Berkeley Lights, Inc. (BLI) Q1 2021 Earnings Call Transcript

Berkeley Lights, Inc. (BLI)
Q1 2021 Earnings Call
May 11, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Berkeley Lights first-quarter 2021 earnings conference call. [Operator instructions] I would now like to hand the conference over to your speaker today, Carrie Mendivil. Please go ahead.

Carrie Mendivil -- Investor Relations

Thank you. Earlier today, Berkeley Lights released financial results for the quarter ended March 31, 2021. If you have not received this news release or if you'd like to be added to the company's distribution list, please send an email to [email protected]. Joining me today from Berkeley Lights are Eric Hobbs, chief executive officer; and Kurt Wood, chief financial officer.

Before we begin, I'd 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 entitled Forward-Looking Statements in the press release Berkeley Lights issued today. For a more complete list and description, please see the Risk Factors section of the company's annual report on Form 10-K filed with the SEC on March 12, 2021, and in its other filings with the Securities and Exchange Commission.

Except as required by law, Berkeley Lights 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, May 11, 2021. With that, I'd like to turn the call over to Eric.

Eric Hobbs -- Chief Executive Officer

Thanks, Carrie, and thank you, everyone, for joining us this morning. We started the year off strong and had solid execution across our business during the first quarter. Revenue grew 35% year over year to $18.6 million. I'm very pleased by the performance of our team this quarter and encouraged by the increasing demand and enthusiasm we are receiving from our customers.

At Berkeley Lights, we focus on major markets that leverage cells to make products, which include antibody therapeutics, cell therapy, synthetic biology, and, most recently, gene therapy. To truly enable the growth of these markets, one needs to rapidly assess the relevant functions in the large numbers of sequences produced daily. Linking the genome to the desired phenotype at scale is at the heart of our technology. This is extremely important to our customers as it increases their probability of success and leads to an accelerated time to market.

These functional tests become even more essential as the complexity of the end product increases to multidimensional tests and parameter optimization. Sequences by themselves have limited value and are not actionable unless a particular sequence in the cell is shown to create a valuable product, such as a cure for a disease, an enzyme, or a food protein. At Berkeley Lights, we are bringing functionally validated sequences and cells to life at an unprecedented scale, speed, and resolution. Three key tailwinds continue to drive expansion across our markets.

First, demand for cell-based products is growing. Second, the complexity of cell-based products is increasing, requiring more precise multifunctional assays with the highest resolution. And third, there are new therapeutic modalities, including multi-specific antibodies and cell and gene therapies using DNA or mRNA therapeutics, which require precise functional validation. To benefit from these market tailwinds, we are focused on two key areas.

First, we are driving our core business in existing and adjacent markets, and second, we are leveraging our technology with partnerships to expand into new addressable markets. Starting with our core business. Demand was strong from both new and existing customers in the first quarter. We grew our installed base by 10 platforms to 85 systems, of which eight were direct sales in the quarter and two were attributed to the completion of milestone programs.

Five of those went to new customers and five to existing customers. Today, about one-fourth of our installed base is multiple system placements, demonstrating growing technology adoption. CDMO and CRO demand remains strong as Berkeley Lights technology becomes a key offering in this market segment. In the first quarter, approximately one-third of our revenue came from the contract research and development industry and represented the largest contribution to our revenue during the quarter.

Part of our technology adoption strategy is to tailor access models to specific customer segments. We do this by offering alternative access models to accommodate customers through a subscription-based approach. Initially, this approach is very focused on financing, essentially providing customers with access to full capacity through fixed payments over time. After further market assessment, we're introducing a second subscription model to better meet their specific capacity needs.

In this model, customers will subscribe to a given capacity, inclusive of all consumables, software, service, and support, for their cell line development or antibody discovery campaigns. Pricing is based on campaign capacity, so customers with fewer campaign runs can cost-effectively access our technology. We believe this will increase our serviceable available market, broaden our customer base, and drive incremental demand. We're early in the release stage but are encouraged by the interest we're receiving so far.

Kurt will walk you through some of the financial details of our new subscription approach in his remarks. We continue to see opportunities for expansion both in existing and new customers alike, driven by increased use cases enabled by our workflows. In Q1, we announced our next-generation antibody discovery workflow, Opto Plasma B Discovery 4.0, which will be the industry's first fully integrated antibody discovery workflow from target identification to functional molecule. The placement of our platform, in combination with Opto Plasma B Discovery 4.0, will provide comers with an instant turnkey solution.

We expect to release this workflow by the end of Q2. Last month, we made another significant product announcement with the launch of Opto Assure, a series of assays that will provide yield and product quality data at an earlier stage in the cell line development process, enabling better lead candidate selection over a broad set of product and manufacturing parameters. Antibody therapeutics are becoming increasingly complex. Quality issues, such as aggregation and highly engineered proteins, are becoming a greater challenge with implications for drug manufacturability and patient safety.

