SomaLogic, Inc. (NASDAQ:SLGC) Q2 2022 Earnings Conference Call August 15, 2022 4:30 PM ET
Company Participants
Marissa Bych – IR, Gilmartin Group LLC
Roy Smythe – Chief Executive Officer
Shaun Blakeman – Chief Financial Officer
Conference Call Participants
Dan Brennan – Cowen
Brandon Couillard – Jefferies
Dan Arias – Stifel
Kyle Mikson – Canaccord
Operator
Good day, and thank you for standing by. Welcome to the SomaLogic’s Q2 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]
And I would now like to hand the conference over to your speaker today, Ms. Marissa Bych. Ms. Bych, please go ahead.
Marissa Bych
Hi, thank you. Today, SomaLogic released financial results for the quarter ended June 30, 2022. A copy of the press release is available on the company’s website. Before we begin, I’d like to remind you that management will make forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995.
Any statements contained in this call that relates to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including without limitation, those relating to our market opportunity, gross margin, and future financial performance, protein content, and database growth, customer base, diagnostic pipeline, expectations for hiring, and growth in our organization are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.
Accordingly, you should not place undue reliance on these statements for a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Form 10-Q filed with the Securities and Exchange Commission today and a section entitled Risk Factors in our most recent annual report on Form 10-K.
This conference call contains time-sensitive information and is actuate only as of the live broadcast today, August 15, 2022. SomaLogic disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise.
And with that, I will turn the call over to Roy Smythe, Chief Executive Officer.
Roy Smythe
Thank you Marissa. Good afternoon and welcome to our 2022 second quarter update call. As always, I want to express my sincere gratitude to all who continue to invest in and support us. At SomaLogic, we continue to make progress toward building a differentiated, scalable and durable proteomics enterprise. Despite a challenging and ultimately disappointing quarter, our confidence in our technology and its trajectory and its unique ability to successfully unlock the power of the proteome for our customers and society at large remains unchanged.
In the past quarter, we have objectively grew and diversified our customer base. We also continued our strategy organically and inorganically expanding the platforms for our protein measurement and identification technology and investment in new products to expand our market reach.
I would also like to call specific attention to the health of our balance sheet and cash position, especially in comparison to others in our sector. This capital strength provides SomaLogic significant optionality to evaluate and act on inorganic opportunities, diversify platforms and products, increase scale, continue to attract execution talent and grow revenue.
We have made a significant amount of progress over a very short period of time, turning our largely research and development organization into a commercial enterprise. However, we still have work to do. And while this remains a challenging period to navigate, we continue to work diligently to build on the foundational elements we have put in place.
I’d like to turn now to our second quarter revenue of $14.1 million, and provide additional color on the factors that have impacted revenue, for the most recent quarter and thus far in 2022. First, not dissimilar to other companies in the innovative life sciences tool space, the macroeconomic backdrop has had an adverse effect on both supply chain and customer spending behavior.
Supply chain disruptions have affected sample delivery, pushing revenue out into subsequent quarters while also slowing the launch and deployment of our site of service distributed SomaScan kits. At the same time, the macroeconomic environment has forced some customers particularly a number of our largest to slower-than-normal contracting, and thus has also impacted our revenue recognition.
Specifically, we saw several million dollars in contracts that were underway late in the second quarter, only finalized after the quarter closed. Second, as we’ve discussed previously while we are in the process of evolving our technology to a more distributed model, over 75% of our business currently relies on contracted in-house service revenues, derived from sample delivery from customers.
We have experienced and continue to experience a great deal of delayed sample deliveries. And this in turn, creates variability in month-to-month and quarter-to-quarter revenue recognition. And third, as we are still building commercial capabilities especially in EMEA and APAC, at present we are a relatively small sales group.
The team currently consists of only 35 competent and highly dedicated individuals, who are primarily working in the US and 60% of them have joined the company in the last six months. This has limited our ability to expand our global customer base and to generate increasing revenues from large customers, who are already on our platform.
