Singular Genomics Systems, Inc. (OMIC) Q4 2021 Earnings Call Transcript

Singular Genomics Systems, Inc. (OMIC -3.04%)
Q4 2021 Earnings Call
Mar 02, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Singular Genomics fourth-quarter results and business update conference call. [Operator instructions] I would now like to hand the conference over to your host today, Philip Taylor. Please go ahead.

Philip Taylor -- Investor Relations

Thank you, operator. Presenting today are Singular Genomics founder and chief executive officer, Drew Spaventa; and head of finance, Dalen Meeter. Earlier today, Singular Genomics released financial results for the three months and full year ended December 31, 2021. A copy of the press release is available on the company's website.

Before we begin, I would like to inform you that comments and responses to your questions during today's call reflect management's views as of today, March 2, 2021, only and will include forward-looking statements and opinion statements, including predictions, estimates, plans, expectations, and other information. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued earlier today and in our filings with the Securities and Exchange Commission. Our SEC filings can be found on our website or on the SEC's website.

Investors are cautioned not to place undue reliance on forward-looking statements. We disclaim any obligation to update or revise these forward-looking statements. Please note that this conference call will be available for audio replay on our website at singulargenomics.com on the Events page of the News & Events section on our Investors page. With that, I will turn the call over to CEO Drew Spaventa.

Drew Spaventa -- Founder and Chief Executive Officer

Thank you, Philip, and welcome everyone to Singular Genomics fourth quarter 2021 conference call. I'm excited to share our recent accomplishments, business updates, and commercial progress of the G4 launch. My prepared remarks will touch on a few key areas; G4 production system and its differentiated value proposition, the latest results from our early access program, and an update on the commercial progress as we near our first G4 customer shipments. I'll provide some additional color on our product roadmap and how we are positioned to serve our customer's needs, deliver cost benefits and tap deeper into the significant opportunity in front of us.

Lastly, I'll provide more detail on pricing and value. In addition to the value proposition inherent in the G4 core tenants of power, speed, flexibility, and accuracy, we will share our goal to lower our customers' costs by delivering high throughput level pricing on a benchtop instrument for the first time. Genomics-based research, biological discovery, and medical advancements continue to progress, largely powered by NGS. Clinical adoption is ramping.

NGS is driving the adoption of precision medicine as a standard of care and multiomics is emerging as the next frontier of Biological discovery. The life sciences tools and diagnostic space has experienced its most active market cycle on record with over $30 billion of capital raised in public markets between 2020 and 2021. With this, we are seeing increased investment in biological tools, strong company creation, and record utilization of sequencing technologies, further substantiating the large NGS and multiomics opportunities in front of us. Here at Singular Genomics, we are seizing the opportunity to enable and accelerate discovery in this ecosystem.

We are in a strong position to develop, manufacture and commercialize transformative life sciences tools that will empower research and clinical work in genomics and multiomics. We continue to execute on our roadmap and timelines and we are confident in our position for both near and long-term success. Our first product, the G4 benchtop sequencer sets a new benchmark in power, speed, flexibility, accuracy, and cost. In December of 2021, we announced the commercial launch of the G4 system.

Today we are happy to announce that we have taken initial customer orders and remain on track to ship the first production G4 system in the second quarter along with F2 flow cells supporting 100, 200, and 300 cycle kits. We also remain on track to launch the F3 flow cell in the fourth quarter of 2022 for higher throughput applications. With four F3 flow cells running in parallel, a single G4 can produce approximately 1.2 billion to 1.3 billion reads and up to 400 gigabase of data in less than 19 hours, establishing itself as the world's most powerful benchtop sequencer. As we have outlined previously, the G4 was purpose-built based on direct feedback from the field to meet customer needs.

Over the past year, we have improved all four of the key performance metrics, including, number one, faster run times. We are currently achieving 2.5-minute cycle times, our commercial target. Number two, accuracy. We are achieving accuracy on the high end of our published target range of 99.6% to 99.9% single-pass accuracy and above -- and at or above Q30 scores for 75% to 90% of base calls.

Number three, number of reads. We are achieving read counts above our target specs of 150 million paired reads for F2 flow cells. Number four, read lengths. We are now achieving our accuracy and Q-score targets for novel 150 base-paired read sequencing runs.

To demonstrate and optimize these capabilities, we initiated the early access program or EIP, where partners ran G4 systems in their labs. The EIP has validated our technology in a wide range of customer lab settings and applications. On our last conference call, we reported results from our first three EIP partner sites, including labs running applications such as spatial transcriptomics, targeted sequencing, and liquid biopsy, reporting results of up to 170 million reads per flow cell and greater than 80% of bases at or above Q30. Site one was previously revealed as Harvard's Beth Israel Deaconess Medical Center.