Identifying manufacturing cell lines that secrete high titers of quality product is emerging as a critical challenge in cell line development. With Opto Assure, our customers will be able to rapidly select clonal cell lines with favorable manufacturability profiles early in cell line development, leading to faster timelines, decreased costs, and the best downstream products. Opto Assure is an example of our strategy and inherent value proposition to move quality and yield validation to the earliest possible point in the development and manufacturing process. And most recently, at the end of April, we released Cell Line Development 2.1, which significantly enhances our import capabilities by adding a proprietary on-chip enrichment sort.

This allows us to screen up to 20 times more cells compared to our previous Cell Line Development 2.0 workflow and up to 50 times greater throughput than traditional cell points. Broader access to relevant biodiversity further increases the probability of finding that rare or best clone that will manufacture the product at the volume and quality our customers need. We are also leveraging our technology to access new markets through business development partnerships. The truly incredible thing about our platform-based technology is its broad applicability into new markets.

As we approach new attractive cell-based markets, we look for the biggest problems that our customers are having and engage in business development deals with those partners to develop a solution to the problem. We jointly develop workflows, become the solution of record, and commercialize those workflows in the broader market. We have done this in cell line development with Amgen where Beacon has become Amgen's standard platform for cell line development. We are doing it with Ginkgo in synthetic biology.

And one our last earnings call, we announced the $17 million deal with a global leader in gene therapy space to adopt the Berkeley Lights platform to enable the selection and manufacturing of stable viral vector producer cell lines. Viral vector producer cell lines are used across multiple therapeutic modalities, such as gene therapy, cell therapy, and really any therapy using viral transfection. Today, these therapies rely on costly and difficult-to-scale transient reexpression cell lines. This is because quickly generating stable producer lines has not been proven possible with current approaches.

We believe the Berkeley Lights technology will make it possible for the first time to execute multiparameter functional tests, including viral capsid and genomic titers without losing the live biology. Once developed, this will allow us to select stable clones in one to two weeks that will be used to create stable master cell banks, similar to what is being done in cell line development for antibody manufacturing. We believe this will become the new standard for viral vector manufacturing as it significantly reduces cost, enhances manufacturing predictability, and provides a superior approach from the regulatory perspective. This partnership has progressed into the next phase, and we expect these types of partnerships to have a meaningful impact on our growth trajectory over the coming years.

Finally, before I turn the call over to Kurt, I'd like to share a brief update on our board of directors. Today, we announced that John Chiminski, chairman and CEO of Catalent, will be joining our board effective May 14. John has led Catalent into a leading CDMO that today supports the introduction of 200 new products and over 70 billion doses each year. He brings deep industry and market experience and shares our passion of continuing to accelerate the discovery and development of cell-based products.

The Berkeley Lights Board and I couldn't be more thrilled to have John on board. At the same time, Michael Marks will be retiring from our board, and Greg Lucier, who currently serves on our board as a director, will assume the role of chairman. Greg has a wealth of experience growing public companies both organically and through high-growth acquisitions in this space. I look forward to his continued leadership and guidance as our new chairman.

With that, I will now turn the call over to Kurt for more detail on our financials. Kurt?

Kurt Wood -- Chief Financial Officer

Thanks, Eric. Revenue for the three months ended March 31, 2021, increased 35% year over year to $18.6 million, with $13.5 million coming from product revenue and $5.1 million from service revenue. Looking at our three revenue streams. Direct platform sales totaled $11.1 million in the first quarter of 2021, increasing 18% over the prior-year period.

Revenue from joint development agreements and partnerships was $3.1 million in the first quarter of 2021, compared to $1.9 million in the first quarter of 2020. Recurring revenue was $4.4 million in the first quarter of 2021, up 77% over the same period in 2020. The increase is a result of our growing installed base compared to the prior-year period. Regionally, the strength in APAC continued into the first quarter and accounted for 45% of our first-quarter revenue, followed by North America at 40%.

During the quarter, we added 10 platforms to our installed base, ending with 85 total placements. As Eric mentioned, eight of these platforms were direct sales, and two were placed in connection with the completion of a milestone program where title of the tool passed to the customer. Gross profit for the first quarter of 2021 was $12.5 million, compared to $10 million in the prior year. Gross margin for the first quarter of 2021 was 67%, compared to 72% in the first quarter of 2020.

The decline was largely driven by the cumulative impact of the two Ginkgo workflow buy-downs during 2020. By executing our buy-down rights on the Ginkgo workflows, we gained full commercial rights to the workflows in all target markets, which allows us to expedite the commercialization of these workflows and leverage them into new partnerships and accelerate growth. Excluding the Ginkgo impact, gross margins for Q1 was approximately 72%. We continue to expect our long-term target for gross margins to be approximately 70%.