Our revenue growth from 2022 for EMEA and APAC, has fallen short of our expectations thus far this year, something others are seeing as well across the industry and likely tied both in part to macroeconomic headwinds, as well as our need to substantially grow our sales team in these regions.
As these factors are still operative and headwinds still evident, we are revising our full year guidance to be more conservative and Shaun Blakeman our Chief Financial Officer, will give more details on our revised view during his portion of our prepared remarks.
I will now address these foregoing factors and how we are mitigating them. At a high level, our incredibly strong capital position with more than $600 million currently on the balance sheet, will substantially facilitate our ability to weather the challenging and less predictable current macroeconomic environment. Nonetheless, to be abundantly cautious. We’re significantly reducing planned expenses, by as much as $75 million for the remainder of this year and through 2023, with an eye towards maintaining a healthy balance sheet and optionality in an evolving market and Shaun, will provide details for this as well in his comments.
It’s important to note, that as we do adjust expenditures we will continue to invest and build out our life sciences commercial team and appropriately support it to ensure, we allocate resources to our largest opportunities especially large biopharma enterprises and particularly in EMEA and APAC.
To add even greater urgency to execution, we are also organizing all life science commercial activities into one business unit, and promoting a seasoned and talented executive to run it in Adam Taich. Adam joined the company earlier this year, after a successful 22-year career at Thermo Fisher, an established powerhouse in this sector. Adam led all aspects of the molecular biology business there where his portfolio included products sold into research, diagnostic and therapeutic markets. He also led the protein and cell analysis business, strategy and corporate development for the life sciences group and global services in support of Thermo Fisher. He will now take those learnings to drive the same execution as General Manager for our Life Sciences business unit with SomaLogic. And in this role Adam reports directly to me.
To address the variability of our business related to macroeconomic factors, we are working to achieve greater business scale and diversity of customers and have more product options available to them as well.
As you can see on slide 15 in our online investor deck, we have doubled new customers over the past year and added 20 new customers in this most recent second quarter alone, which actually represents our largest quarter-to-quarter increase of customers over the past 12 months.
As the larger revenue opportunity for our life sciences business requires, we encourage large existing customers who come onto the platform to do increasing amounts of business with us, often moving from pilots or small studies to much larger ones, our significant and ongoing new customer growth should pay real dividends over the next year and beyond.
In addition to customer growth, we are also working to make it easier for customers to secure and deliver samples to us, which should help relieve some of the supply chain and contracting effects we have recently experienced.
In regard to diversifying product, we have successfully transitioned SomaScan from 5,000 proteins to 7,000 and our 10,000 protein measurement identification product is in successful development and is expected to launch commercially in 2023. We have continued to develop new SomaSignal high-plex protein pattern recognition diagnostic tests with significant academic clinical and early commercial traction. And there are also significant use cases for these products in evaluation with our biopharma customers as well as known downstream clinical applications.
In consideration of our current service business orientation and its impact on month-to-month and quarter-to-quarter variability, we are successfully putting the foundational elements in place to substantially grow our distributed business over time with a three-part plan; increase the deployment of our existing array-based SomaScan kits, launch NGS-based distributed solutions with Illumina, and create and launch chip based products with recently acquired Palamedrix.
The first part of the plan is to supply our existing array-based kits to biopharma and research customers, having recently reinitiated this program. Supply chain factors have negatively impacted our ability to acquire and build inventory of kits hardware and in turn our ability to distribute these products. However, we have found new vendors and are considering taking some components of manufacturing in-house.
The second part of our plan is to get our Aptamer constructs onto one of the world’s largest provider platforms of distributed life sciences solutions in the world with Illumina. Our close partnership with them and their commitment to create market and sell an NGS application of SomaScan will change the commercial landscape for Aptamer based arrays and proteomics in general when co-branded products are launched in 2024. Work between our two groups continues to go very well as mentioned in Illumina’s quarterly earnings call last week.
