Please note, this event is being recorded. I would now like to turn the conference over to Marissa Bych of Gilmartin Group. Please go ahead.
Thank you. Earlier today, Seer released financial results for the quarter ended September 30, 2026. If you have not received this news release, or if you would like to be added to the company's distribution list, please send an email to investor@seer.bio. In addition, during today's conference call, we will be referencing a slide presentation that can be accessed on the Events and Presentations section of Seer's Investor Relations website. Participating today from Seer is Omid Farokhzad, Chief Executive Officer and Chair of the Board, and Charles Endweiss, Treasurer, Principal Financial Officer, and Principal Accounting Officer. Before we begin, I would like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appears in the section titled Forward-Looking Statements in the press release Seer issued today. For a more complete list and description, please see the Risk Factors section of the company's quarterly report on Form 10-Q for the quarter ended September 30, 2026, and in its other filings with the Securities and Exchange Commission. Except as required by law, Seer 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. This conference call contains time-sensitive information and is accurate only as of the live broadcast today. With that, I would like to turn the call over to Omid.
Thank you, Marissa, and thank you all for joining us this afternoon. This quarter, our customers continue to demonstrate what Proteograph makes possible, from new biological discoveries in population-scale studies to emerging applications in AI. Established customers continue to purchase consumables, and new large biopharma customers adopted the Proteograph Product Suite for use in their own laboratories. These developments reinforce my conviction in the value of our technology and the business opportunity ahead for Seer. Our opportunity is to make deep and vast proteomics a routine part of research programs that require a more complete understanding of biology. Proteograph substantially expands what researchers can learn from mass spectrometry while allowing them to use existing LC-MS infrastructure. As this value becomes clearer across more applications, we have the opportunity to expand both our customer base and the use of the platform within each account.
The business model connects directly to that use. Each additional sample processed with the Proteograph requires assay consumables. A successful study can lead to a larger cohort, follow-up research, or adoption by another team within the same institution. Our Technology Access Center, or TAC, and service providers give customers additional ways to access the technology. This allows us to serve researchers at different stages of adoption and build repeat revenue as the programs develop. We see that model at work in established accounts, including customers that have purchased consumables across multiple consecutive quarters. Our commercial priority is to build on these relationships, help customers expand their research programs, and bring the same value to additional accounts. Revenue for the third quarter was $4 million, compared with $3.1 million in second quarter.
Customer funding constraints and longer purchasing timelines continue to affect the pace of revenue conversion, and we are updating our full-year outlook to $13.5 million-$14.5 million. Charles will discuss the results and outlook in detail. We remain focused on converting funded opportunities and expanding repeat customer use. The activist campaign and subsequent acquisition proposals also led some customers to ask about the direction of Seer's future and the long-term support of their research programs. We have spent time directly addressing those questions. As announced on October 29th, the special committee has completed its review, and Seer will remain an independent public company. This gives us a clear message for customers about our continued commitment to innovation, service, and support. I am encouraged by the recovery we are seeing in our pipeline.
Publications, preprints, and reviews describing research conducted using the Proteograph now totals 116, up from 95 at our last quarterly update. I want to highlight the discoveries researchers are advancing, what this growth evidence means for the use of the Proteograph, and how it supports commercial opportunity we are pursuing. Turning to slide three. Let me turn to the scientific evidence from the PRECISE-SG100K cohort presented at the 2026 Human Proteome Organization World Congress, or HUPO. PRECISE-SG100K is Singapore's population health study of approximately 100,000 residents of Chinese, Malay, and Indian ancestry, designed to understand how genetics, biology, lifestyle, and environment influence health and disease. Within this program, investigators selected our Proteograph workflow combined with Thermo Fisher's Orbitrap Astral mass spectrometry to deeply characterize the plasma proteome of 10,000 participants, complementing affinity-based measurements within the broader study.
Professor John Chambers, Chief Scientific Officer of PRECISE and lead investigator of PRECISE-SG100K, presented preliminary findings. Across 9,658 plasma samples, the Proteograph- Astral workflow quantified approximately 8,800 protein groups across this study and approximately 88,000 peptides per sample. Performance was consistent across 126 processing batches with no reported sample failure. Population studies require both depth and reliable execution across thousands of samples, and these results demonstrate the ability of our workflow to deliver both. As subsequently reported by Thermo Fisher Scientific, the PRECISE investigators identified more than 4,200 proteins with significant cis-pQTL associations, which link nearby genetic variations with measured protein abundance. They also reported 2,762 genetic protein associations that had not been reported across the 12 reference studies used for comparison and connected proteins to 71 health-related traits.
