Matthew Sykes : Great. And then, Anna, just on OpEx, you mentioned the 40% growth in ’23. Two things. One, should we think about the R&D versus G&A splits as being kind of similar to what you did in ’21 and ’22 was sort of that 60-40-ish split between R&D and G&A? And then secondly, how should we think about the San Diego facility costs coming through assuming that’s a lease, just either as a percentage of or just maybe kind of characterize as those costs come through in ’23, what that might represent of that growth in OpEx?
Anna Mowry : Matt, I can definitely speak to that. As you suggest, as you mentioned, the majority of our spending is still definitely going to R&D in 2022. That was at approximately 60%. And given that we’re still very much focused on development, I would expect that to continue for most of 2023. And then dollars would shift more towards SG&A as we come closer to that commercial launch. We are very excited about our San Diego facility. It’s a fairly small facility, so I don’t think it will contribute any meaningful expenses those OpEx numbers. And I think overall, our facilities — we’ve done a really fantastic job of linking on new facilities without a significant amount of cash outlay for adding significant structural spend to our ending forecast.
Operator: Our next question comes from Brandon Couillard with Jefferies.
Brandon Couillard : Sujal, on the TGI partnership, I’m curious why they were the next logical collaboration partner? Why focus on such a rare disease like DIPG and how many additional partners would you like to add in ’23 on top of the card 5?
Sujal Patel : Yes. So let me take a couple of aspects of your question, and then I’ll pass it to Parag to talk specifically about DIPG and why this was an interesting application. When you look at our existing set of collaboration, Genentech, Amgen, MD Anderson and now TGen. What we’ve tried to do is we’ve tried to focus on proteoform use cases that are within the capabilities of the platform today so that we can do analysis and delivery to the customer biological insights that they can’t get from somewhere else. And the additional criteria is that we want all of these early collaborators to continue with us on this journey as we move towards platform launch and be great potential early access partners, data sites and then ultimately customers.
And so that’s kind of the initial criteria for us. The other thing that’s important to us is to have researchers who are focused on really important research who are known well and are willing to publish with us so that we can start building this body of evidence around our platform and start showing the scientific community data coming off of our system. And so with PGM, it was able to hit all of those marks. Now that being said, as we start to move deeper into 2023, our intention will switch a bit not to these proteoform partnerships, but really switch to our early access program, which is a more formal program where the customer may take 24 or 48 samples, run them on our platform once we are capable of broad scale proteomic analysis. And then we would return the data to them.
We might have a small fee for that engagement. And really, those early access partnerships are about data generation and showing the scientific community what we can do. But equally, they are important for pipeline generation and starting to drive towards preorders of the instrumentation. Parag, do you want to talk about the particular application for TG and why it’s interesting in our portfolio of applications?
Parag Mallick : Absolutely. Thank you, Sujal. So I think DIPG is despite being a relatively rare cancer is a model for many other types of cancers. Additionally, the particular protein target that we’re studying in that collaboration. Our goal is to measure mutations and post-translational modifications, proteoforms, on individual histone molecules. And that ability will provide really critical new insights into how histone modification and variation thereof drives the biology of this disease, but also will provide a window into epigenetic modification in general. And that’s a tremendous area of scientific interest. It’s incredibly exciting. TGen is a fantastic partner to work with on these studies. So we’re really excited to dive in with them.
Brandon Couillard : That’s helpful. Sujal, any updated thoughts on the supply chain? And as you look out over the next kind of 12, 18 months, any pain points you anticipate that you start moving towards commercial launch?
Sujal Patel : Yes, Brandon, that’s — it’s a great question. And we certainly are continuing to see supply chain pressures out there. And most of that pressure is with respect to lead times for various things. It could be simple things for — simple things like tubes and pipes tips, and can be — it can be more complex pieces of implementation as well. The third area for us is that there certainly are some slow parts of the supply chain with respect to some of the parts of our instrument as well. And so — what I would tell you though is yes, there’s some pressure, but we are managing it well. We have a team on the supply chain plan has led by our SVP of Operations and Supply Chain. Mary Godwin has been doing this for 4 decades, and we’ve been doing a good job on our instrument side and making sure that we have pipeline for all of the instrument builds that we’re planning, and we’re planning our supply chain appropriately given the extensive lead times for a few components.