Third at the end of July, we announced a strategic acquisition of Palamedrix, a San Diego-based global leader in DNA nanotechnology to develop a chip-based next-generation version of our SomaScan Assay. This acquisition brings differentiated miniaturization technology, scientific and engineering expertise and unparalleled talent as well as the potential for enhanced future distributed and ease-of-use capabilities to our platform. Ultimately, our goal is to make proteomics accessible to all with true benchtop technology. We want to do for proteomics what was done for genomic sequencing making the equipment needed to do this work smaller and more modular and the process more economical and faster all while increasing the number of proteins measured over time.
Finally, and while a future, but enormous long-term revenue opportunity, we continue to make progress in our diagnostics product and business development efforts. In June, we announced an agreement with OncoHost, a global leader in next-generation precision oncology. This deal includes both OncoHost running samples on SomaScan as well as a license to use our development platform to create new clinical cancer characterization tests to potentially enable earlier treatment decisions and informed choices for alternative therapies.
In July, we began an exciting partnership with Mubadala Health to enable the deployment of SomaSignal tests in clinical practice. Mubadala is an integrated network of world-class healthcare providers in the United Arab Emirates and the new agreement where represents the first international healthcare system to be part of the SomaSignal Proteomics for Precision Medicine Initiative, a large-scale clinically focal partnership effort aimed at equipping health care providers with the power of proteomic technology to inform decisions at the point of care.
As part of this deployment, clinicians at multiple Mubadala-owned provider groups including the Cleveland Clinic Abu Dhabi will now order SomaSignal tests under a minimum volume agreement for patient care through their owned affiliate national reference laboratory. These tests will be deployed to support patient care across precision prevention, executive and VIP health and other wellness-focused clinical programs. This new partnership is just one great example of our growing successful effort to enable provider and patient access to SomaSignal tests.
We have asked Todd Johnson to assume full control of our diagnostics business unit and he will now report directly to me as well. Todd served as the Chief Executive Officer of two digital health companies. He led from start-up phase through commercialization as CEO. At HealthLoop a digital consumer health company, he deployed new digital tools into over 70 health systems and hospitals and facilitate its acquisition by GetWellNetwork. Prior he was founding CEO of Salar, which was acquired by Transcend Services at that time, the nation’s second largest publicly traded medical documentation company.
At SomaLogic, we have successfully initiated our operating talent recruitment efforts and built an accomplished and experienced Board and management team. We have raised more than $850 million since 2022 including our transition to public company status in 2021. Importantly, we have also managed our finances such that we have an extremely healthy balance sheet and cash balance to cover operating expenses ahead of achieving profitability, an important point of differentiation during these — times. The team at SomaLogic is growing and differentiating and our focus is strong. We will continue to work hard in the coming quarters to expand the business and to outperform.
I’ll now turn it over to Shaun.
Shaun Blakeman
Thanks, Roy. Revenue for the second quarter of 2022 was $14.1 million, a 28.5% decrease from $19.8 million in the same period of the prior year. While we are, of course, disappointed in this quarter’s outcome the core value and potential of our platform hasn’t changed and we are still laying the necessary foundation for long-term sustainable growth and profitability. Our core customer base remains solid and new customer acquisition continues to be a strong point.
The challenges of the macro environment are not lost on us and we are acutely focused on what we can control to drive growth. We remain optimistic that this groundwork will yield future dividends as we build our global commercial enterprise.
Gross margin for the second quarter of 2022 was 50% compared to 59.6% in the second quarter of the prior year. While we did see stronger margins sequentially from Q1 2022 as expected volumes are significantly lower than anticipated, which is driving margins lower from the mid-50s percentage that we saw last year. Q2 2022 also had a modest negative mix impact from lower royalty revenue compared to Q2 2021.
Looking forward, we anticipate benefiting from more favorable mix and volumes and I expect margins to continue to improve in the second half of this year. But I do want to point out that we expect samples from one of our private-public partnerships at lower margins to modestly impact both Q3 and Q4. So we anticipate aggregate margins in the second half to improve to the low 50% range.
