Akoya Biosciences, the leading provider of spatial biology solutions, has established itself as a key player in the rapidly evolving field of life sciences research and diagnostics. With a robust product portfolio, a growing installed base, and a strong commitment to innovation, the company has positioned itself as a formidable force in the industry.
Business Overview and History
Akoya Biosciences was founded on November 13, 2015, as a Delaware corporation with operations based in Marlborough, Massachusetts. The company's mission is to transform discovery, clinical research, and diagnostics through the power of spatial biology. In September 2018, Akoya made a significant move by acquiring the commercial Quantitative Pathology Solutions (QPS) division of Perkin Elmer, Inc. (Revvity). This acquisition aimed to provide customers with a full suite of end-to-end solutions for high parameter tissue analysis, including advanced multiplex immunochemistry staining kits, multispectral imaging and whole slide scanning instruments, and image analysis software.
The combined portfolio of complementary technologies resulting from this acquisition has fueled groundbreaking advancements in cancer immunology, immunotherapy, neurology, and a wide range of other applications. Akoya's flagship platforms, the PhenoCycler and PhenoImager, enable researchers to detect and map the distribution of cell types and biomarkers across whole tissue samples at single-cell resolution, providing unprecedented insights into disease progression and patient response to therapy.
Since its inception, Akoya has experienced significant growth, driven by the increasing adoption of its innovative technologies. The company sells its products globally to leading biopharma companies and top research institutions and medical centers. In 2021, Akoya went public, raising $138.6 million in its initial public offering. This infusion of capital has allowed Akoya to further expand its product offerings, invest in research and development, and solidify its position as a leader in the spatial biology market.
Financials and Performance
Financials
Akoya's financial performance has been marked by both successes and challenges. For the fiscal year 2023, the company reported revenue of $93.5 million, a 15% increase from the prior year. However, the COVID-19 pandemic and other macroeconomic factors have presented headwinds, leading to a decline in revenue in 2024.
In the third quarter of 2024, Akoya reported revenue of $18.8 million, a 25% year-over-year decrease. This underperformance was primarily due to ongoing capital equipment purchase constraints seen across the life sciences tools market. Despite these challenges, the company has remained focused on improving its operational efficiency and cost structure, as evidenced by a 25% reduction in operating expenses during the same period.
For the three months ended September 30, 2024, Akoya reported a net loss of $10.53 million. Operating cash flow (OCF) was -$9,256,000, and free cash flow (FCF) was -$9,690,000. The company's gross profit for the quarter was $11.72 million, representing a gross margin of 62%.
For the nine months ended September 30, 2024, Akoya reported total revenue of $60.33 million, with product revenue of $40.36 million and service and other revenue of $19.96 million. Gross profit for the nine-month period was $33.49 million, representing a gross margin of 56%. The company reported a net loss of $47.17 million for this period.
Performance by Geographic Markets
For the three and nine months ended September 30, 2024, revenue from North America accounted for approximately 56% and 58% of total revenue, respectively. Revenue from APAC accounted for 16% in both periods. Revenue from EMEA accounted for 28% and 26% in the respective periods.
Product Segments
Akoya operates in two main product segments: Product Revenue and Service and Other Revenue.
Product Revenue is generated primarily from the sale of instruments, consumables, and software products. The company's instrument offerings include the PhenoCycler and PhenoImager platforms. Instrument sales accounted for 47% and 67% of product revenue for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, instrument sales accounted for 47% and 65% of product revenue, respectively.
Consumables revenue, which includes reagents, accounted for 51% and 32% of product revenue for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, consumables revenue accounted for 51% and 34% of product revenue, respectively.
Service and Other Revenue is primarily generated from instrument service, including sales of extended service contracts, installation, and training. This segment also includes revenue from laboratory services operations and companion diagnostic development projects.
Liquidity
Akoya's balance sheet remains solid, with $39.3 million in cash, cash equivalents, and marketable securities as of September 30, 2024. The company's current ratio stands at 2.75, indicating a strong liquidity position. The quick ratio is 1.85, further supporting the company's ability to meet short-term obligations.
However, the company has faced some solvency concerns, with a debt-to-equity ratio of 6.23 and an interest coverage ratio of -4.47, highlighting the need for continued financial discipline and strategic decision-making.
Guidance
Akoya has revised its full year 2024 revenue guidance to a range of $80 million to $85 million, down from the previous guidance of $96 million to $104 million. This revision is due to ongoing capital equipment purchase constraints across the life sciences tools market. The company expects gross margin to continue expanding, with a goal of reaching a couple hundred basis point improvement year-over-year in 2025.
Akoya aims to achieve adjusted EBITDA in the low single-digit percentage range by the end of 2024. While they do not expect to reach cash flow breakeven by the end of this year as previously targeted, the company believes they will be able to achieve this milestone sometime in 2025 as revenue returns to growth.
Competitive Landscape and Market Opportunities
The spatial biology market is rapidly evolving, and Akoya faces competition from both established players and emerging startups. Competitors such as Lunaphore and Visikol have introduced their own spatial biology platforms, adding to the competitive landscape. However, Akoya's extensive product portfolio, large installed base, and strong industry partnerships have allowed the company to maintain its leadership position.
Going forward, Akoya is well-positioned to capitalize on the growing demand for spatial biology solutions. The company's recent product introductions, such as the PhenoCode Discovery IO60 panel and the mouse FFPE IO panel, have been well-received by the research community, driving increased adoption and utilization of its platforms.
Moreover, Akoya's focus on expanding its clinical diagnostics business, through partnerships with companies like Acrivon Therapeutics and NeraCare, presents a significant opportunity for the company to diversify its revenue streams and drive long-term growth.
Risks and Challenges
Despite Akoya's strong market position, the company faces several risks and challenges that investors should be aware of. The ongoing macroeconomic uncertainty and its impact on capital equipment spending in the life sciences industry pose a significant risk to the company's near-term performance.
Additionally, Akoya's reliance on a limited number of large customers and the highly competitive nature of the spatial biology market present potential challenges to the company's long-term sustainability. The company's ability to maintain its technological edge, expand its product offerings, and effectively execute its strategic initiatives will be critical to its continued success.
To address recent challenges, Akoya implemented a workforce reduction in January 2024 in connection with certain operating expense cost savings initiatives, including the consolidation of its facilities and the exit of its Menlo Park, California leased facility. Another workforce reduction was initiated in July 2024 in connection with further cost savings efforts. These measures demonstrate the company's commitment to adapting to market conditions and maintaining financial stability.
Outlook and Conclusion
Akoya Biosciences has demonstrated its resilience and adaptability in the face of challenging market conditions. The company's focus on improving operational efficiency, expanding its product portfolio, and diversifying its revenue streams through clinical diagnostics partnerships position it well for long-term success.
While the current macroeconomic environment has presented temporary headwinds, Akoya's strong market position, robust balance sheet, and commitment to innovation suggest that the company is well-equipped to navigate these challenges and emerge as a stronger, more competitive player in the spatial biology landscape.
As the life sciences industry continues to evolve, Akoya Biosciences remains poised to capitalize on the growing demand for spatial biology solutions, solidifying its status as The Spatial Biology Company and delivering value to its shareholders. The company's revised guidance and strategic initiatives indicate a cautious but optimistic approach to navigating the current market challenges while positioning itself for future growth.