When combined with disease genetics and other evidence, these relationships can help researchers investigate disease mechanism and prioritize potential therapeutic targets. The PRECISE-SG100K illustrates a central aspect of Seer's value proposition. Proteograph fundamentally expands the biology researchers can see with mass spectrometry. Published studies and customer presentations using matched plasma samples have repeatedly demonstrated that conventional mass spectrometry workflows without the Proteograph achieve approximately 10%-15% of the protein coverage achieved when Proteograph is paired with a mass spectrometry. Used alongside advanced mass spectrometers, Proteograph substantially expands the biological information available for discovery. Just as 10x Genomics enabled researchers to use DNA sequencing to resolve biology at the level of individual cells, Seer enables researchers to use mass spectrometry to explore a much deeper landscape of circulating proteins.
By bringing thousands of additional proteins within reach of measurement, Proteograph opens new opportunities to uncover genetic protein relationships, investigate disease mechanism, and identify potential therapeutic targets. This is the discovery capability Seer brings to population-scale research. The PRECISE team is now beginning to analyze the peptide-level data, creating opportunities to investigate protein variants and isoforms beyond the protein-level findings reported to date. For Seer, studies of this scale demonstrate both scientific value and the ability to support substantial sample processing programs. Turning to slide four. An independent study published in Clinical Proteomics provides another example of our differentiation. Researchers at CHA University in South Korea compared seven plasma preparation approaches using accessible mass spectrometry instrumentation. Proteograph XT, together with the Orbitrap Exploris 480, delivered the greatest proteome coverage, identifying an average of approximately 6,060 proteins per sample and the lowest rate of missing protein measurements at 1.9%.
These findings demonstrate that Proteograph enables deep proteomic coverage even in laboratories using earlier generation of mass spectrometers. Alongside this performance evidence, we have made important progress in protecting the technology behind it. Our intellectual property portfolio now includes more than 250 patent and patent applications, including 88 issued patents. On November 5th, we announced a significant development in our ITC action with Brigham and Women's Hospital against Nanomics. Nanomics stopped defending the investigation, and the ITC's investigative staff subsequently recommended granting the full exclusion and cease and desist order we requested. The commission's final determinations remains pending and is expected by the year-end. This is meaningful progress in defending our foundational intellectual property. Our customers commit precious samples, time, and resources to scientific discovery, and we will vigorously protect the innovation they rely on.
The downstream impact of the Proteograph-enabled discoveries also illustrated by PrognomiQ's ProVue Lung, the blood-based lung cancer detection test developed from biomarkers discovered using our technology. PrognomiQ commercially launched ProVue Lung in November 2025 as a laboratory-developed test, or an LDT, and has reported early results from its ongoing real-world clinical evaluation. In recent conference presentation, PrognomiQ's Chief Technology Officer, Bruce Wilcox, described how the protein biomarkers from the original discovery study were independently replicated using both targeted mass spectrometry and immunoassays in a separate patient cohort. The findings supported translation into a multiplex immunoassay for the launch of ProVue Lung. He also reported that the program progressed from initial Proteograph-based discovery to a validated laboratory-developed test in 31 months, with clinical deployment through Allegheny Health Network and Penn Highlands Healthcare.
This is a concrete example of how broader biological information at the discovery stage can support the development of a clinical assay. Turning to slide five. AI is shaping biology, and the capabilities of a model depend on the data it learns from. Proteograph-enabled mass spectrometry produces information at the spectral, peptide, and protein levels. Researchers can use this data to investigate protein abundance, peptide-level differences, and signals that conventional identification-based analysis have yet to fully characterize. Professors Sang-Won Lee and Jaewoo Kang of Korea University presented preliminary findings for more than 5,500 plasma samples at the ASMS and HUPO conference this year. Their work combines deep Proteograph-enabled plasma measurements with an ID-Free AI proteomics approach that uses features from both identified and unidentified spectral signals. Preliminary results showed improved overall cancer classification performance compared with models using only identified peptide features.
We believe AI can become an important driver of demand for deep unbiased proteomics. When researchers are searching for new biological relationships, the information available to a model shapes what it can discover. Proteograph allows them to explore thousands of proteins beyond pre-defined panels while retaining peptide-level information and identifying spectral signals that can be revisited as analytical methods advance. The Korea University work provides an early example of that opportunity. As more organizations use AI to investigate biology, we see an opportunity to help them generate the deep proteomic datasets those efforts require. That scientific interest is now translating into commercial activity. Our priority is to translate that scientific value into sustained commercial growth. Under Tony Bazarko's leadership as our Chief Commercial Officer, we're concentrating customer engagement and resources on accounts with the potential to generate meaningful repeat revenue.