Total SG&A and R&D expense for the second quarter of 2022 was $54.4 million, a 133% increase from $23.4 million in the second quarter of 2021. R&D expenses for the second quarter of 2022 were $17.6 million compared to $8.6 million in the second quarter of 2021. Sales, general and administrative expenses for the second quarter of 2022 was $36.8 million compared to $14.8 million in the second quarter of 2021. Adjusted EBITDA for the second quarter of 2022 was a loss of $46.4 million, compared to an adjusted EBITDA of $11 million loss in the second quarter of 2021.
Please see our press release on file with the SEC as of this afternoon for a reconciliation between GAAP net loss and non-GAAP adjusted EBITDA. We ended the quarter with $619.1 million of cash, cash equivalents and short-term investments. As Roy touched upon, we understand the importance of protecting this cash balance as it is a true differentiator allowing us to uniquely consider strategic options.
Now more than ever we recognize the necessity of staying focused on building out our life sciences team and diversifying our product offerings. In addition with the benefit of our past investments, we have a first-mover advantage in diagnostics with a broad portfolio of assets, as we continue to evaluate vast opportunities. We will focus on those tests that we believe offer the best returns potential for modification.
So I’d like to reset expectations on our SG&A and R&D expense. We have enacted plans to reduce our operating expense spend by $75 million from the last consensus through 2023 with $10 million already in progress this year. In addition, we are also revising our 2022 revenue guidance to $80 million to $90 million. While we are cautiously discounting expectations given the challenging macro environment, I want to point out that to reach the upper range of the guidance, we believe that we would need to benefit from our typical past Q4 customer seasonal behavior and that impact is likely to be muted though the extent is unpredictable.
I will close by saying that we believe Q2 will be our low point on commercial execution. And while the macro environment may take time to improve, we believe that our focus on the key priorities, Roy highlighted earlier will deliver the strong growth expected of our platform and technology.
At this point, I would like to turn the call back to the operator for Q&A.
Question-and-Answer Session
Operator
Thank you, sir. [Operator Instructions] Our first question will come from Dan Brennan of Cowen. Your line is open.
Dan Brennan
Great. Thanks for the question, guys. Maybe just first question just high level. Just kind of could you tease out a little bit of the supply chain impact kind of on the quarter and kind of how much you guys are now forecasting that in kind of the back half of your guidance versus what you highlighted as the macro impact from customers, I guess, being more restrictive on spending? And then I wanted to follow-up on that kind of second part on the spending aspect between OUS and the US. But I’m just trying to tease out from a high level and how we think about those too?
Roy Smythe
Thanks, Dan. The supply chain issues for us were really twofold. One is disruptions in supply chain have continued to make it less predictable that, we’re going to get samples on time from our customers. Things as trivial as not having the right tube to allocate samples into and then a host of other issues, obviously, impact those samples coming to us on a predictable time line, as opposed to a more distributed business model.
The second impact that, the supply chain has had on us thus far this year as that had a significant impact on our ability to create and stockpile and inventory the hardware we need to push out our existing array kits. So these have been the two major impacts for us. One related to the fact that, we’re a primarily service business and the second it’s really had a disruptive impact on our ability to push our kits out in our reinitiated array kits program.
As far as macroeconomic impacts on spend, again, what we’ve seen is a slowing of finalizing contracts with our customers. And our assumption is that, this is just those customers taking a careful look at their own expenditures as compared to previous times. We have not seen customers leaving our platform, but we have seen a slowing of some existing customers contract processes.
Dan Brennan
Right. And kind of – so are they kind of equal, or is one more – is kind of one more significant than the other? Just because obviously the supply chain issue was in 1Q and I mean, people very much expected it here in Q2 and beyond. I’m just trying to tease out the relative magnitude?
Roy Smythe
Yeah. I don’t know that, we are prepared to talk about the relative magnitude of one versus the other. There are really two different types of impact, right? So the first again is the supply chain issue has an impact on sample delivery being on time or being predictable and then our ability to roll out our existing array kits. That’s obviously, an impact both to predictability of revenue and actually our ability to capture revenue in the second case around the existing array kits program.
