So that makes perfect sense. We’re seeing other customers focus on oncology research and whether it’s MRD or it’s actually oncology screening, there’s a lot of research going on and an opportunity there. So the combination for Onso is we have a lot of market opportunity. I feel like our quality is still the best in the market. And so much so that we specify it in our specifications. I’m not sure the other customers or other competitors are doing that yet. But I do think at the end of the day, the market is significant, and we enjoy competing in it.
Operator: The next question is from Subbu Nambi with Guggenheim. Please go ahead.
Subbu Nambi : Hi. Thank you for taking my question. Following up on Doug’s question on consumable revenue per Revio. Your guidance seems to imply that you’re assuming $300,000 per box in full year guidance. Is that right? And if so, keeping in mind what you described on this call and in AGBT last week, are you expecting this will build momentum in the second half of the year and heading into 2025? And then I have more follow-up.
Christian Henry: Okay. So with respect to the pull-through, we — there’s lots of ways to get to the guidance. And so we won’t comment on whether our model says 300, 350, 400. What we’ve said is that we don’t know where our pull-through is going to end up. But like, for example, last week at AGBT, I did say I believe it’s going to be in the $300,000 to $400,000 range. And there’s lots of factors, of course, that would influence one way or another that I’ve already kind of been through on this call. But I didn’t explicitly — I won’t explicitly comment on whether it’s our model to get to the guidance was $300,000 a box or not. A more general comment I’ll make about the business in general is that we do see more of the revenue coming in the second half of the year as opposed to the first half.
Now this is not an uncommon phenomenon. And we don’t expect, as Susan pointed out, 45-55 is the split, which isn’t really uncommon in life science business, but we do see the business strengthening throughout the year because of these large projects, because of the growth in consumables, because of the actual opportunity set we see for Revio and Onso over the course of the year. And so we’re excited about our ability to grow faster than the market. We do think our competitive positioning is extremely strong right now, and we just have to go execute.
Subbu Nambi : That makes perfect sense. And Christian, like you said, there was lots of enthusiasm even in our chats at AGBT last week. That said, there was the need for lower cost and more streamlined solution adjacent to sequencing costs came up and even the sequencing process. And you, of course, launched the HiFi kit, the new kits that you launched last week to address that same exact friction. What else should we think about is in the pipeline to address the same issue? And how big an opportunity is this reducing — reduction of friction both in terms of reducing activation energy, but also capturing more revenue?
Christian Henry: Yeah, that’s a great question. Thank you for it. You’re right. The new kits we’ve been really focusing on automation and reducing the friction and cost of the upfront workflow. We continue to lower the DNA input requirements, which gives you more access to more kinds of samples, more samples, all those things are critical. Other things that we’re doing to decrease friction and enable revenue growth is on the bioinformatics side. And so we continue to build out more applications that really highlight the benefits of HiFi sequencing and using long-reads. And the more of those applications that are out there, the more we can reach more and more customers, we’re also doing things on the market development side. So we created the HiFi solves consortium so that customers can work together to solve rare diseases to show how they can benefit from seeing some particular variant in a particular sample because by definition, rare disease, each single one of them is rare.
And so enabling the community is an important thing. And then finally, of course, we have a bench-top sequencer, a long-read sequencer, in development now. And once that product comes to market, that will change the capital barriers, of course, of the system and enable us to even broaden our customer base further. And we haven’t given specific timing on that, but we will certainly share updates as they are warranted. So thank you for the question.
Operator: The next question comes from Rachel Vatnsdal with JPMorgan. Please go ahead.
Rachel Vatnsdal: Perfect. Good afternoon and thanks for squeezing me in. So I wanted to ask, at AGBT, you talked about some of this cautious capital spending that you’re seeing at customers. And so you noted that you’re starting to explore giving discounts to customers on Revio, but then requiring higher minimum spend on consumables to kind of alleviate some of that capital purchasing dollars. It’s almost more of a reagent rental model. So can you spend a minute talking about that for us? Have you started to use that go-to-market strategy this year? And then if so, how should we think about that impacting ASP as we model Revio for this year as well? Thank you.
Christian Henry: Rachel, it’s a great question. Thank you. Yes, we are exploring alternative business models or economic arrangements that still get us to the same place with respect to Revio, but as perhaps a customer pays more for consumables and less for their instrument. We — last year, we implemented a new leasing partner. That new leasing partner gives us the ability to do more creative financing arrangements where the leasing partner takes some of the financial exposure, but we obviously get the benefit to our customers, and we still get healthy revenue from that. and so we’re managing through this period by starting to think about how we experiment with different models to see how we catalyze, how we continue to catalyze and grow the market.
The vast majority of our sales are still going to be traditional sales as we’ve historically done. And so I don’t think anyone should be thinking that we’re fundamentally altering how we think about generating revenue and the geography of revenue on the P&L. But I do think at the margin, some customers might benefit from more reagent rental type programs. And the implication of that would be that would be, you would likely have higher consumable revenues. And effectively, what the Street would see is lower instrument ASP maybe a little bit. But I think that when you think about 2024, the real impact to ASPs and consumable revenue probably isn’t that significant really. I think at the end of the day, it ends up being much more of a marketing tool and a way to get into customers, and then they will decide how to deploy whatever opportunity that we provide them.
So we’ll see how it goes, and we’ll keep you guys posted.
Operator: The next question is from Mason Carrico with Stephens. Please go ahead.
Mason Carrico: Hi, guys. Sorry if this has been asked already, I hopped on a little bit late here, but you guys have talked about these larger sequencing projects coming online in the back half of the year. Is there any way to frame up the magnitude of these projects in terms of the growth implied in the guide, I mean, ultimately, I think the question is how derisked is the revenue baked into the guide related to these projects? How much visibility do you have into the timing and ramp of these customers scaling them up in the back half?
Christian Henry: Thank you, Mason, for the question. It’s a good question. And the reality is any time you have a large project, large projects are highly variable with respect to when they start. But once they start, they crank. And so watching when they actually start, of course, we are doing everything we can to accelerate them. Some of these projects that we’re seeing certainly already have samples banked and ready to go and those most likely to get going sooner than others. That might be prospective kinds of studies. When you think about, okay, what’s the magnitude of any particular project, probably the best way to think about it is to apply a cost per genome, for example, and then multiply it by the number of samples that the particular project is.
So if you have a 5,000 sample project at a $750 price per genome or whatever price you want to use, you can do the math and figure out what that looks like. And then you have to assume they have to buy capital along to run. So that can kind of give you a sense of what the magnitude of any particular project. With respect to our guide, we were actually pretty — because the volatility or the variability of when any particular project starts, we took a pretty conservative view as we’re baking in those projects into our guide, because we really want to make sure that we put out responsible guidance. And we’re not so dependent on one project, or one as maker break for the year. so to speak. But I do think in 2024, you’re really going to start to see the turning point here, where several of these projects start to get kicked off.
We already are seeing some, right? All of us is moving along. We talked about the GREGoR Consortium project. And so we talked about Singapore starting later this year. And so the — we’re really seeing it. And it’s super exciting because every time we go to one of these conferences, more samples get added to the funnel and significantly more samples. And so now it’s a question of timing and execution, and we’re ready to — you can be assured we’re ready to go.
Operator: Thank you. This concludes our question-and-answer session. I’d like to turn back to management for any closing remarks.
Christian Henry: All right. Well, we want to thank everyone for hanging in with us. I know we’re a few minutes over time today. We expect 2024 to be an exciting year for the company, and we appreciate everyone’s support. We look forward to seeing you at the various conferences over the course of the quarter and on our next earnings call. With that, we will end this call. Thank you.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.