Total operating expenses for the first quarter of 2021 were $27.6 million, inclusive of $4.5 million of stock-based compensation, compared to $18.2 million in the first quarter of 2020. The increase of $9.4 million was driven by $3.3 million of stock-based compensation, $4.1 million of G&A as we transition to a public company, $1.5 million of research and development, and $0.5 million of sales and marketing. Net loss for Q1 was $15.4 million, compared to a loss of $8.4 million in the first quarter of 2020. All net loss numbers are inclusive of stock-based compensation.

We ended the quarter with a strong balance sheet consisting of $230 million of cash and cash equivalents. Turning to our outlook for 2021. We continue to expect revenue to be in the range of $90 million to $100 million, representing growth between 40% and 56% over the prior year. As we mentioned in our year-end earnings call, we expect revenues to be more heavily weighted to the back half of the year as more business development collaborations and partnerships come online and as a result of the seasonality we typically experience in the fourth quarter.

As Eric mentioned, we're rolling out a campaign-based subscription offering. This offering will recognize revenue over the subscription term compared to the upfront recognition of a typical equipment sale. As we ramp this offering, it is possible that some previously anticipated capex sales may transition to a subscription offering. This could impact quarterly revenues in the near term but, in turn, would provide upside to recurring and overall revenues in future periods.

The potential variability between capex sales and subscription mix is incorporated in our revenue guidance for 2021, and we anticipate placing at least 45 platforms during the year. We do not expect any impact to our long-term gross margin expectation of 70% from the new subscription model. With that, I would like to turn the call back over to Eric for closing comments.

Eric Hobbs -- Chief Executive Officer

Thanks, Kurt. We started the year with strong platform placements, continue to expand opportunities in our existing markets, and grew our total addressable market. At Berkeley Lights, we envision a future where cells are a scalable and sustainable way to manufacture the products that we need to live a long and healthy life. The Berkeley Lights platform is key to enabling this by providing precise, rapid discovery and functional validation of biology.

As we look ahead in 2021, I'm more bullish than ever about the opportunities in front of us, and I'm confident that we are well-positioned to execute our strategy to transform the market for cell-based products this year and beyond. With that, we will now open up to questions. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] And our first question comes from Doug Schenkel with Cowen. Your line is now open.

Doug Schenkel -- Cowen and Company -- Analyst

Hey, good morning, everybody. So just a couple of financial questions. Of the 10 placements in the quarter, how many were Beacon versus Lightning? And what was the mix of subscription placements in the quarter?

Kurt Wood -- Chief Financial Officer

Hey, thanks for the call -- or for the question. Appreciate it. We don't disclose the breakout between Beacon and Lightning. Obviously, it was majority of Beacon.

And then from the subscription standpoint, we had one subscription in the quarter.

Doug Schenkel -- Cowen and Company -- Analyst

OK. So I guess a couple of questions building off of the subscriptions. I'm doing some quick math here, so yes, that's always a little bit dangerous, but I think it's simple enough where it does look like the ASP on Beacon, assuming -- yes, if I just say, hey, nine of the 10 or vast majority were Beacon and just divide that into your instrument revenue, it does seem like ASPs were down. So if I have that right, why is that? And then more generally, going back to when you started the subscription program, I think we had collectively, meaning the company and the investment community, higher aspirations for the impact of the existing subscription program.

What do you think hasn't worked there as well? And maybe in a little bit more detail, why does the new program put you in a better position to essentially lower the bar to adoption here and, hopefully, get you to that 45 placements this year?

Eric Hobbs -- Chief Executive Officer

So, Doug, this is Eric. I'll answer the second question first, and then Kurt can comment on the other one, right? We look at the overall market for the Berkeley Lights platform, and one of the things that we found when we rolled out the first subscription is that although it provided our customers with access -- with the full access to the Beacon that there were still a larger subset of customers which could leverage a different level of capacity on the Berkeley Lights Beacon. What we wanted to do was to make it as easy as possible for our customers to access our technology. And so by offering this newer subscription on alternative access model, it accommodates our customers through this approach.

Now, as you -- as I mentioned, initially, the approach was focused on financing, which essentially provided customers, again, the full access. But the new subscription model better meets their specific capacity needs. And in this model, our customers are going to subscribe to a given capacity, and it's all inclusive of consumable software service and support for their cell line development or antibody discovery campaigns. And I think when you place yourself in the shoes of our customers in this space, they're really thinking about how do they execute their campaigns to serve their customers.

And this newer subscription offering does exactly that. Does that help, Doug, answer that question on the newer model?