Tony and I are also making AI-driven research an explicit commercial priority, focusing on organizations that need deep proteomic data and have funded programs that can translate into sample volume. Within existing accounts, we're working to expand successful studies into additional funded programs and introduce Proteograph to other research teams. In new accounts, we're focusing on opportunities with a clear scientific use case, funding, and a defined path to sample processing. We're also in active discussion with public and private population-scale cohorts about how Proteograph can support their next studies. We're also focused on biopharma, where we have signed several new large pharmaceutical customers this year that purchase instrument and consumables for their studies. Pharmaceutical companies can use proteomics across multi-year research programs to investigate mechanism of action, resistance biology, and biomarkers. Our objective is to help initial adoption develop into larger studies and broader use across research teams.
These priorities reflect how we intend to grow, expand sample volumes within established accounts, and develop additional customers whose research programs can support repeat use over time. We're aligning commercial activity with funded studies, anticipated sample volumes, and opportunities for account expansion. Those are the operating measures that connect our scientific differentiation to revenue. We also have the financial resources to pursue this opportunity thoughtfully. We ended the quarter with approximately $198 million in cash equivalents, and investments. Our capital allocation approach combines investment in commercial adoption and product innovation, and disciplined spending and share repurchases. We believe our current share price does not reflect the value of our technology, customer relationships, and long-term business opportunity.
Through September 30th, we had repurchased approximately 13.5 million shares at a volume-weighted average price of $1.85 per share, using approximately $25 million of the combined $50 million authorized by our board in May 2024 and February 2026. Approximately $25 million remained available under those authorizations. We review repurchases as an opportunity to increase continuing shareholders' ownership of the business at prices we believe are attractive, while preserving capital to execute our operating plan. Our confidence in our capital position reflects both our balance sheet and the changes we have made to our expense base. Third quarter operating expenses were $16.5 million, approximately 23% below the prior year period, reflecting lower employee compensation, including stock-based compensation, and lower laboratory and professional service expenses. Our path to cash flow breakeven depends on growing revenue and improving gross margins while maintaining spending discipline.
Based on those assumptions in our current operating plan, we believe our existing capital is sufficient to reach cash flow breakeven. We will continue to manage investment against commercial progress with a focus on building long-term value per share. Before turning to the financials, I want to thank David Horn, who served on our leadership team for more than six years and helped guide Seer through an important period in the company's development. We are grateful for his contribution and wish him all the best. I would also like to welcome Charles Endweiss, who has been a senior member of our finance team for nearly six years and brings a deep understanding of our business. Charles previously served as Vice President of Financial Planning and Analysis, and assumed the roles of Treasurer, Principal Financial Officer, and Principal Accounting Officer on October 1st.
With that, I will turn the call over to Charles.
Thank you, Omid. Slide six. Total revenue for the third quarter of 2026 was $4.0 million, compared with $3.1 million in the second quarter. The sequential increase was driven by higher product revenue from increased instrument shipments and new customer agreements. Product revenue was $2.8 million and consisted of Proteograph instrument and consumable kit sales. Service revenue was $1.1 million. Related party revenue was $0.1 million. Other revenue was approximately $67,000 and consisted of lease and shipping revenue. Gross profit was approximately $1.9 million, representing a gross margin of 47%, a decline of 130 basis points sequentially. We continue to expect quarterly variability in gross margin as the proportion of instrument, consumable, and service revenue fluctuates. At scale, we continue to believe long-term gross margins can be in the range of 70%-75%.
Total operating expenses were $16.5 million, including $1.2 million of stock-based compensation, compared with $21.5 million, including $3.6 million of stock-based compensation in the third quarter of 2025. Research and development expenses were $6.4 million, compared with $10.8 million in the prior year period. The decrease reflected lower employee compensation, including stock-based compensation, as well as lower laboratory and professional service expenses. Selling, general, and administrative expenses were $10.1 million, compared with $10.7 million in the prior year period. The decrease reflected lower employee compensation, including stock-based compensation, partially offset by higher professional service expenses. Net loss was $13.7 million, compared with $18.2 million in the third quarter of 2025. For the nine months ended September 30th, 2026, net cash used in operating activities was approximately $34.5 million. After approximately $311,000 of net purchases of property and equipment, free cash flow is approximately - $34.8 million.