And the macroeconomic, again, has not really had an impact on our ability to capture revenue. It’s just slower — it just slowed revenue recognition. And as we mentioned there were several million dollars in business that was in contracting in the second quarter that got pushed into next quarter, because of this apparent slowing of contracting with our customers.
Dan Brennan
Got it. And maybe a second one, just on the commercial team. You’re obviously cutting SG&A and R&D to be more prudent. The plan was to double the number of commercial individuals, I believe, from like 60 up to I guess 120 by year-end 2022. Where are you in that? And how much is that being impacted by the more conservative cost outlook?
Roy Smythe
Well, we certainly don’t plan to cut any investment in growth of our commercial team or supporting structure around it. We’re going to be full speed ahead on that regardless of printing spending in other areas. We had a plan to be at about 125 total commercial team members at the end of this year and we’re likely going to push that total number up moving into next year.
Our plan also requires that we go from our existing 35 sales field team to something around 70% and we need to more than double our current contingent in EMEA and APAC. We’ve got about 11 individuals combined in EMEA and APAC and we’d like to hire at least 15 more combined in those two regions. So the total number of 125 is likely to be pushed up some moving into the first half of 2023. And we initially had great success in hiring, but it has slowed for sure. And most notably it has slowed ex-US.
Dan Brennan
Got it. And then maybe a final one on the queue would just be, the original guidance is your call for 29% to 35% growth. Obviously, you have two — impacting that today. Could you just speak to how we should think about — we don’t know what 2023 will look like at this point in terms of both supply chain and macro. But in terms of the confidence level and a 30%-plus type growth rate as things normalize.
And related to that, any comment on the competitive landscape? Obviously, it’s really early for what you’re doing and there’s other kind of high — approaches out there as well that are in the marketplace a little bit ahead of you. But maybe just, if you can comment on the confidence in that 30-plus-percent type of growth? And do you think any of the impact on the kind of customers pausing here is related to anything from a competitive landscape factor. Thank you.
Roy Smythe
Sure. Well we certainly aren’t ready to comment on projections for 2023 in large part as you noted without knowing what’s going to happen with the macroeconomic or supply chain issues moving into next year. We do believe that our performance will improve over the coming year for sure and we’ll be talking more about 2023 guidance on an appropriate time line.
As far as our competitive issues, we have not seen competitive issues actually being that big of a factor here. We are very close with our existing customers. We have been talking to them over the last two quarters and we really feel like, this is more of an issue of again those factors I mentioned earlier around the impact of macros and supply chain on our business our primarily service orientation and then the size of our team.
We — if you’re going to make comparisons, it would be important to note that our business model is primarily a service business model, and there are others in the market that have their business model sort of more evenly split between service and a distributed set of solutions. And obviously a distributed set of solutions will be less sensitive to supply chain factors, impacting delivery of samples into a service business orientation.
So again, we haven’t seen significant competitive factors involved here. I don’t believe that’s part of this. And I’d also like to comment that, we also don’t believe this is a zero-sum game. Only a few percentage points of the massive proteomics total addressable market have been captured by anyone. So we don’t believe this is a zero-sum game. And this is one company or companies taking away from others. We believe the opportunity is still very large for the sector.
Dan Brennan
All right. Roy thanks. I will go back in a queue.
Operator
Thank you. Our next question will come from Brandon Couillard of Jefferies. Your line is open.
Brandon Couillard
Hey thanks. Good afternoon. Maybe for Shaun, how do I square the 2Q revenues being down year-over-year with the number of active customers growing over 2x year-to-year? Has there been any change in pricing?
And then, I believe your top three customers were about 44% of the revenue base last year. Did you see a big drop in that cohort of kind of your top three large customers? I’d be curious how much they contributed in the quarter? And what that looked like on a year-over-year basis?
Roy Smythe
We haven’t talked specifically about what each customer is contributing to the bottom or to the top line revenue Brandon, but there are a couple of important comments to make here.