Today, we are pleased to share the identities of sites, two and three, Adaptive Biotechnologies and Exact Sciences. We have received orders from both Adaptive and Exact and look forward to delivering value for these early access partners as key members of our initial customer group. We are pleased with the early support of the program and that the companies of this caliber have elected to take the next step in what we hope will be a growing and mutually beneficial relationship. In addition, today we are excited to provide an update on EIP sites four and five.

Site four, a government core lab perform microbial genome sequencing and achieved average recounts of 169 million per flow cell, greater than 80% of bases at or above Q30 accuracy, using two by 150 base-paired read sequencing on 300 cycle kits. Site five, a commercial CRO performed liquid biopsy sequencing. They achieved average recounts of greater than 200 million per flow cell, greater than 80% of bases at or above Q30 accuracy, using 200 cycle kits. We are pleased to have achieved our target performance specifications at these two additional EIP partner sites, further validating the G4 performance specs across various applications and lab settings that represent some of our target early customers and markets.

In summary, between our beta test and early access program, we have installed and validated instruments at seven independent sequencing labs. The successful execution of these programs over the last year provides the necessary foundation for broad commercialization. In addition to the information shared in our G4 production system update, we would like to highlight the technical report published in connection with our commercial launch. This report is intended to demonstrate system performance for one of the most technical and common applications, whole human genome sequencing.

The report contained a transparent and comprehensive overview of our performance and data quality. The G4 produced sequencing data on par with current state of the art and yet performance with single-pass accuracy of approximately 99.8% and uniform coverage of the high confidence regions in the reference genome evaluated at 20x, 30x, 40x coverage. This was an important milestone for us. It has stimulated interest and facilitated discussions with many target customers across the industry.

We anticipate sharing additional information related to our sequencing performance as we continue to improve. In addition to the G4 outstanding performance specifications, there are other aspects of the system's value proposition that are resonating with potential customers. These include workflow integration, operational advantages associated with our core tenants of power, speed and flexibility, and direct cost savings. Each of these are considerations in the customer's evaluation of a new sequencing technology.

The G4 provides a compelling value proposition in each of these areas. I'll talk about each of these now. Workflow integration. We develop the G4 to plug seamlessly into existing customer workflows.

As such we are excited to announce that we have entered into three new partnerships with library prep solution providers Roche, Agilent, and Qiagen. With Roche, we are validating its KAPA EvoPlus and HyperPrep library prep kits. With Agilent, we are validating its highly sensitive sure select target enrichment products for both custom and catalog kits. With Qiagen, we are validating its QIAseq kits, a product line for both DNA and RNA sample prep.

These are in addition to the previously announced library prep partnerships with Twist Bioscience, New England BioLabs, Lexogen, Watchmaker Genomics, and Dovetail Genomics as well as the informatics partnership with the Board Institute to integrate the G4 with its Tara data platform. Across all nine of these partners, we plan to optimize compatibility and performance and provide our customers the ability to seamlessly integrate these market-leading solutions with the G4. Operational advantages. The G4 is the most powerful benchtop sequencer on the market.

The G4 will reduce more data per day than any other benchtop sequencer, up to 400 gigabases or approximately 1.2 billion to 1.3 billion reads for a single run in less than 19 hours. In addition, the G4 offers unparalleled sample flexibility in the form of four flow cells with individually addressable range. The combination of speed and flexibility allows the customer to optimize sequencing run capacity, feel flow cells more efficiently and run more frequently. This translates to lower cost per experiment and faster results.

Direct cost savings. The operational advantages and related savings that I just mentioned already established a highly differentiated value proposition. Yet we intend to further build upon this value proposition by offering additional direct cost savings, especially for high volume customers or customers that need to scale. These direct cost savings take two forms; list price and volume discounting.

First on the G4, we plan to offer kit-based pricing that results in savings on a dollars per gigabase or dollars per read basis versus the existing comparable kit offerings. Second, we plan to offer significant volume-based discounting, providing a cost-effective way for customers to scale their sequencing within the benchtop segment. All customer types, low mid and high volume, will see cost savings with the G4, in some cases, up to 50% or more over current benchtop offerings. We are also excited to share some information about the upcoming G4 by four system.

The G4 by four is the configuration of four G4 instruments on a single customer benchtop with integrated compute and data storage, intended for higher volume customers. The G4 by four will offer a scalable, cost-efficient solution with near-random access capabilities, rapid turnaround times, and significant cost savings at scale. The G4 by four will offer high throughput level pricing on a benchtop instrument for the first time at sub $10 per gigabase providing an unmatched combination of power, speed, flexibility, accuracy, and cost. With the G4 and the G4 by four, Singular offer customers cost-effective choices to meet their current needs and their needs as they scale.

