,000 per slide. We still think $5,000-$700 per slide is maybe too much to drive that really high volume. So we're working on next generation. And obviously, have carefully priced the instrument to support the business we have today.
Was there one more part of your question? No.
No, it's just, you know, what you think, you know, the ultimate placement opportunity would be.
500-1,000 is probably for an instrument of that size and complexity. So installation is expensive. You need some special venting. It's fairly easy to use. Like, I think I could use it. That's how simple it is to do. Interestingly, it's a lot easier than Flow cytometry because you just stain the slide. You can literally put them in drawers for weeks and pop them in when you're ready. Okay.
In the genomics business, you know, you're more focused now on driving sort of these OEM relationships.
Mm-hmm.
You know, the Olink relationship and recently announced Next Gen Diagnostics partnership is an example of this. What’s your, you know, strategic rationale here for doing this? And how do you get that business, you know, back to growth beyond, you know, this year?
So stop burning $25 million in cash. It's a good thing. You know, cash, cash is at a premium. But there is actually very healthy growth in the business. What we're seeing is a seven-eight-year steady decline in where the applications move from real-time PCR, from SNPs, to next-gen sequencing. I cannot stem that. And so once that's burned off and we almost burn through all of that, we see a very healthy growth in the new accounts. So our target market is not the high-throughput labs, but it's what we do offer is one instrument, list price $150, one technician, one pipette. You have a genomics factory, and you could do everything yourself. It's much smaller footprint and investment than running a sequence.
We found niches where that work and there's a very healthy growth in that. With Next Gen Diagnostics, we're using this to automating the library prep upfront to then do diagnostic whole genome pathogen detection. Very exciting opportunity.
Got it. Interesting. Any questions for my next one? All right. Well, my next one, so, so M&A, you know, a big part of your strategy here is to, you know, bring other underappreciated or, or mismanaged assets, great technologies into the Standard BioTools panel, you know, over time. Since SomaLogic just closed in, in January, how should we think about the roadmap, you know, or timing of additional deals? You know, would you be looking for more sort of tuck-in technologies as opposed to more, you know, transformational M&A down the line again? How should we think about that?
Yeah. Well, we'll spend a little time digesting this one. It's a merger of two equal-sized companies. There is, yeah, we obviously got a lot of experience in what to do the last couple of years and then all our prior experience. But it's a big one to swallow here. In a year or so, hopefully, we'll, as I said, one seamless organization. And so it would probably not be smart to go out and do another similar-sized one, although however tempting. There are a number of well-managed companies out there with good gross margin profiles that need commercial reach that they don't have and need G&A leverage. And since valuations are at an all-time low, we're talking to multiple at any one time here. And as you know, M&A is not, "Okay, I wanna do one this quarter.
I want this quarter." You work many of them, and then one happens. And then as it did with the SomaLogic and Standard BioTools deal, as I said, it was no cakewalk to getting to here. But a year and a half, and the stars align, and you manage to bring it all to line here. And so we, we're doing a lot here. But we wanna certainly do more deals here at the super attractive valuations we see.
Got it. Then last one, I guess, you know, what would you say is the most underappreciated part of the story?
Just how strong the technology is. So people, "Okay, 5,000 versus 10,000 proteins." It makes a dramatic difference. And we're beginning to see that now as we're getting early 11,000. There's a lot of misinformation out there, and much of it caused by ourselves, our legacy going in and out of the market. But the underlying technology is the best proteomics technology out there that I'm convinced of.
Got it. Thank you, Michael.
Thank you.
Appreciate it.