One is that, I would say due to a combination of factors both the macroeconomic and frankly the small size of our team and our focus thus far on new customer acquisition, rather than same-store sales that that combination has had an impact on active customers spending more on our platform.
We have not fully built out the competencies or the structures that we need to encourage our active customers to move into spending more with us on our platform. And that’s obviously an energy-expending requirement.
Those customers don’t call you and tell you that they’d like to spend more money you have to go out and get that. So we believe that that will be aggregated a great deal by just growing the team and putting those same-store sales competencies and structures in place.
We have seen obviously as I mentioned earlier, a slowing in spend from our active customers. I think that it’s no secret to anyone that some very large biopharma companies have announced significant disruptions to their own internal operations over this last year.
Some are laying employees off. So that has had an impact on the slowing of spend. But it’s really those two things together the macroeconomics and the fact that we still need to fully build out those competencies. What we have not seen are active customers leaving our platform and the enthusiasm of our existing customer relationships has not been attenuated.
Shaun Blakeman
And I would just add related to your question regarding ASPs that it’s in no way a result of ASPs be integrated. In fact, our ASPs have slowly improved throughout the year. So from a transactional basis our margins by customer actually are getting stronger. Again, what you’re seeing both in terms of the revenue and the margin as I mentioned are more of an impact in terms of just the volume of samples coming through in the quarter.
Brandon Couillard
Got you. And then Shaun in terms of the guidance for the back half, I mean it would imply the top line bounces back to a little over $20 million a quarter in the second half. What exactly in terms of the factors that negatively impacted 2Q are you assuming to get better in the second half whether it’s sample delivery variability normalizing or supply chain issues kind of abating somewhat? And then I think you talked about on the OpEx line about 70% growth for the year. what does the revised outlook contemplate for just OpEx growth for this year?
Shaun Blakeman
Yes sure. I would say actually to get to the lower end of our guidance, we’re not actually assuming any significant improvement in the macro environment or something improving with contracting time. It really is just based on a matter of our known pipeline and factoring in right the new behavior and time lines and contracting that we’re seeing.
And again as Roy and I have mentioned in the past right, this is a variable business and we also know where we are with several large agreements and just again assessing the magnitude that’s coming in. So, to answer your question to get to the low base we actually don’t expect to improve. Q2 had some unique aspects that led to the disappointing results.
But to get to the second half, we’re not assuming that any magic has to happen. It’s more so to get to the upper end would have to have some kind of modest improvement in what we’re seeing in the macro environment with our customer uptake and specifically with our biopharma customers specifically with their past Q4 behavior which really muted in our guidance.
Brandon Couillard
Okay. That’s helpful. And then last one for me Roy. On the Palamedrix acquisition can you just talk about the timing of commercial launch and magnitude of incremental investment that might be needed to get that new product to commercial stage?
Roy Smythe
Sure. I guess the first comment I would make is that we believe that this acquisition was an extremely good deal, based on the price that we paid in exchange for the competencies technology and talent that we have acquired. And the operational spend over the next couple of years is actually relatively low in comparison to what might be anticipated.
As far as definitive statements about when we will begin to see revenue generated from this acquisition this is a development acquisition. We felt like it will be two to three years before products are created and are marketed and sold. However, we expect to accrue benefits from having this group people like Paul Rothman, who’s a McArthur [ph] fellow under the tent with us and their work on all aspects of our technology platform. So we will accrue benefits, on the way to launching new products based on DNA nanotechnology and chip-based approaches. That will be important for us, even before those products are launched.
Q – Brandon Couillard
That’s it. Thank you.
Operator
Thank you. One moment please, for our next question. And our next question will come from Dan Arias of Stifel. Your line is open.
Dan Arias
Good afternoon, guys. Thanks. Roy on the manufacturing options that you’re considering, what kind of time lines would the moves to internalize some of that production or those production processes beyond? And can you just sort of talk to the risk around doing something like that, as you’re trying to scale elsewhere and within a choppy environment?