This has the potential to redefine which applications are suitable in a benchtop system and expand the benchtop sequencing market as a segment. We are actively scaling our commercial team, hiring sales and customer service and support personnel to engage with and support our early customers. We expect to ramp our sales, customer service, and support and marketing headcount to approximately 40 people by the end of the year. In connection with the buildup of our commercial team and infrastructure, we are setting up an internal customer care lab to help validate customer applications via simple optimization and testing.

This will be a courtesy service offer to prospective new customers who are interested in seeing data prior to purchasing a system and designed to streamline their adoption of a new technology. This will also serve as an opportunity to work with customers on specialized kits such as HD-seq and XR-seq. As a reminder, our G4 and core F2 and F3 consumable kits will be applicable to all sequencing applications and compatible with existing library prep and informatics workflows as validated through our EIP program. In addition to the F2 and F3 kits, we are progressing development of two unique specialized application kits, HD-seq and XR-seq.

HD-seq is an integrated sample prep and sequencing kit can generate Q50 accuracy for rare variant detection. Sequencing accuracy is the critical aspect of rare variant detection and applications in oncology, especially in the detection of somatic mutation in tissue and liquid biopsy. We continue to advance the development of HD-seq and are now demonstrating 99.996% accuracy for 100 base reads and anticipate target specs of 90.999%, accuracy or Q50 quality scores for greater than 100 base read at commercial launch, which is on track for the fourth quarter of 2022. Extended rate sequencing or XR-seq is a specialized application kit for targeted sequencing of up to 3,000 base pairs that we believe can sell unmet needs in areas such as immunology for the diagnosing and monitoring of blood cancers, therapeutic antibody and T cell discovery, and vaccines for infectious disease.

We continue to advance our development of this kit internally and are on track for commercial launch in the fourth quarter of 2022. We look forward to sharing more about these specialized applications and anticipate publications being issued on these techniques toward the middle of the year. Looking beyond the G4 launch, we are excited about the products and the development in our pipeline. We continue to believe that our R&D capabilities and team are unmatched for a company of our size and age.

Our ability to integrate and leverage the broad range of scientific and engineering disciplines is a core competency that distinguish Singular from the competition. We are continuing to make progress on the development of the PX system, expanding the number of in situ RNA and protein targets and demonstrating concurrent protein detection and RNA sequencing in the same cells. We are assembling our first beta instruments now and expect to have a handful of working beta systems in the second quarter of 2022. We are planning to open a technology access program or TAP for our early PX collaborators later this year, offering early customers and thought leaders, the ability to work with Singular to develop assays and application solutions as advance of the planned commercial launch in 2023.

In addition to all the operational and business progress, we made some important updates to our team. We added Elaine Mardis to our board. Elaine is a pioneering researcher, internationally recognized in cancer genomics. Her focus has been in the application of genomic technologies to improve the understanding of human disease and the precision of medical diagnosis, prognosis, and treatment.

Mardis serves as co-executive director of the Institute of Genomics Medicine at Nationwide Children's Hospital. Additionally, we launched our Scientific Advisory Board. This group is comprised of distinguished academic and industry experts who advise on the company's product and service offerings and R&D pipeline. We look forward to their contributions as we deliver the next generation of NGS to the scientific and medical community.

With that, I will now turn the call over to Dalen to go over the details of our fourth-quarter financial results.

Dalen Meeter -- Head of Finance

Thank you, Drew. I'll start by covering the Q4 2021 financials, followed by a few comments on 2022, including brief remarks on initial orders and expected revenue recognition timing. Then I'll conclude with an update on our operational infrastructure build-out to support future growth. Operating expenses for the fourth quarter of 2021 totaled $19.7 million, compared to $7.6 million for the fourth quarter of 2020.

These totals included noncash stock-based compensation expense of $2.9 million in Q4 2021 and $0.3 million in Q4 2020. The year-over-year increase in total operating expenses was driven primarily by our headcount growth, investments to support the G4 launch, continued investment in our product pipeline and R&D roadmap, and the costs associated with being a public company. Net loss for the fourth quarter of 2021 was $19.8 million or $0.27 per share, compared to $7.9 million or $0.73 per share in the fourth quarter of 2020. Ending cash, cash equivalents, and short-term investments, excluding restricted cash, totaled $339.2 million as of December 31, 2021.

A weighted average share count for the quarter used to calculate net loss per share was approximately 72.2 million. Looking ahead through 2022, we expect total operating expenses including stock-based compensation to continue to increase as we invest to support the scale-up of manufacturing, add headcount in sales, marketing and customer service and support, and progress future innovations in R&D. We expect our Q1 weighted average share count used to calculate net loss per share to be approximately 71 million. Turning to orders, we have begun to take initial orders and are encouraged by the positive reception from our early customers.