Brandon Couillard : Got it. Last question, maybe better for Anna. The CapEx outlook made another $30 million in incremental spend, let me mostly weighted to the back half and I think you’ve been pretty cautious about building the commercial team up too soon. Will that begin to take shape in the back half? And I guess, generally, where will that incremental $30 million be concentrated?
Anna Mowry : I can speak to the first part, and then, Sujal, maybe you want to tag on to that. But last year was a bit of an interesting year. We saw a dip in expenses as we consolidated our costs, and then we picked up in the second half. I would expect going forward that we would see more consistent growth over the course of the year, certainly with the highest spending being towards the end of the year. And that’s really still very much focused on development. We’re still continuing to invest there. We’re preparing for scale up, quality, manufacturing. So those are some of the areas where we’ll continue to put both hires and dollars as we scale our experimental capacity. And then certainly, towards the tail end of the year, we would begin hiring for the commercial launch that we expect in the first half and in the middle of 2024.
Sujal Patel : Yes. So let me take the second half and take your question here. Brandon, let me take the second half of your question here, then you can dive in and more. So one of the things you asked was really when to expect the commercial build-out. And I think that I will add a little bit of nuance here. There were some questions earlier about the macro environment and how we’re reacting to it. And one of the things that we will do here our commercial launch in mid-2024 is built out a commercial team. But there are 2 things that you should relax there. Number one is that the team itself, we believe, will be a very efficient team, and it’s not going to be a team that’s going to be huge. And the primary reason there is that we have an instrument deal price, an initial deal price, that’s roughly $1 million.
And so the transactional mode of being able to generate significant bookings from a particular sales rep out there is actually really good. And that leads itself to sales efficiency and helps us with the cost structure of our commercial organization. The other thing to think about is that when capital is readily available in the wider market, you would build your commercial team and start your oppormal activities earlier in the cycle. And when things are tight like the environment is today, you’ll build the commercial team much closer to the launch. And so I’m not going to commit to exactly what the timing is of that commercial team build out. But what I will tell you is that we will compress that down pretty tight in front of that commercial launch.
And that while that might affect our revenue ramp rate right after the commercial launch. It’s our job as a management team to try to mitigate that. But we think that that’s probably the most prudent thing to do because the last thing we want to do is overbuild the commercial organization and then have some sort of timing difficulty that leads to an additional pressure on our OpEx.
Operator: Okay. Our last question comes from Tejas Savant with Morgan Stanley.
Tejas Savant : Tejas. I guess the first one for me would be for Sujal. Thank you for the color on the access challenge. But I was thinking aside from the access challenge and your conference presentation and data releases, how else are you keeping customers engaged ahead of your mid-’24 launch?
Sujal Patel : Yes. So that’s a really great question. So I think that there are a lot of different ways that we are keeping the scientific community, meaning the researchers and our potential collaborators and customers engaged. So first and foremost, we’ve had a large number of conversations, hundreds of conversations over the course of the company’s 6-year life with with potential customers and partners. And the response has been incredible. We continue to engage with those customers, giving them regular updates. We engage with them on surveys and formal voice customer types of interviews. We meet with them at our various conferences and spend time keeping them up to date. So that’s number one. Number two, that one of the things that’s really been great here at Nautilus is that there is quite a bit of inbound activity from potential partners and customers because of the excitement around our platform and the capabilities that we we’ve begun to show at scientific conferences.
And so we have a steady stream of conversations with customers, getting them up to speed and doing presentations because of that inbound types of activity. One of the other things as well, that we did in 2022, is that we engaged with about 40 KOLs, most of whom are mass spec users, and we did deep interviews with them, engaging them on where their pain points are what they’re looking for out of a proteomic solution that really tries to make a significant impact on their biological research. And through those engagements, we’ve had a continued meaningful dialogue. So all of those things together, the first access challenge, the data release of conferences, we have a very, very good interface with our potential customers and collaborators and partners.
Tejas Savant : Got it. That’s helpful. And then Sujal, I’m just wondering, if you look over the past year and all the changes in the proteomic landscape, has your views on the competitive changed at all over the past few months? And are you anticipating any dynamic changes ahead of your mid-’24 launch?
