Quantum-Si (NASDAQ:QSI) is an innovative life sciences company on a mission to transform single-molecule analysis and democratize its use by providing researchers and clinicians access to the proteome, the set of proteins expressed within a cell. The company has developed a proprietary universal single-molecule detection platform that it is first applying to proteomics to enable Next-Generation Protein Sequencing (NGPS), the ability to sequence proteins in a massively parallel fashion.

Quantum-Si's platform is currently comprised of the Platinum® NGPS instrument, the Platinum Analysis Software service, reagent kits and semiconductor chips for use with its instruments. The company began a controlled launch of the Platinum® instrument in December 2022 and subsequently initiated a full commercial launch at the end of the first quarter of 2024.

Business Overview

Quantum-Si was founded in 2013 with the goal of developing a revolutionary technology to enable the sequencing of proteins. The company's proprietary platform was designed to offer an end-to-end workflow including both sample preparation and sequencing. Quantum-Si believes it is the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity and allowing for a massively parallel solution at the ultimate level of sensitivity - single-molecule detection.

The company's Platinum® instrument and Platinum Analysis Software system is intended to streamline sequencing and data analysis at a lower instrument cost than legacy proteomic solutions. Quantum-Si believes its platform could have wide utility across the study of the proteome, including applications such as biomarker discovery and disease detection, pathway analysis, immune response, vaccine development, and quality assurance and control.

Financials

For the full year 2023, Quantum-Si reported annual revenue of $1,082,000, an annual net loss of $95,960,000, annual operating cash flow of -$94,036,000, and annual free cash flow of -$99,309,000.

In the first quarter of 2024, the company generated revenue of $457,000, a gross profit of $269,000, and a net loss of $19,474,000. Quantum-Si's research and development expenses decreased by $6.1 million, or 33.4%, for the three months ended March 31, 2024 compared to the same period in 2023, while selling, general and administrative expenses increased by $350,000, or 3.1%.

Dividend and interest income increased by $1.4 million, or 61.1%, for the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to higher dividends and interest earned on invested balances in marketable securities. There was no gain on marketable securities in Q1 2024, compared to a gain of $2.9 million in Q1 2023.

Liquidity

As of March 31, 2024, Quantum-Si had $235.4 million in cash, cash equivalents and investments in marketable securities. The company is reaffirming its 2024 financial guidance, which includes revenues between $3.7 million and $4.2 million, adjusted operating expenses less than $103 million, and net cash usage less than $100 million. Quantum-Si expects its existing cash and investments will provide runway into 2026.

Commercial Adoption

Quantum-Si's first corporate priority for 2024 is to accelerate commercial adoption of its Platinum® platform. The company moved into a full commercial launch of Platinum® at the end of March 2024 after finalizing its commercial readiness, including training its direct sales force and distributor network, and launching the Version 2 sequencing kit.

Going forward, Quantum-Si expects to see steady quarter-over-quarter revenue growth as it progresses through 2024. The company will continue to monitor its commercial performance and customer success rates, and leverage that data to execute on a thoughtful scale-up of its commercial infrastructure, both direct and distribution, throughout the year.

Quantum-Si's commercial strategy involves a mix of direct sales and distribution partners. In the U.S. market, the company is currently operating with a direct sales and service model. In EMEA, the initial focus is on the European market where Quantum-Si will use a mix of direct and distribution approaches. The company also has a distributor partner in Japan, which it expects will serve as the strategic entry point into the broader APAC market.

As of the end of the first quarter, Quantum-Si's direct commercial team, which includes sales, marketing, service and support personnel, encompassed approximately 24 individuals based in the United States and Western Europe. The company is closely monitoring a variety of commercial metrics as it looks to shape and grow its team and approach going forward.

Quantum-Si's customers to date have largely been academic research labs, but the company is pleased to report that it secured its first customers in the government and pharma market segments during the first quarter. These initial successes underscore a broader interest the company is seeing emerge in these additional market segments, in addition to biotech and other commercial applications.

Innovation Roadmap

Quantum-Si's second priority for 2024 is to deliver on its innovation roadmap. In February 2024, the company launched its Version 2 sequencing kit, which included the introduction of a new amino acid recognizer, high reproducibility across runs, and an approximately threefold reduction in cost per amino acid. Quantum-Si has successfully transitioned all existing customers to the Version 2 kit, and the customer feedback has been very positive.

Last week, Quantum-Si announced the release of a new version of its Platinum Analysis Software, offering customers an average of a 55% increase in the number of peptide alignments, a 9% increase in the precision of identifying unknown proteins, and a 70% reduction in primary analysis time.

Looking ahead, the company's product development team is fully engaged in the Version 3 kit program, and Quantum-Si expects to deliver this updated kit to customers by the end of Q3 2024. While details are still limited, the current development results are promising, and the company is expecting a very meaningful performance improvement over the Version 2 kit.

Quantum-Si's innovation pipeline also includes ongoing enhancements to its proprietary kinetic model and kinetic database, which now comprises nearly 2 million parameters. The ability to continuously train the kinetic model on generated sequencing data represents a significant opportunity to unlock even deeper insights from the company's NGPS technology.

Preserving Financial Strength

Quantum-Si's third priority for 2024 is to preserve financial strength. The company has reduced its overall spend year-over-year while improving its ability to deliver new products to the market and funding its commercial operations ramp-up. For the first quarter of 2024, Quantum-Si's GAAP total operating expenses were $23.6 million, compared to $29.3 million in the first quarter of 2023. Adjusted operating expenses were $21.9 million for Q1 2024, compared to $24.6 million for Q1 2023.

The year-over-year reduction in operating expenses was the result of several initiatives Quantum-Si put in place in 2023 to maximize capital efficiency, including its R&D realignment efforts. This has resulted in lower R&D spend by $6.1 million, while effectively swapping G&A dollars to fund commercial operations, increasing overall SG&A by only $350,000.

Net loss for the first quarter of 2024 was $19.5 million, compared to $23.6 million in the first quarter of 2023, a decrease of $4.1 million. Adjusted EBITDA for Q1 2024 was negative $20.5 million, compared to negative $23.7 million in Q1 2023, an improvement of $3.2 million.

Quantum-Si is reaffirming its 2024 financial guidance, which includes revenues between $3.7 million and $4.2 million, adjusted operating expenses less than $103 million, and net cash usage less than $100 million. The company expects its existing cash and investments will provide runway into 2026.

Conclusion

Quantum-Si is making significant strides in its mission to transform single-molecule analysis and democratize the use of proteomics. With the full commercial launch of its Platinum® platform underway, the company is focused on accelerating adoption, delivering on its innovation roadmap, and preserving its financial strength.

As Quantum-Si continues to enhance its technology, expand its customer base, and execute on its strategic priorities, the company is well-positioned to capitalize on the vast opportunities in the proteomics market and drive long-term value for shareholders.