It is still early in our launch cycle and we will plan to share more information on orders after we have begun to ship and have better visibility into how the sales funnel is transitioning to orders through mid-year. As a reminder, we do not expect to recognize any revenue until after we commence shipping instruments and consumables. Revenue recognition on our initial system placements will be contingent upon the completion of a customary acceptance or validation process. This could result in revenue being recognized in subsequent periods for units shipped in Q2.

We will plan to deliver more information on units shipped and associated revenue recognition timing as we gain better visibility into the shipment schedule. Longer term, we expect to structure our terms and conditions to enable revenue recognition upon shipment. I will provide a brief update on our operational infrastructure build-out to support additional instrument shipments and future growth. A dedicated 20,000 square foot manufacturing facility in San Diego is up and running and we are assembling production instruments as we speak.

Additionally, we are on track to move into our new 80,000 square-foot headquarters in the second quarter of 2022. We executed a new lease for an additional 200,000 square feet in the life sciences hub of Torrey Pines in San Diego. The addition of this space starting in 2024 will support additional demand and meet our capacity needs for the next several years. In summary, we remain well capitalized to support the G4 launch activities.

We are investing to achieve our commercial goals and scale the business. We are making progress on our product pipeline initiatives and are confident in the commercial plan that our team has in place to capture the large market opportunities in front of us. Thank you, and back to Drew for closing remarks.

Drew Spaventa -- Founder and Chief Executive Officer

Thank you. Dalen. I am incredibly proud of our team and the progress made over the last few months. We have commercially launched the G4.

We have demonstrated leading performance specs at two additional EIP partner sites. We progressed development of the system and achieved targeted commercial specs in key areas. We stood up our dedicated manufacturing site, assembled initial production units and we are continuing to build out a world-class team with industry expertise. In addition, we have taken multiple orders from customers and are on track to ship the first instruments in the second quarter.

Lastly, our product pipeline is robust, with F3 flow cells and our specialized application kits expected to launch in the fourth quarter of 2022. We are committed to driving value for all customers through the core features of the G4 system as well as direct cost savings. With the G4 and even more so with the G4 by four later this year, we will enable high throughput level pricing on the benchtop sequencer for the first time. Our value proposition is clear.

Industry-leading power, speed, flexibility, accuracy, and cost, on a sequencer that spans the mid to high throughput market. With the G4, there are no trade-offs. We are excited to bring our first products to market and take a major step on our mission to accelerate genomics for the advancement of science and medicine. Joining me for Q&A, we have Eli Glezer, founder and CSO; Dalen Meeter, head of finance; and Dave Daly, president and COO.

Now let's open it up for questions. Operator?

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Tycho Peterson with J.P. Morgan. Your line is open. Please go ahead.

Tycho Peterson -- J.P. Morgan

Appreciate all the color around the G4 launch. Curious, can you talk on the path to improving accuracy. I know you're launching the HD kit later this year, which will get you to Q50. Can you maybe just talk about how you think about that opportunity and how important is accuracy and some of these early discussions?

Drew Spaventa -- Founder and Chief Executive Officer

Yes. Absolutely. Tycho, this is Drew. I probably have Eli talk a little bit more in detail about HD-seq specifically, but I think, accuracy is a term that really matters in the context of what type of sequencing you're talking about.

Meaning that accuracy for counting applications are RNA-seq is very different than accuracy for whole-genome. And exome and then when we think about liquid biopsy specifically, it's really a very unique accuracy profile that's required there, that most people are turning to library prep techniques, such as UMI or Duli UMI to really drive the accuracy needed to get to rare variance. And that's specifically, kind of what HD-seq is designed for. And I'll let Eli talk more about kind of HD-seq specifically and current status of where it is.

Eli Glezer -- Founder and Chief Scientific Officer

Yes. I think that's a good summary. On the basic sequencing, as you heard in our updates from the last two sites that we've presented, we're hitting more than 80%. The big cause of both for Q30, so kind of industry -- standard industry-leading type of performance there.

And then in the report we published on the whole -- the whole human genome sequencing that takes it up to the next level of looking across the entire human genome and looking at our ability to call variance and we think that that's on par with kind of the state of the art today. And then, we've continuously improved the sequencing quality over time. We will continue to do that on the basic raw accuracy. And then in terms of HD-seq, as Drew mentioned, that's really intended for rare variant detection for liquid biopsy or mutations in tissue samples, for example.

So there, we are now hitting Q50 accuracies, the 99.999 -- 59 and we intend to put out some results on that around the middle of this year.