Doug Schenkel -- Cowen and Company -- Analyst

It does. And I guess my only follow-up, Eric, would be, I mean, this seems like a smart way of essentially getting more people to use the platform with maybe less of a commitment. And I guess the hope would ultimately be that after more experience with Beacon, they would potentially use this more or make a more long-term commitment. I want to make sure I'm thinking about that right.

And then kind of building off of that before I know Kurt answers the other question on ASPs, I am curious if any of this is in part motivated by competitive dynamics with folks who are not selling instruments but instead are offering somewhat similar services.

Eric Hobbs -- Chief Executive Officer

Yes. It's not a competitive offering. It is, in fact -- we do see our customers -- our customers are doing incredible things with our platform, Doug. And it's really exciting for me to see.

And so the more people who have access to our technology, the more innovation, not only from Berkeley Lights but from our customers, into some of these new markets that will gain traction. And I think as we continue to deploy and ramp our technology, that customer base innovation is really important, and it makes them a part of the story as well. So for me, it's important to see our technologies continue to roll out and ramp in the market.

Kurt Wood -- Chief Financial Officer

And, Doug, this new subscription is really tailored to the folks with a lower capacity need, so it's a sweet spot with what we're offering. And we do believe that it accelerates the access of that SAM, the serviceable available market, for that. And what we saw already is we've got good traction. After that initial subscription, we took feedback from our customers, came up with this program, and already in kind of the pilot, we've gotten really strong interest in this.

So we feel good about that.

Doug Schenkel -- Cowen and Company -- Analyst

OK. That's great. And then, Kurt, on ASP, anything interesting there?

Kurt Wood -- Chief Financial Officer

Yes. I think what you might be missing is why we placed 10. What we mentioned in the call is two of those were essentially title transfers at $0 from the completion of a milestone agreement that we did, so they were included in partnership revenue in the past. And upon the successful completion of the milestones, the title passed to them.

So they'll bear the pull-through on those tools going forward. So really, from a revenue-generating aspect, there was eight tools in the quarter that were direct placements.

Doug Schenkel -- Cowen and Company -- Analyst

OK. And very last one, and then I'll let others jump in here. Just looking at the funding environment in terms of company access to capital, there certainly seems like there's been no slowdown in the pace of investment and, for that matter, innovation in the field of cell therapy. Is that changing the mix of demand that you're seeing? I mean, I'm not necessarily saying that this is a huge change from trend, but I am curious if there's a pickup in interest from emerging players or, on the flip side, maybe CDMO interest is as strong as ever? I guess at a high level, what I'm asking is where are you seeing the most interest over the last three months? And is the mix of backlog in terms of customer profile evolving at all relative to where we were last year?

Eric Hobbs -- Chief Executive Officer

Yes. Doug, in the cell therapy space, we continue to see demand for functional validation of the therapeutic entities that our customers are, creating, and whether that's cell therapies or mRNA therapies, right. Understanding that those therapeutics are having the function, which is intended by the designer, right, to cure the diseases that they want to cure is really important for them. And to be able to see the -- see that function on patient samples in a Berkeley Lights platform with just thousands of cells is fairly interesting to our customers.

And so we'll continue to learn more about that particular market space and support those customers as we continue to evolve the capability of these different therapeutics.

Doug Schenkel -- Cowen and Company -- Analyst

OK. Sounds good. All right. Thanks, guys.

Eric Hobbs -- Chief Executive Officer

Thanks, Doug.

Operator

Thank you. Our next question comes from Tycho Peterson with JPMorgan. Your line is now open.

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

Hey, thanks. Eric, maybe I'll start with the cell therapy manufacturing. I know you placed your first alpha unit in the fourth quarter. Can you just talk a little bit about discussions with clinical customers, how we think about workflow development, and just next steps?

Eric Hobbs -- Chief Executive Officer

Yes. Absolutely, Tycho. Good morning. So as we -- our team continues internally to make really good progress on the CTMS system.

We've got our alpha units now up and running, right, doing process optimization on culture, integrating different assays. So that's great to see the internal team continue to make great progress on the CTMS. And the discussions in the market are, how do we integrate those next-generation assays? And what are the critical assays that our customers are looking for in this space? And certainly, of course, the cytotoxicity assay that we have, Tycho, has certainly gained interest for our customers. But we'll continue to move that forward.

Again, I just want to remind everyone that in the cell therapy space, although it's a wonderfully exciting space, it also is one that has a longer burn as we get into the market on the timeline for that to start to generate revenue. But certainly, progress is being made, and I'm very excited about what the team is doing inside the company right now.

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

Great. And then on the CDMO front, I know you talked about, I think, a third of the placements were either CROs or CDMOs. On the back of your viral vector deal last quarter, which was an interesting one, right, I think you started out trying to sell a system and turn into a $17 million deal. So can you just talk about whether there's been kind of follow-on interest from others around viral vector production, similar-type arrangements?

