Akoya Biosciences, Inc. (NASDAQ:AKYA) is a leading life sciences technology company delivering innovative spatial biology solutions that are transforming discovery and clinical research. Despite facing temporary headwinds in the first quarter of 2024, the company remains well-positioned for long-term success as it navigates the evolving market landscape.

Business Overview

Akoya's mission is to bring context to the world of biology and human health through the power of spatial phenotyping. The company's proprietary platforms, PhenoCycler and PhenoImager, enable researchers to quantitatively interrogate a large number of biomarkers and cell types across tissue samples at single-cell resolution. This comprehensive spatial analysis provides valuable insights into disease progression and patient response to therapy, driving advancements in fields such as oncology, neurology, and autoimmune disorders.

Akoya's end-to-end solutions serve the unique needs of customers across the discovery, translational, and clinical research continuum. The PhenoCycler platform is ideally suited for high-plex discovery research, while the PhenoImager platforms offer high-throughput, scalable solutions for translational and clinical applications. The company's integrated workflow solutions, including flexible sample types, automated processing, and comprehensive data analysis, have made Akoya a trusted partner for leading academic and biopharma institutions worldwide.

Financials

For the full year 2023, Akoya reported annual revenue of $96.6 million and a net loss of $63.3 million. The company's annual operating cash flow was -$50.9 million, and annual free cash flow was -$54.6 million. These financial results reflect Akoya's continued investment in research and development, as well as its strategic initiatives to expand its commercial footprint and manufacturing capabilities.

In the first quarter of 2024, Akoya reported total revenue of $18.4 million, a 14% decrease compared to the prior-year period. Product revenue, including instruments, reagents, and software, totaled $12.1 million, while service and other revenue reached $6.2 million, a 5% increase year-over-year. The company's gross margin for the quarter was 46%, while non-GAAP adjusted gross margin was 57%.

Akoya's first quarter results were impacted by several factors, including systemic pressure on capital expenditures, temporary challenges related to the company's new manufacturing center of excellence, and a shift in the timing of certain contracted laboratory services revenue. Despite these headwinds, Akoya remains focused on executing its strategic initiatives to drive long-term growth.

The company's industry-leading installed base of 1,213 instruments, including 354 PhenoCyclers and 859 PhenoImagers, continues to generate strong recurring revenue from consumables and services. In the first quarter, Akoya's annualized reagent pull-through reached $53,000 for the PhenoCycler-Fusion and $40,000 for the PhenoImager HT, demonstrating the value proposition of its spatial biology solutions.

To address the temporary manufacturing challenges, Akoya has completed the launch of its new facility in Marlborough, Massachusetts, which is now fully operational and poised to meet the growing demand for the company's reagents. This strategic move is expected to improve product availability, enhance quality control, and drive cost efficiencies, ultimately supporting Akoya's goal of expanding gross margins.

Recent Developments

Akoya's spatial biology solutions have garnered significant interest from the research and clinical communities, as evidenced by the company's growing list of partnerships and collaborations.

In April 2024, Akoya's partner Acrivon Therapeutics presented positive Phase IIb clinical data for its therapeutic agent ACR-368, which utilizes Akoya's PhenoImager HT platform for the ACR-368 OncoSignature assay. This statistically significant prospective validation of the patient selection approach demonstrates the potential of Akoya's technology to enable precision diagnostics and address significant unmet treatment needs.

Additionally, Akoya recently announced partnerships with Shanghai KR Pharmtech and NeraCare, further expanding the reach of its spatial biology solutions into new markets and clinical applications. The KR-HT5 instrument, co-developed by Akoya and KR Pharmtech, has received premarket approval from China's National Medical Products Administration and will serve as the core technology for delivering next-generation pathology solutions in the Chinese market. The partnership with NeraCare aims to leverage Akoya's PhenoImager HT and CLIA lab capabilities to enable personalized therapy selection for early-stage melanoma patients, addressing a critical unmet need.

Outlook

Despite the challenges faced in the first quarter, Akoya remains confident in its ability to deliver sustained growth and achieve its goal of operating cash flow breakeven by the end of 2024. The company has updated its full-year 2024 revenue guidance to a range of $104 million to $112 million, reflecting its expectation of a measured recovery throughout the year.

Akoya's growth strategies focus on several key areas:

1. Expanding its installed base: The company is committed to increasing sales of its PhenoCycler and PhenoImager platforms to new and existing customers, leveraging the growing adoption of spatial biology in the life sciences research market.

2. Driving incremental pull-through: As Akoya's research and development team identifies new applications and biomarker targets, the company expects to increase the pull-through on its existing and new instrument installed base, driving higher recurring revenue from consumables and services.

3. Improving revenue mix and gross margins: By expanding the applications and performance of its instruments and consumables, Akoya aims to increase the value proposition for its customers and mitigate downward pressure on average selling prices, ultimately driving improvements in gross margins.

4. Executing on strategic partnerships: Akoya's collaborations with Acrivon, Shanghai KR Pharmtech, and NeraCare demonstrate the company's ability to leverage its spatial biology expertise to address unmet needs in the clinical research and diagnostics markets, positioning it for long-term growth.

Risks and Challenges

While Akoya's long-term prospects remain promising, the company faces several risks and challenges that investors should consider:

1. Competitive landscape: The spatial biology market is rapidly evolving, and Akoya faces competition from both established players and emerging competitors, which could impact its market share and pricing power.

2. Regulatory and reimbursement hurdles: The successful commercialization of Akoya's clinical diagnostic solutions will depend on navigating complex regulatory approval processes and securing favorable reimbursement policies, which can be time-consuming and uncertain.

3. Reliance on key partnerships: Akoya's success is partially dependent on the continued progress and success of its strategic partnerships, such as the one with Acrivon Therapeutics, which could be affected by factors outside the company's control.

4. Macroeconomic conditions: Prolonged economic uncertainty, inflationary pressures, and fluctuations in capital expenditure budgets could continue to impact Akoya's instrument sales and customer demand.

Conclusion

Akoya Biosciences is a leader in the rapidly evolving spatial biology market, providing innovative solutions that are transforming discovery and clinical research. Despite facing temporary headwinds in the first quarter of 2024, the company remains well-positioned for long-term success. By executing on its strategic initiatives, expanding its partnerships, and navigating the competitive landscape, Akoya is poised to deliver sustained growth and create value for its shareholders.