Tycho Peterson -- J.P. Morgan

OK. That's helpful. I know we're all going to get the question about orders and I appreciate it's early but I guess you're committing to giving orders next quarter. I mean when will we kind of get a sense of the magnitude and some of the newer customers you've announced here like Adaptive and Exact, are they putting the G4 in the production mode, or is it really for kind of R&D at this point?

Drew Spaventa -- Founder and Chief Executive Officer

Yes. I think, Tycho, we probably won't provide specifics on backlog until we've really gotten out in the market for a few quarters and feel like we can provide information that is credible and predictable, that you guys can count on. In terms of the early adopters and the orders we've taken so far, I mean, I think in general, it's a crawl, walk, run, a new type of adoption for sequencing. We've had questions before about the barriers to adoption and we're committed to partnering with these companies to make sure that they are not only seeing good sequencing quality, but they're also seeing a path to value and cost savings.

So I think in general what we can say is, you would expect people would step-wise a new technology into large clinical sequencing operations. I think it makes sense just in general that there is a step-wise approach there. That being said, we think the profile of the G4, the cost savings matched with the speed and flexibility, really do provide a nice glide path to larger engagements and bigger relationships in terms of customer-vendor down the road.

Tycho Peterson -- J.P. Morgan

OK. And then just last one before I hop off. On PX, are you able to give us any details on resolution, throughput, panel breadth, any metrics there you can talk about ahead of the launch?

Drew Spaventa -- Founder and Chief Executive Officer

Yes. I'll have to turn that one over to Eli.

Eli Glezer -- Founder and Chief Scientific Officer

Yes. So I would say in terms of resolution, it will be in the same ballpark as state-of-the-art pathology when applied to tissue, sub-micron resolution there. And I just want to say, there is a number of unique features about the PX system that is designed for both single cell analysis and also for tissue in one platform. And within each of those categories, it's able to read out gene transcription of panels of RNA, and then also panels of proteins, either just RNA and just proteins or the two combined.

And since we use the sequencing readout, we also have a unique capability to look at the specific sequence in cells, for example, the variable regions in antibodies producing cells. And then lastly, is just the scale. So we use a 96 low play format and we can run up to about 100,000 so per well . So that's across 96 sample in parallel and I think that's unprecedented today.

And the same thing can be done with tissue sections those wall. So those are some of the unique attributes of that platform.

Tycho Peterson -- J.P. Morgan

Very helpful. Thank you.

Operator

Thank you. And our next question comes from the line of Matt Sykes with Goldman Sachs. Your line is open. Please go ahead.

Matt Sykes -- Goldman Sachs -- Analyst

Thanks for taking my questions. Maybe just a question on sort of customer type. Your EIP is pretty well-diversified across numbers and customer types. But as you kind of gone through that process and gotten a lot of additional customer feedback, is there any type of customer whether it's government, CRO, pharma, diagnostics, that you feel like some of the demand gravitating toward or is it still pretty well spread across those different customer type groups and that we should expect a fairly diverse potential customer base going forward?

Dave Daly -- President and Chief Operating Officer

Yes. This is Dave Daly. You've hit it. We've got a very robust engagement across all the customer segments.

So whether it's academic cores, whether it's fundamental research, clinical, biotech start-up, we're very, very excited about the breadth. I think as Drew outlined, when you look at the attributes of cost, speed, accuracy, workflow integration, that versatility of the G4 really does give us the opportunity to hit all of those customer segments and meet their needs, specifically with the G4 or the G4 by four. So it continues to be very broad and very diverse and we're excited about that.

Matt Sykes -- Goldman Sachs -- Analyst

Great. Thanks for that color, Dave. And then, Dalen, maybe one for you just on the opex. Have you had to readjust your budget at all for supply chain constraints, inflation, etc.? Are you still relatively on track to what you kind of had originally kind of budgeted out in the original plan or subsequent plans?

Dalen Meeter -- Head of Finance

Yes. Hi, Matt. Yes. Absolutely.

I'd say how to think about opex, we're definitely in an investment phase. We're expecting opex to increase here in 2022. Specific to inflation or any of the other factors that you've laid out, yes, I wouldn't say that it's anything material that causes us to reset. I think in general, we've seen some manageable headwinds, like a lot of companies are seeing.

But the team is managing through that. We've got a little bit of increase in labor expenses with higher job market or more competitive job market. But the team is managing through that. If we think about kind of pace of expense into 2022, we could see operating expenses be about double 2021, just depending on how we are going to phase in the investment to support the growth.

But I just say that we've all been really capital efficient. You can look at our history, $450 million raised, $110 million or so spent to date. We're going to continue to add philosophy in investments here over the course of the next couple of years.

Matt Sykes -- Goldman Sachs -- Analyst

Great. And then maybe just last one, just related to that. Just on the PX, does that opex spend bake in some spend on PX, and will we see that kind of increase this year, or is that sort of a little bit more of a '23, type of spend plan?