Eric Hobbs -- Chief Executive Officer

Yes. Absolutely, Tycho. In this particular market, Berkeley Lights is enabling stable rapid generation of stable cell lines would be a game-changer in the market. And so we have had additional discussions is about as far as I think I can disclose anything on the call.

But we do have interest, of course, people would love to do this. If we could -- if the potential opportunity is if we could make stable cell lines very rapidly, which we believe we can do, then that would change the way that this particular market operates. And so for us, it's very exciting because Tycho, in antibody therapeutics, Berkeley Lights has a wonderful solution for antibody discovery and cell line development. But make no mistake, we are better than -- it's a me better kind of a market, right, we're better than the competition in that space.

In some of these other spaces, we may be the only solution in those spaces. And of course, for obvious commercial reasons, right, that has great interest to us. And so we're excited about some of these new markets that we're seeing as we continue to evolve our capabilities from our foundational markets into adjacent markets and future markets.

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

OK. That's helpful. And then just a follow-up on Doug's question on the new subscription model. Can you give us a sense of the types of customers you're targeting with this kind of all-in approach? Is there a particular customer class you're going after here?

Eric Hobbs -- Chief Executive Officer

Certainly, the customers who are using a lower-capacity, smaller CROs, CDMOs are of particular interest, but it can also be large pharma companies who want to dip their toe in the water and try something first before they move on to a full purchase. And so we do see a large market contingent in that customer base, as Kurt mentioned, with a larger servable available market to us.

Kurt Wood -- Chief Financial Officer

And I think that you're seeing a lot of -- go ahead.

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

No, no, go ahead.

Kurt Wood -- Chief Financial Officer

And I think you're seeing a lot of companies get funding that are starting out with their own biology, want to run it, but can't utilize the full capacity of the beacon, hard to get that capex sale through. This provides an easy way for them to get in and, in some cases, allows them to bypass an initial feasibility study because the hurdle is smaller, and they go right into being able to run campaigns very quickly in a cost-effective differentiated way.

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

OK. That's helpful. And then last one on Ginkgo, you talked about the workflows that you've kind of bought down. Can you just talk about timelines to commercialize those workflows?

Eric Hobbs -- Chief Executive Officer

Yes. We're still on track to deliver workflows to Ginkgo this year. Per previous discussions that we had, Tycho, the team continues to -- collectively, these two teams are working together fantastically well. There's new innovations, there's new capabilities in the space that I'm extremely happy to see.

And so I continue to be happy about -- that's a good relationship and partnership between the two companies.

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

OK. Thank you.

Eric Hobbs -- Chief Executive Officer

Thanks.

Kurt Wood -- Chief Financial Officer

Thanks.

Operator

Thank you. Our next question comes from Brian Weinstein with William Blair. Your line is now open.

Brian Weinstein -- William Blair & Company -- Analyst

Hey, guys, good early morning to you out on the West Coast. So I guess of the 45 placements that are in your guide, what is the mix that you guys are thinking between the different commercial models that you're expecting? And longer term, can you talk about what your expectations are as we think about revenue longer term as to how these different commercial models will play? And I understand your gross margins are not changing, but how should we think about the way that you're planning around these subscription models longer term?

Kurt Wood -- Chief Financial Officer

Yes. I appreciate the question. I think when we guided at least 45 placements and in this year, the lower number of placements would correlate to the higher end of the guidance because that would mean we're doing more capex sales. What we believe is the new subscription model increases the SAM and increases the unit placements.

So we would expect that to drive incremental unit placements. So you would have a higher incremental units, but there could be, in the short term, some cannibalization rate for those customers that are on the fence of the capacity need that would trade off some of the revenue in the short term for a longer-term recurring aspect. A couple of ways to look at this. If you think about the subscription model, how we're pricing it, over the five-year useful life of the tool, it's slightly accretive over the -- on a subscription on an absolute-dollar basis.

Obviously, though, we expect not just to breakeven. We drive that incremental demand that we're doing. So the real driver will be as the success of that is can we drive the incremental demand in units, and we feel we can under the subscription model for that. So I think as you look out in time, as we place that more and more subscriptions, you're going to see more recurring revenue come off of that, plus you obviously have, off of the existing installed base on the capex sale, a growing consumable run rate.

You saw the jump in recurring year over year this year as well. We would expect that to continue. It's obviously way too early for us to guide for 2022 and beyond, but we do anticipate that recurring base from both subscription and the growing installed base to be strong drivers of growth in the future. I will point out, though, this new subscription plan, unlike the old one, it's all-inclusive.

It includes the consumables, it includes the tool, it includes the service, and everything on that. So this really is an all-in, very simple sale process for us that allows them to run it on a per-campaign basis all included.