Roy Smythe
Sure. Dan, we haven’t made a decision whether or not we actually need to bring some of that manufacturing in-house. We are pleased with the results, that we anticipate will accrue over the next few quarters just changing out some of our vendors for some of those hardware components definitely have not made a decision, whether or not to bring any of the manufacturing in the house. And obviously, because that is — that will require capital and time and effort, we’ll likely try to avoid that if possible. But I think the message I was trying to transmit is that, simply changing out vendors has already made an impact on this. And if we have to bring some aspects of manufacturing in-house, we will but actually hoping not to have to do that.
Dan Arias
Okay. Okay. Maybe just two quick follow-ups. On the new customers, that you’ve taken on this year, I’m just curious about the split roughly speaking between biopharma versus academic. And then just on the 10,000 protein kit that you’re working on. I know it’s still set for 2023, I’m just worry — wondering whether there’s been a push off within 2023, whether we should think about the time line just being further down, but still captured in the year? Thanks.
Roy Smythe
As far as the split between biopharma and research customers, from this the new contingent of customers that we’ve been fortunate enough to add over the last year, and as I mentioned, this last quarter was our largest new customer success story over the last 12 months. We haven’t talked about the split. What I can say is that, we have grown both new biopharma customers and research customers. We have grown research as we’ve previously mentioned, at a faster clip than biopharma, but that’s not surprising because we’re certainly slanted more to big biopharma two years ago. And that percentage, it’s healthy for that percentage to shift a bit to encourage more research customers to come on to the platform.
So we haven’t talked about the split, but we have grown in both contingents. It’s a good time to just mention, that remember that when these customers first come on to the platform, whether they’re research or biopharma, the first deal that we ink with them, is usually in the tens of thousands of dollars rather than the hundreds of thousands of dollars rather than the hundreds of thousands or millions of dollars. It really requires us to move them into the next step for the larger revenue opportunity. And characteristically or historically we’ve been very successful in doing that. That’s why we say that this huge new customer growth should bear significant dividends over time.
As far as the launch of the 10,000 Plex, what we’ve talked about is that we plan to have all the reagents in hand by the end of this fiscal year to create the product. We’re on a path to do that. Development has been successful so far and that we will launch the product sometime in 2023. I would be surprised if we launched that in the first half of 2023. It’s more likely to be in the second half just based on the usual needs to productize this to take the data from 7,000 Plex and ported over to 10,000 Plex for some of our customers. So I would anticipate it would be in the latter half of the year. But we’ll talk more about that as the project progresses.
Dan Arias
Okay. Thanks very much.
Operator
Thank you. And again one moment for our next question. Our next question will come from Kyle Mikson of Canaccord. Your line is open.
Kyle Mikson
Hey thanks. Roy and Shaun, could you talk about how much business has been delayed to future quarters? Maybe you like quantify that in dollars or at least qualitatively? And then much related to that, how much revenue from EPIC and MESA sample processing was recognized during the second quarter? Thanks.
Roy Smythe
As I mentioned Kyle there were several million dollars that were delayed at the end of the second quarter, because of slowing of contracting of existing deals, and I would characterize that in the high single digits of millions of dollars that were delayed, and will be pushed forward. And hopefully most of that will come into the fourth quarter. There’s a chance that some of that will be pushed even further and that remains to be seen.
As far as revenue from EPIC and MESA just to remind you and others as we’ve talked about previously, EPIC and MESA were investments, they are not top line revenue generating deals. The MESA deal was an investment and a modest number of samples to run on our platform [Audio Gap] was an investment and a modest number of samples to run on our platform to be able to take our existing cardiovascular risk models.
And again just to remind you we published a seminal study in a major journal just recently on cardiovascular risk in science translational medicine that got a fair bit of attention to take those existing models and to sort of harden them for multi-ethnicities. We plan to sell these tests all over the world. And for them to be useful all over the world, we need to make sure that we are making any dispensations for ethnicities that are required.
The EPIC set of samples was a larger set of samples that comes out of the UK in combination with the WHO. And these samples are being run to create our suite of cancer predictive tests. Again, groundbreaking products once launched that will tell you what your risk of developing cancer in the future is. Not early detection. It’s something a bit more compelling than that that could, obviously, sit in front of early detection platforms globally.