Dalen Meeter -- Head of Finance

No. We're actively working on that here in development. We're bringing up beta units. right now, we'll be moving into, you can say, the technology access program phase here, last part of this year.

So that opex spend includes PX as well.

Matt Sykes -- Goldman Sachs -- Analyst

Great. Thank you very much.

Operator

Thank you. And our next question comes from the line of John Sourbeer with UBS. Your line is open. Please go ahead.

John Sourbeer -- UBS -- Analyst

Thanks. Appreciate all the color you provided there. Maybe just on the early access customers, any additional feedback or impressions you could provide and maybe that the customers that haven't yet converted to orders, has there been any feedback there on various maybe for focus or improvements?

Drew Spaventa -- Founder and Chief Executive Officer

Yes. I'd say holistically the EIP has been really helpful in a number of ways, both from a learning about the system perspective, but also learning about customers. And one part of that is understanding, kind of the buying cycle. It's much different if you're looking at a private company versus a core lab or an academic or some type of public institution.

So there's definitely differences in buying cycles and budgeting in the way that happens and we're learning through that. No additional color at this point in terms of customer-vendor relationship. We're hopeful that we can convert most of these if not all these EIPs to customers at some point in time.

John Sourbeer -- UBS -- Analyst

Got it. Thanks for the color. And the company has announced several partnerships just begin of the year, few more this week. Any additional details there or areas that you think of focus maybe for any addition to fill.

Drew Spaventa -- Founder and Chief Executive Officer

I don't think there is more color on the names involved. I think maybe, that the higher takeaway is that we are very focused on making sure that the practical adoption of the sequencing is as seamless as possible. So the team that's running through these partnerships, whether they are on the back end of data informatics or the front in the library prep, is understanding that there are hurdles to get new adopters. And there are nuances and differences with the different sequencing platform and the partnerships holistically are kind of a very focused intended set of activities that we plan to really spend time on this quarter to make sure that when we're shipping systems and they are reaching customer labs and they're using third-party library prep solutions that they've used before, that the compatibility of the protocols, all that's already been essentially figured out for them that we don't have any, aha moments or any confusion when a system drops in.

So I would say it's a really all in kind of the same direction of how do we make sure adoption is seamless and that users have positive experiences with the sequencer and existing kit that they're already accustomed to using. Thanks for taking my questions. I'll jump back in the queue.

Operator

Thank you. And our next question comes from the line of Michael Ryskin with Bank of America. Your line is open. Please go ahead.

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

Good afternoon. This is Peter on for Mike. So on the PX, definitely appreciate it's still early days here. I believe you previously commented that we could expect the launch in the second half of 2023.

I guess, A, is that timeline still intact? And then, B, is there any more detail you can give on the TAP plan? I think you had touched on it differently from the G4. I'm just wondering if there's anything new there you can share.

Drew Spaventa -- Founder and Chief Executive Officer

Yes. Absolutely. So, I guess, I'll cover the first part of the PX and then I'll let Eli, talk a little bit more about the TAP program. We do still have it on schedule for kind of second half of next year.

We are again launching our first product, and that is not a trivial pursuit, so to speak. So we are very aware that the success of the G4 and this organization needs to be focused on making sure our first platform is successful, make no mistake on that. We are trying to make sure that we have a group continuing to push the PX forward and assuming we are successful with the G4, things go according to plan. As they are right now, we should be able to continue that investment stay on that timeline.

But we will be very transparent on the timeline of the second system and it largely has to do with the success the first system, which is our priority. In terms of the technology access program. I'll turn it over to Eli to talk a little bit more about what he has in mind there?

Eli Glezer -- Founder and Chief Scientific Officer

Yes. Thanks for the question. It is going to be a little bit different than our early access program for the G4. In that program, we're really just trying to validate the operation of the sequencers in customers' hands.

In the applications we're very clear that we're targeting. For the PX, there is such a broad range of possibilities as I mentioned a little bit earlier, single-cell analysis, tissue, reading out, RNA panels, proteins, the direct sequencing, that we hope to do through the technology access program, is work with some thought leaders and potentially large customers in this area to help guide us in the most promising directions there. And so that's part of the technology access program. We will work with people closely on those applications, maybe develop custom panels specific to those needs.

And then that will guide our further development as we head toward commercialization.

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

All right. Great. Thanks. And then, is there anything you can speak to how discussions with potential customers have evolved specifically within the past couple of months here? I know given an announcement by a major competitor in January and then there is another pending platform is expected to roll out.

How are you kind of thinking about this impacting your launch? Thank you.

Dave Daly -- President and Chief Operating Officer

Yes. Hey, Peter. This is Dave. As I mentioned previously, the customer engagement has been very robust, and in fact, it's accelerating.