During the third quarter, we repurchased approximately 61,000 Class A common shares at an average price of $1.64 per share. As Omid noted, we ended the quarter with approximately $198 million in cash equivalents, and investments, and approximately $25 million remained available under our repurchase authorizations. Slide seven. We are updating our full year 2026 revenue guidance to $13.5 million-$14.5 million from our prior range of $16 million - $18 million. Two factors have affected the timing of customer purchasing decisions. Funding constraints in academic and government research have extended sales cycles and delayed the start of some studies. Separately, uncertainty surrounding Seer's future during the activist campaign and subsequent acquisition proposals caused some customers to seek additional assurances before committing to purchases.
Together, these factors have extended the time required to convert opportunities into revenue, and several late-stage opportunities are now expected to close later than planned. Our revised outlook reflects those longer timelines. Following the conclusion of the special committee's review, we are addressing customer questions directly and focusing our commercial resources on funded programs with a defined path to sample processing. With that, I turn the call back to Omid.
Thank you, Charles. I remain confident in Seer's future because of the value Proteograph creates for researchers and the opportunity to build lasting customer relationships around that value. The studies we discussed today show the platform enabling discoveries at a scale and depth that expand what researchers can learn about human biology. Repeat customer purchases give us a commercial foundation to build on, and our balance sheet gives us the resources to pursue the opportunity with discipline. Our focus is to expand adoption, grow sample volume within customer accounts, and convert that activity into sustained revenue growth. I believe Seer is well-positioned to play an important role in the next generation of biological research, and I'm committed to building long-term value for our shareholders.
Thank you to our shareholders for your continued support, to our customers and collaborators for the work you are advancing with the Proteograph, and to our employees for your dedication to our mission. With that, we will open the call for questions. Operator?
We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. We ask that you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question today comes from Kyle Mikson with Canaccord. Please go ahead.
Hey, guys. Thanks for the questions. Just thinking about the guidance reduction here and maybe as you sort of exit the year and enter 2027, what can you do to mitigate these headwinds from the constrained academic funding environment and the spending among the broad kind of end markets here? You have larger projects. You have, I think you said, several biopharma partners. I am just curious if that is enough to maybe offset some challenges, like reinvigorate some growth, or do you intend on entering non-affected markets as well? Thanks.
Kyle, thanks a million. I think it is important to break it up into tailwind, headwinds, and what are we seeing. You were spot on in that the headwinds have been the funding environment around academic government. Biopharma spending has picked up, and we are seeing more and more customers doing sequential quarter after quarter consumable placements. We also had a challenging start to the year with a lot of kind of the background with the proxy contest, et cetera, that did create some challenges with some of our customers, Kyle, in terms of customers wondering if Seer was going to be around for long-term support, et cetera. Those added additional delay. The tailwinds are that we are seeing more and more customers adopting the platform without the prior, for example, need to examine the utility of it.
It used to be that a sales cycle involved doing this proof of concept studies before a customer would opt in to move ahead. We are not seeing that anymore. The body of literature out there, the proof points out there are robust enough that customers are interacting with our sales team, going through the process, and adopting the platform. We are seeing more and more publications come out. We are at 116 now. We are going to enter 2027 with a run rate of 100 publications a year. These validations are basically currency of trust in our industry, as you know, Kyle, and they help. Separately, we are seeing large population scale studies get presented, like the PRECISE at the HUPO just a month ago. The data that is coming is exceptionally validating in terms of the value proposition.
Additionally, AI is an important driver for us as well because the foundational models need rich data, and the level of data that Seer provides is not matched with any alternative in terms of the proteomic space. You are looking at data across different dimensions, protein groups, peptides, spectral data, and the depth that Seer provides is unmatched. This is not just a mass spec. This is a unique capability that Seer brings forward in the era of AI biology if you want to add proteomic information to those functions. So I look at, in aggregate, all of those headwinds and tailwinds, and I believe 2027 is going to be a year of growth for us, and I am enthusiastic about it. We are not prepared to guide.
We will talk about that on Q4 call, but I think it is going to be a good year for us, Kyle.
Okay. In the Clinical Proteomics paper with the seven head-to-head comparisons, Proteograph outperformed on most of the metrics there. The workflow is the most expensive, though, required the largest volume of plasma input, and it looks like, I think it is the only workflow with automation. So, maybe just talk about what you guys learned from that and the trade-offs of cost and performance and other variables as you sort of look to scale over the long term.