Brian Weinstein -- William Blair & Company -- Analyst

Got it. And then, Eric, I have another question for you. I mean, you guys have announced a lot of stuff from a technology standpoint to business model standpoint. If you take a step back, what are the kind of key drivers, the key two or three drivers that you're looking at when you think about how this business is progressing? What are you looking at internally here to kind of monitor all this?

Eric Hobbs -- Chief Executive Officer

Yes. Thanks, Brian. There are really three main drivers or catalysts for our business, and the first is to grow the opportunity in. And we talked about that through business models such as subscription, but also with business development in regards to viral vectors.

The second thing we're doing is expanding our biology and technology offerings. These are the new workflows, the new capabilities that we talk about. CTMS and Antibody Discovery 4.0. And the third thing we're really working on is building our corporate capabilities.

So in addition to sales and marketing and business development, which we talked about, also building biology, our apps dev, and even into infrastructure such as our finance organization team. And those are really the three things that are driving overall that are the three drivers for our business as we move forward.

Brian Weinstein -- William Blair & Company -- Analyst

Got it. Thanks for that. And if I can squeeze one more in here. We get a lot of questions about competitive dynamics and whatnot.

And I know that you just addressed that. The change in the commercial model was not related to competitive dynamics, and I appreciate that. But what are you seeing competitively at this point in terms of other systems that are out there? Obviously, there's some that are more high profile than others, but can you just kind of give us an update on the competitive landscape and what you see relative to how your technology is stacking up against others at this point? Thank you.

Eric Hobbs -- Chief Executive Officer

Yes, absolutely, Brian. So the thing that we see in the market is that -- we're learning is that Berkeley Lights does this functional validation or test better than anybody else. And the relevance of that is that each and every biologic modality, whether it's antibiotic cell therapies, gene therapies, and every gene sequence that's discovered or cell line that's engineered, each requires functional validation. And I believe it could be optimally performed on the Berkeley Lights platform.

And so for customers who are looking to accelerate their business to discover development, to manufacture whether any cell-based products, all roads ultimately will lead to Berkeley Lights. And so I feel very, very strong about how we're positioned in the market right now. We'll continue to release capabilities to build our capabilities so that our customers are able to do the jobs that they need to do with their products.

Brian Weinstein -- William Blair & Company -- Analyst

Thank you.

Eric Hobbs -- Chief Executive Officer

Thanks, Brian.

Operator

Thank you. Our next question comes from Tejas Savant with Morgan Stanley. Your line is now open.

Tejas Savant -- Morgan Stanley -- Analyst

Hey, guys, good morning. So Eric and Kurt, just one question on the service revenue. It looks like you came in decently higher than our model. And so I was just curious as to what drove the uplift there.

Obviously, you have the CDMO contract sort of working its way through the model, but in terms of how you're thinking about amortizing that $17 million contribution over the remainder of this year and then '22, is there any sort of shift in revenue recognition thinking on that front?

Kurt Wood -- Chief Financial Officer

I'd have to dig into your model a little bit more specifically to answer, unique on your model. But from the partnership, we're not seeing a change in the revenue recognition that we outlined earlier from the viral vector deal. We obviously announced that it's going into the next phase. We obviously had some revenue recognition for that in the first quarter, which is positive.

That arrangement is going extremely well. Eric mentioned the demand we're getting from others, inbound coming in. Obviously, nothing formalized to announce, but we are seeing a fair amount of traffic coming from that. So we feel good about that, consumable recurring run rate's up.

And the service type specifically lined within the recurring, I would say, was a normal seasonal pattern for us.

Tejas Savant -- Morgan Stanley -- Analyst

Got it. And, Kurt, I want to go back to that comment you had made earlier in your prepared remarks around, there's a certain degree to which you're expecting some of the direct installs to shift to the new subscription model here. Given your sort of subsequent remarks that the offering is essentially tailored at folks with a lower capacity need, it allows them to bypass initial sort of feasibility studies and so on. Can you just walk just through why a customer was potentially going to buy a $1.5 million to $2 million Beacon would now pivot to this model? I can understand why the old subscription model might sort of result in some of those customers switching to a more flexible sort of offering, but from a direct installed perspective, can you just walk us through the dynamics there, please?

Kurt Wood -- Chief Financial Officer

Yes. If you look at the lower capacity, obviously, the more campaigns you're going to run on a tool, the more apt you are to purchase that tool and get the economies of scale there. But for some customers that have lower, let's say, 10 or less type campaigns, they're probably going to consider and say, look, there -- do I want to spend the cash on that right now? And can I get the return of doing that on it? Or am I better off entering into an all-in exclusive relationship that doesn't have that same long-term commitment on there? And that's what we're seeing is a few folks that really see the value of it but have that lower campaign capacity need that puts them on the cusp, and it's actually those customers that generally have a longer sales cycle, to begin with. So this alleviates that constraint of a longer sales cycle, allows them to have a way to access the technology all in.