So these are both investments. Revenue is not being recognized from either one of these sample sets. And we’ve been clear over the last couple of years that on occasion we will be doing this. We’ll be making investments in sample sets for product development. And also to remind you that for most of these samples once they’re run that data goes into our database, which also has downstream product development capabilities and benefits.
Kyle Mikson
Okay. That was great. Thanks for that. And maybe just a follow-up. Could you clarify if the high-single-digit millions that you just talked about being kind of pushed out is that included in the guidance, or is that not included? And then maybe just like another follow-up. How material is the delay of the potential to, I guess of the kits rollout? Is that even delayed? Thanks.
Roy Smythe
So we have accounted for those contracts being pushed forward in our second half revised guidance. And again, as we have a better understanding of how those deals will be closed and again, we’re quite confident that they will be, because for in contracting, we’ll talk more about that. Sorry, the second part of your question again?
Kyle Mikson
Just the extent of this kind of slowdown, it seems of the kit rollout?
Roy Smythe
I would say it’s been relatively significant. And it’s really been significant in two ways. The first is that, obviously, it’s a way for us to expand top line revenue. There are some customers that would rather have distributed solutions and service solutions, we’re fully aware of that. And the second impact is the consequences of supply chain issues.
If one of the difficulties a customer has in sending us samples is related to their inability to acquire the infrastructure or again, things as mundane as the sample tubes they need to send those that actually is important. That obviously has an impact. So it’s impacted not only top line revenue, but also it’s impacting our sensitivity to supply chain issues.
And that’s why as I mentioned in the transcript we are working diligently on a three-pronged approach to turn what I would term right now a challenge for us not having a number of distributed solutions into what I believe over the next couple of years will be a differentiated strength for us.
When you consider lots of our ready kits — SomaLogics — I mean Illumina’s launch of our co-branded products into the market which will be again transformational I believe for the proteomics industry; and third, our development of follow-on chip-based products with our acquisition of Palamedrix.
Shaun Blakeman
I would just add regarding the guidance again that it does not contemplate a marked improvement in the macro environment. So although to Roy’s point as we look at our pipeline and where we are in the known contracting process which is how we’re building this and adding on more conservative assumptions based on what we’ve actually been seeing as of late in the market that we’re not expecting to get to that number. We’re not expecting that all of a sudden everything comes back in one quarter. We assume we’re going to continue to see modest issues in the quarter going forward.
Kyle Mikson
Okay. That was great. Thanks, guys. Just one last question for me. Given this run rate revenue kind of exiting 2022 over $20 million could the original guidance range the $105 million to $110 million could that be a good way to think about revenue in 2023?
Roy Smythe
I will know a lot more about 2023 as the year progresses and we continue to grow our commercial team and build our pipeline as a result of that. So we’ll be talking – obviously, we’re talking about 2023 as soon as that makes good sense.
Kyle Mikson
Thanks. We appreciate it.
Operator
Thank you. And this will end our Q&A session. I would now like to turn the conference back to Roy Smythe for closing remarks.
Roy Smythe
So I want to thank you for joining our quarterly earnings call this afternoon. And thanks to Shaun for his comments and our operator for assistance as well. We look forward to giving you additional updates about our business at several upcoming investor events, including participation in the Morgan Stanley conference in New York in September.
We made significant progress at SomaLogic over a relatively short period of time and have already put in place incredibly important foundational elements to create a differentiated scalable and durable proteomics enterprise and importantly a number of compelling initiatives that will contribute to that eventuality are also now well underway.
We’re both excited and confident about the future here. As a result of our hard work and your support we will unlock the power of the human proteome to enable our customers to make increasingly important discoveries and in life — relieve human suffering and together will relieve human suffering and extend meaningful life. Thanks so much.
Operator
This will conclude today’s conference call. Thank you all for participating. You may now disconnect and have a pleasant day.
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