Yeah, Kyle, I have a couple of thoughts on that. One is, if you look at the overall cost of doing the proteomics studies of this type, you start off with the sample cost, processing cost, data analysis cost, data storage cost, et cetera. The lion's share of the overall cost is actually in the samples. In other words, the clinical samples, the human samples, they are in 1,000, 2,000, 3,000 +. So the relative cost of the consumable used is a small fraction of that. Now, that said, if you then compare Seer's price compared to the other options available to a customer, the value proposition is quite different. Meaning, I think Seer, in terms of the depth of proteomic that offers, in terms of the type of information that provides, is quite differentiated and different from targeted approaches.
I think they can coexist, but the value proposition is very different. So if you're interested in discovery, Seer provides a unique solution. Now, this misconception about Seer being expensive, I think progressively this is also being eliminated. We're now entering population scale studies. These are studies of tens of thousands of samples. Those studies could not have been done if the cost of the reagents was not appropriate for it. So not only is the value proposition, I think, quite attractive in terms of the exchange of price with the value that you get, but I also think that having scaled the organization to the way that we have, advanced the platform the way we have, we're also seeing some cost savings that we're passing that on to our customers.
So I think you're going to see a reduction in price as well for the customer side, but the value proposition, I think, is the most important that I think is very much robust.
The next question comes from Kyle Boucher from TD Cowen. Please go ahead.
Hey, good afternoon. Thanks for taking my questions. I wanted to talk a little bit about what you're seeing on the sales cycle side. I know you mentioned a number of times that they're elongated, but I guess how should we think about what sort of the average timeline is for the sales cycle at this point? On that, I think you also talked about going after some bigger customer opportunities, maybe accounts that will spend a little bit more. I guess, can you talk about your sales funnel in terms of maybe academic and government customers versus biopharma customers?
Yeah, Kyle, thanks a lot. The sales cycle continues to be long, but I think, Kyle, that has reduced in length. I would say today it's about six months. Before, I would say it was high single-digit number of months. The shortening of that from the high single-digit number to maybe six is a reflection of the fact that we're doing very little number of these proof of principle studies. I mean, I think customers are going from initial interaction to an acquisition or a TAC project. That's the first point. Second is, I'm super happy about the addition of Tony Bazarko to our executive team. Tony is our Chief Commercial Officer, joined about seven months ago, and then he brought Ryan Gossett as VP of Sales, someone who he had worked with in the past. Ryan has been with us for about maybe four months or so.
The two have been fantastic. They've been out seeing customers. The two of them in the last seven months that Tony's been on the job, for that Ryan has been on the job, together, they have seen 50 distinct customers in person on their site globally. By the way, if a particular customer, like a large pharma, has multiple offices at different sites, different cities, I count that as one. Meaning these guys have actually seen more than 50 distinct customers over the last few months. The message that they're bringing to the headquarter is that there's a tremendous amount of appreciation for the kinds of studies that they're getting, and they're targeting progressively more and more biopharma customers. That is a priority for us. These are the customers with recurrent revenue, quarter after quarter revenue growth.
Additionally, also looking at where the samples are, meaning we rather focus our commercial effort on large customer with recurrent revenue quarter after quarter, and then customers that have the budget, customers that have the samples. We're now in multiple discussions of pharma and other types of customers that the initial discussions are at 10,000 + samples. I expect to announce one of those over the course of the next few weeks. That's going to be a 10,000 + sample customer with an initial order on a couple of thousand sample size. These are the kind of customers that Tony is targeting, and I think it's a combination of the validation of the platform that is becoming more and more seen in the eyes of the customer that translate into these kind of activities.
Got it. Thank you. Maybe just one more on pull-through. I guess, can you just talk about what you are seeing from a pull-through perspective? I think in the past you noted that it could take somewhere around six to nine months for customers to reorder consumables after purchasing an instrument. Are you seeing consumables being reordered by customers who purchase instruments in late 2025 into early this year?
Kyle, let me introduce you to Charles, and Charles is going to take that. I might add at the end of it, but Charles?
Yeah. Hi, Kyle. The pull-through was relatively flat sequentially quarter-over-quarter. Our established customers continue to purchase consumables, including accounts with purchases across multiple consecutive quarters. The purchasing remains project-driven, so individual customers may order for a study, and then there is a gap between when they reorder. We are also seeing the pipeline development with Tony and his team amongst our existing customers, where we are getting longer visibility into their project pipeline. Our priority is to build a broader base of repeat usage and higher utilization, and we are working to expand the number of active programs within each of these accounts.
Got it. Thank you.
This concludes our question-and-answer session and concludes our conference call for today. Thank you for attending today's presentation. You may now disconnect.