And there's likely going to be some cannibalization. I think it's a very low percentage of cannibalization, but you'll likely see some of that. And then the majority of the sales will be new incremental growth that we have. Does that answer your question?

Tejas Savant -- Morgan Stanley -- Analyst

Got it. Yes. Super helpful, Kurt. And then a couple for you, Eric.

Just in time, I think Tycho asked us around timelines for the Ginkgo workflow commercialization. I know you mentioned the partnership is on track and is working well. But over what timeframe should we expect that the workflow that you bought down to be commercialized across a broader customer set? And then any updates you can share on the expansion of the BioFoundry that you completed in the U.K. and Asia? Just how that's translating into customer inbounds and pipelines in those geographies would be very helpful.

Eric Hobbs -- Chief Executive Officer

Yes. So we continue to -- so let's answer the workflow question first, right? So the workflow question, we will release those later this year. And as we release those later this year in Q4, in late Q4, then you'll start to see us commercialize these through 2022, OK? On the BioFoundries and the labs, the labs in Asia Pacific and in the European Union, we just -- it's great to see the pictures coming back for the team. The last we built the systems installed, working, running with customers in the market.

In the Asia Pacific area, we have an upcoming -- we'll have our second user group meeting this summer, so looking forward to bringing customers together in APAC. And so as things begin to open up in APAC, we see, again, recurring and strong interest in that space. And the demo lab in the European Union just was -- just the tools were just installed, I think, two weeks ago. And so I saw some pictures coming from Garrett over in Europe.

So those are moving forward. Again, running customer demos, customers love to see their biology operating on our system. So certainly, I think that I do believe that's a great sales tool for our team members in these regions.

Tejas Savant -- Morgan Stanley -- Analyst

Got it. Super helpful. Thanks, guys.

Operator

Thank you. Our next question comes from Dan Arias with Stifel. Your line is now open.

Dan Arias -- Stifel Financial Corp. -- Analyst

Good morning, guys. Thank you. Eric, can you just expand a bit about how the Lightning figures into the equation going forward? You've got the Beacon outright purchase and the Beacon subscription uptake. I'm just sort of curious where the sweet spot is for that system at this point?

Eric Hobbs -- Chief Executive Officer

Yes. So as everybody is aware, Lightnings are lower capacity, less automated way to access our technology. And we continue to place Lightnings, so placed our Lightnings in the quarter as well. And so we see -- it's very interesting.

We see some very interesting demand in the Lightning space, in particular, back to the question, I believe, was asked by Tycho, which is in the cell therapy space. And understanding, taking samples from patients before infusion of the cell therapy and, of course, after infusion of the cell therapy. And I think there's a very good fit there for Lightning in the cell therapy space, so we continue to release our cell therapy workflows in that space. And as we continue to move into the future, right, is there another access model for Lightning to be determined right now? We continue to see, like I said, in the academic space, some pretty strong and building interest on using the Lightning in the cell therapy space.

Dan Arias -- Stifel Financial Corp. -- Analyst

OK. And then just maybe on the Beacon and the placements that you're making today versus, say, a year ago, are you seeing the validation and the ramp-up period gets shorter these days as labs get smarter and you guys sort of get smarter at bringing customers up to speed, and do you think that that's something that can positively impact the pull-through rate that you might see in, say, the first 12 months of ownership for a customer?

Eric Hobbs -- Chief Executive Officer

Well, I think the key – yes. So I think the key thing is Berkeley Lights continues to improve these workflows. And I do believe as we continue to develop and improve the workflows, we are going to see increase in recurring revenue. So for example, Antibody Discovery 4.0 is great because not only do we have the upfront sort of capability as we come into the microfluidic environment, but we're also enabling our customers to rapidly reexpress their proteins as they've discovered and all of this can be done in less than a week.

And so as we continue to turn the crank and improve these protocols, improve these workflows, they are coming up faster, Dan, for our customers. And I think that as our customers see the system, they see computer-controlled biology in action, right, they tell their friends about, hey, these tools come in, right, they wheel them in, they plug in a couple of gas lines, power in the internet and, all of a sudden, we're up and running. Antibody Discovery workflow's faster than we could ever run. And so that's very positive for our customers.

I think it's also positive for the market. And as we continue to add capabilities, we'll continue to take more upstream and downstream capability into the Berkeley Lights workflow, which will drive recurring revenues up.

Dan Arias -- Stifel Financial Corp. -- Analyst

OK. One more for you, and then I'll hop off. On consumables utilization, how would you compare the increase in pull-through when you just look at your anchor users, Amgen, Amyris, etc., to some of the new buyers? I mean, obviously, the dollar amount is higher for the big-time customers. But I'm sort of just curious whether you're seeing a steady progression toward higher utilization across the board here when you look at the various types of customers.