The number of engagements, the funnel itself across all of the various segments continues to be very, very strong. And again, I think as we're demonstrating the value proposition of the G4, is real. I think one thing that we haven't mentioned that I think is helpful that is, the early access program actually shipping systems to these third parties and having them be run in their laboratory, has given us a lot of insight that you don't get when you just send samples into their laboratories -- provided laboratory for processing. So we can talk specifically to these target customers about how the G4 can actually plug and play.

I think secondly as Drew indicated with, the upfront library partnerships with the back-end analytics partnerships, we can likewise talk about real-world utilization of the G4 at these various customer prospect locations. So we're not talking conceptual. We're really talking about actual capabilities of the system, and the ability to do that has again accelerated those customer engagement. So feeling really good about that, not only the number, but the acceleration of the number in the funnel.

Drew Spaventa -- Founder and Chief Executive Officer

I guess I'll just add on the competition. There's going to be competition in this space. I think what we're focused on is, what's within our control and largely that has to do with making sure that we meet or exceed the specs that are very aggressive that we've put out and making sure that we're engaging and listening to customers. I think one thing that it's worth mentioning, the profile of the G4 and G4 by four is really unique in that.

It kind of spans both the mid-throughput and the high throughput and what I mean by that is if you look at, essentially how on a simple way, how pricing works on a per gigabase basis, right now the mid-throughput market is kind of in the high teens to maybe $40 or so and then the higher throughput market is probably kind of $45 mid-single digit, up to about 20. What we're really talking about here is a system where the power and the speed and the output and now with pricing kind of ranging from high-single-digit, up to $40, we're kind of expanding the gap between those two systems. So it's really a unique offering and when we say no trade-offs, I mean that's, we really mean it that the speed of the system, the flexibility of the system, the fact that will be offering some of this spans of gap, we think, provide a very unique value proposition, a very unique system that will be differentiated for quite some time.

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

Very good. Thank you, guys.

Operator

Thank you. And our next question comes from the line of Dan Brennan with Cowen. Your line is open. Please go ahead.

Dan Brennan -- Cowen and Company -- Analyst

Thanks, guys, for taking the questions. Maybe the first one would be, in terms of the flexibility of the G4, the ability to one flow cell or four flow cells, all the way up and get the same pricing per gig, like among the early beta users and the customers so far, how often are they, like, wanting to run, one flow cell or two flow cells and that's a pretty big differentiator in terms of your viewpoint on the funnel, is that going to be like a big driver for customer?

Drew Spaventa -- Founder and Chief Executive Officer

Yes. I think it's going to be a very big driver and I think it really just depends on the profile of the customer. There are certain profiles of customers that if they're running fleets of next feet, those are customers that are thinking about this system has certainly bridged this dam in terms of throughput and lowers their cost. And those are the types of customers that are probably going to be using four flow cells in parallel doing multiple runs per week.

There is another subset of customers that are really, for example, an academic or core lab where they're serving all different types of sequencing. And for those, the flexibility is really something that allows them to cater to their PIs or operate their lab in a more efficient faster turnaround type fashion where a sample type or set of samples can come in, you have minimal batch requirements. You can load up a single flow cell run the systems ready to go the next day. You don't have to wait all week-to-batch to run 300-gig flow cell.

So the question I think really, it can be best answered, it depends on the customer and if it's both of those needs very well.

Dan Brennan -- Cowen and Company -- Analyst

Great. Thanks, Drew. In terms of learnings that you've had so far, has there been, I assume, there has been a bunch of like smaller things that we won't see. It sounds like things are going well but have there been any kind of key learnings as you've gone through this beta where you've been able to tweak things fixed certain things such that like does the G4 were kind of out of the box, if you will, right now?

Drew Spaventa -- Founder and Chief Executive Officer

There's been a ton of learnings. I guess on the commercial side, Dave and I were just talking about. There's definitely been a lot of learnings in terms of the way people think about their own validation. And there are also learnings in -- again, what is the purchase look like, and it's very different for small private company versus a large private company versus a government entity.In terms of the actual technical learning, I'll probably turn that one over to Eli.

I don't know how much detail you want to go into here but feel free to be candid.

Eli Glezer -- Founder and Chief Scientific Officer

I would say it's been valuable for us to work with real customers, real samples, real library preparation methods. So maybe I give you one example, in one case, their libraries are particularly small insert and so we want up adjusting some things in the way we process the data to make it suitable to that. So the things of that sort -- nothing sort of deeply fundamental but important to be able to be prepared to meet all those various types of applications as we roll out the commercial systems. And I would see also overlayered on that, it's just been our own internal progress in the output and sequencing quality and all that, and that's just sort of happening in parallel during this year as we've done the EIP program.