Kurt Wood -- Chief Financial Officer

You hit the nail on the head there. It kind of varies by segment that you go for. And then obviously, part of the subscription offering we're doing is for some of those customers that have lower campaign and consumable requirements. But when we look at a like-for-like basis, we actually saw a little bit of an uptick year over year, Q1 to Q1, on the customers that were in service.

So similar to like a same-store-sale type metric, we saw a slight uptick.

Dan Arias -- Stifel Financial Corp. -- Analyst

OK. Thanks very much.

Kurt Wood -- Chief Financial Officer

Thanks, Eric.

Operator

Thank you. Our next question comes from Paul Knight with KeyBanc. Your line is open.

Paul Knight -- KeyBanc Capital Markets -- Analyst

Hi. Eric, are the academic customers more oriented to the second subscription model, or are they more of a Lightning customer, in your opinion?

Eric Hobbs -- Chief Executive Officer

Yes, certainly. So the academics love to play, and they love to invent and they're coming up with great stuff, Paul. So they're more on the side of buying consumables. They'll buy their consumables, their reagents, and they'll play into a new space.

The new subscription offering is really -- it's a turnkey solution, right? Our customers, I think as Kurt had mentioned, smaller start-ups, a certain amount of money in the bank, right, need to run. They need to run a number of campaigns. They know they need to execute those things in a timely manner to drive the value of their organization. And so really, because the new subscription includes the consumables, the service support, the software, etc., for running a given number of campaigns, I think that that's excellent in the commercial area.

But the academics love to play in tinker so much that it wouldn't see their need, certainly not targeting them at this point in time with that subscription model.

Paul Knight -- KeyBanc Capital Markets -- Analyst

And then the success you're seeing in Asia with 45% of sales in that market, what's driving that?

Eric Hobbs -- Chief Executive Officer

Yes. Sure, Paul. I mean, certainly, we saw Asia Pacific come out of COVID earlier than the rest, so strong growth in the Asia Pacific region is, one, due to the response in to COVID. But additionally, the Asia Pacific market is an emerging market.

In an emerging market, they don't have installed infrastructure in place that they have to forgo to move to a new technology. And so they're rapidly adopting the Berkeley Lights technology as it's the fastest and most efficient way to get to these solutions and build their pipelines. And so new technology can make the biggest impact in emerging markets, and so I believe that's another reason why we're seeing the rapid adoption of our platform in that space.

Paul Knight -- KeyBanc Capital Markets -- Analyst

Is Opto Assure a contract manufacturing purchase or a contract research purchase?

Eric Hobbs -- Chief Executive Officer

So Opto Assure, you'll see use more in the CDMOs and our cell line development workflow. And Opto Assure, the first that we've released with Opto Assure is the aggregation assay. And so our customers need to know and understand whether the antibodies that they've engineered or discovered have this aggregation potential because these drugs just operate differently inside of patients. And so it's very valuable for our customers to know that at the point of cell line development rather than learning that downstream while they're trying to scale things up, that would -- of course, there's a lot of waste in terms of processing time and dollars spent for our customers.

And so what we're doing is part of our strategy is how it's always been to take these downstream quality checks and move them as early in the process as possible. So our customers have a better product, have the best product as they move into scaling up their solution.

Paul Knight -- KeyBanc Capital Markets -- Analyst

And then lastly, your sales headcount and sales headcount goal for the year-end?

Eric Hobbs -- Chief Executive Officer

Yes. We continue to drive our sales headcount up, and we had previously mentioned that we're looking to push up from 2020 through a factor of two into 2021, and we'll continue to drive sales heads and sales headcount as we move. But simultaneously, Paul, in addition to headcount, it's all about also getting efficient with our sales headcount, ensuring that we have the right marketing materials and these things for -- and sales tools for our sales leads to be able to effectively do their jobs. So it's a balance of both headcount and process.

Paul Knight -- KeyBanc Capital Markets -- Analyst

Thanks.

Operator

[Operator signoff]

Duration: 50 minutes

Call participants:

Carrie Mendivil -- Investor Relations

Eric Hobbs -- Chief Executive Officer

Kurt Wood -- Chief Financial Officer

Doug Schenkel -- Cowen and Company -- Analyst

Tycho Peterson -- JPMorgan Chase & Co. -- Analyst

Brian Weinstein -- William Blair & Company -- Analyst

Tejas Savant -- Morgan Stanley -- Analyst

Dan Arias -- Stifel Financial Corp. -- Analyst

Paul Knight -- KeyBanc Capital Markets -- Analyst

More BLI analysis

All earnings call transcripts