Dan Brennan -- Cowen and Company -- Analyst

Great. Thanks for that. In terms of like the funnel, obviously, not giving any backlog numbers now but, Dave, obviously talked about the funnel really feel good about. I mean, we have -- I think we're around with the street is, we'd like 30 placements this year obviously not going to comment directly, but as you look at what you're seeing in the funnel qualitatively, if you look at where the street is, can you comment at all on the final expected conversion, just any thoughts on how we might translate that funnel as we look ahead for the full year?

Dalen Meeter -- Head of Finance

Dan, this is Dalen, and I'll take that. And anyone can chime in here. But, yes, just as a reminder, we haven't provided any formal guidance on units of revenue as a public company, but yes, we're absolutely aware that consensus model, it's out there, and it's about 40 units back-end loaded in Q3 and Q4. There is no change to our perspective on the commercial opportunity at all, right.

From a manufacturing ops perspective, we're building units to achieve this. I would say that the 40 units is in a layup by any means. We're bringing in new technology and new product to market for the first time, but it's definitely an achievable challenge, right. We're out there learning every day, filling the sales funnel, customer conversations are going well.

So I'd say that's a little bit of an overview and I don't know Dave, if you have anything else of that?

Dave Daly -- President and Chief Operating Officer

Yes. I think Dan, you also have to take into account, you touched on this a little bit when you look at the funnel is, there are variety of sales cycle, you know, in academic core lab is a six to nine-month cycle, a clinical lab is a two to three months or more cycle, biotech start-up can move a bit more quickly. So while you've got a full funnel and there is a lot of robustness, then you now have to bake in the various sales cycles to get to the numbers that Dalen gave.

Dan Brennan -- Cowen and Company -- Analyst

Got it. Great. And then maybe final one, just on the four by four, who is the target customer there? Is it – yes. Just interested to kind of see who you're going to be marketing that product to?

Drew Spaventa -- Founder and Chief Executive Officer

Yes. I think the four by four was something that we have been consistently talking about it since we kind of power S1. So this is always been something that as we were talking with customers, we found and continue to feel that there is a strong opportunity allowing people an alternative and scaling into a super high throughput sequencer. If you think about why people scale, it usually comes down to, they have a lot of volume and they are seeking lower cost.

But there is a big step into a high throughput system. It's usually a $1 million price tag, which is a lot of capex and that's a big deal. So the thought process with the four by four is trying to provide an alternative and a more attractive cost and value proposition to those customers that essentially when we talked with them and we say it's a mid-throughput instrument at a certain price point and a certain capacity that you know it's great, but I'm just going to need more. And a lot of those customers would be customers like central labs, it could be research labs, but a lot of times, it's going to be a clear environment clinical lab, running LDTs and we just want to make sure that we're able to capture that market.

Again, if you think about a grid and on that grid you have high throughput system, you have an SP and S1 and S2, and that's four flow cell, the people running the SPs, the S1s, the S2s, those are a large percentage of the total customers that are stepping into that system. And first, a lot of those customers having something that's faster, more flexible at a similar cost point or a better cost point, is a really attractive value proposition. So it's really very simple. If we look at the grid, you have your low throughput, your mid-throughput, by doing the four by four, it allows us to extend directly into that higher throughput grid and really provide an attractive alternative from a cost and throughput standpoint for those customers.

Dave Daly -- President and Chief Operating Officer

And, Dan, one other additional point, I think, to complement what you just articulated is, you're looking at higher volumes and higher throughputs, keep in mind that the four by four is taking four independent G4 and harmonizing them. So now not only do you have the ability to run greater volume, but now you have the opportunity to run simultaneously more types of experiments at the same time or if you've got something a large experiment running and you have to get something that needs to be processed relatively quickly, you have access to your system. So I think that really provides a different workflow scenario in a higher volume setting. Then you're getting with something that's a bit more stepped.

You loaded, you got to wait for it to finish before you can then reload it. The four by four gives you a lot of workflow flexibility that you don't get in most high throughput systems today.

Dan Brennan -- Cowen and Company -- Analyst

Great. Thanks, Dave. Thanks, guys.

Operator

[Operator signoff]

Duration: 51 minutes

Call participants:

Philip Taylor -- Investor Relations

Drew Spaventa -- Founder and Chief Executive Officer

Dalen Meeter -- Head of Finance

Tycho Peterson -- J.P. Morgan

Eli Glezer -- Founder and Chief Scientific Officer

Matt Sykes -- Goldman Sachs -- Analyst

Dave Daly -- President and Chief Operating Officer

John Sourbeer -- UBS -- Analyst

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

Dan Brennan -- Cowen and Company -- Analyst

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