Azenta, Inc. (AZTA) Earnings Call Transcript & Summary

Great. For our next panel here, we're going to do a presentation with Azenta. They're going to be diving into some of their genomics business. And representing Azenta today, we have Sara Silverman, who is Head of IR; and Andrea O'Hara, who is a technical specialist within the genomics business. So Sara, I'll let you go ahead and get started here.

Okay. Great. Thanks, John. It's really great to be here at the UBS conference. We've had a great day of meetings, and we're really excited about this presentation we're about to do. So we're going to do an overview of the business as we typically do, but we're going to do something extra, a little special today. We have Andrea here, and she's going to do a deep dive into our genomics business. I get the question a lot from investors, from analysts. They say, what about your genomics business is differentiated? How do you support the customer? And I think after her presentation, you'll get a much better sense of how we're able to interact with the customer to bring some of our high-value genomic solutions to the customer setting. Before we get started, I do have to mention our safe harbor statement. We will be referring to certain forward-looking measures as well as certain non-GAAP measures, and the GAAP to non-GAAP bridge is in the appendix of the presentation, and the presentation will be available on our Investor Relations website after the presentation today. So now to the overview of the business. Truly a high-value portfolio of market-leading offerings in cold chain and sample management. We view ourselves as a sample-based solutions provider, really supporting the customer in and around the sample. When you think about it, biological samples are core to all of R&D. And our customers, whether they be pharma, biotech, academic, they really need a partner to support them in management of the sample, storage of the sample, analytics of the sample. And we have that capability across the portfolio to enhance value. The next slide here, you'll see just a broad snapshot of the company. First, I'll start with some of our market-leading offerings, starting with automated ultracold storage. This is really at the DNA of what we do, is automation. This is where we started the Life Sciences business about a decade ago. And it's where our capabilities and automation really differentiate us from some of the other manual ultracold offerings. Next, biorepository services. We offer sample-level biorepository outsourced services where customers can send us their samples, and we'll store them on our site. And it's a really unique offering that I'll go into more detail later in the presentation. Genomic services, I'll be brief on that one because that's where Andrea will go into more detail later. And last, cold chain solutions for emerging markets. This is where we've recently added to the portfolio with B Medical, and we're able to bring cold chain solutions to emerging markets such as South America, Africa, Asia, a real expansion of our footprint in that regard. So just a few statistics for you. Truly a global business. We serve over 180 countries. We have over 3,500 employees and over 9,000 customers. When you think about the scientists that use our products and services, that 9,000 number is even greater. Moving to the center, you'll see a graph of our products and services portfolio. We have about 45% of the portfolio segmented into products. And these, you can think of things that -- physical objects that we deliver to the customer and they use on their site. Services, the other 55%, is really an outsourced service. And in our case, it's genomic services as well as biorepository services. I'll touch briefly on our financial results. We did report our fiscal third quarter last week. I'll know -- we've performed pretty well. We had 8%, a strong organic growth number, excluding consumables and instruments. I highlight that for the reason that consumables and instruments is an area of the portfolio which saw COVID boost during the pandemic and is in a bit of an oversupply. When you kind of extract that area of the business that's experiencing some market dynamics, the core business is really performing quite well. And to round it all out, you can see on the bottom, our revenue growth over the past 5 years has been really strong. We're coming up on a fiscal year that we're about to do just under $660 million of revenue based on our revenue guidance at the midpoint. And last but certainly not least, our cash position, really strong. We had over $1.3 billion of cash or, I should say, approximately $1.3 billion of cash at the end of our fiscal third quarter. And I'll also note, third quarter was our first free cash flow positive quarter as a standalone life sciences company. So really strong business, poised for growth and profitability and a really strong balance sheet to back it up. Next, this is a snapshot of our -- the wheel you saw in the previous slide of products and services but with a bit more detail. And I want to get a chance to dive in a bit deeper here so you get a sense of what we really do for the customer in and around the sample. The first piece is our genomics piece, and that consists of our Next Generation Sequencing business, Sanger Sequencing and Gene Synthesis and other preclinical and services in and around genomics. This is really a nice piece of the portfolio, pretty unique to have a company that offers such a breadth of genomic services. We often have customers come to us for one type of sequencing or synthesis service, and they find we can be a one-stop shop for them. And that is highly valuable to our customers and our ability to build long-standing relationships with customers across, especially in the R&D space, where we really excel in our genomics business. The next piece I'll touch on is our Sample Repository Solution. This is what we also refer to as our biorepository business. Customers send us samples, and we'll store those on our sites. Our largest site is in Indianapolis, and we store over 50 million samples worldwide. What's really unique about this offering is we offer what we refer to as sample-level visibility and sample-level service. So the customer sends us their sample collections. We scan them in sample by sample, and the customer is able to log on to a portal and see their global sample collection not just across one site but across all of the sites that they might store samples with us. And you can imagine how valuable that is in terms of research and discovery, clinical trials. Just to be able to have that data at your fingertips is really valuable. And when the customers see that we are able to be such a core partner to them, it really is a game changer and something that they can't do on their own. Moving over to the product side of the portfolio. I'll touch briefly on consumables and instruments. There, we sell consumables such as PCR plates, tubes, instrumentations such as automated cappers, decappers, a nice complementary aspect to a lot of the other things we do in and around the sample for the rest of the portfolio with, again, a gearing towards automation, especially in the instrument side. Ultracold systems and services, really a unique and special part of the business. The 2 product lines I'll highlight is our ultracold large stores as well as our cryogenic automated stores. The ultracold stores -- well, I should say the large stores run from anywhere from ambient to negative 80 degrees Celsius. They're probably our biggest CapEx item in the portfolio, starting at -- think of $1 million and that storing 1 million samples and up and really a nice way for our customers to find the value of automation on their own sites. So we will sell those and install them at the customer site for a variety of applications. The automated cryo store, really unique on the market. There's not really any other commercially viable automated cryogenic solution like it. The alternative is manual. And it has really strong applications in cell and gene therapy, mRNA, IVF, just areas where security of the sample, tracing of the sample is just incredibly critical for that customer. The last piece in products is B Medical. That's the recent addition to our acquisition, a really nice expansion to emerging markets, an extension of our cold chain capabilities and an area where we'd like to kind of grow our Azenta presence in the future. So now that you've gotten a sense of everything we do in and around our portfolio, let me talk a little bit about how we're so well strategically positioned to address market needs through having this portfolio. First, the trend I'll talk about is outsourcing. Outsourcing is really a significant trend, especially for the services side of the business, whether it's genomic services, biorepository services. There's a multitude of reasons why a customer may choose to outsource, whether it be for needs of expertise. A lot of times, customers may not have that expertise around certain sequencing equipment. They may not have that infrastructure I mentioned around having sample-level visibility of their collections. So outsourcing is really a significant growth trend for us in the services side of the business. Next, it's just the need for more cold chain. More and more drug approvals are requiring some sort of temperature control. We're just incredibly well positioned for that. Through our automated solutions as well as through our biorepository, we can support customer at some of the coldest and most challenging temperatures through our portfolio of offerings. Last, cell and gene therapy, a really strong market for us to operate in. But even beyond just kind of the cell and gene therapy, it's just the idea that genomic analysis is core to research and development. Almost all clinical trials or research and discovery have some aspects of genomics analysis tied to them today, whether it be target identification, determining whether a certain mechanism is effective. And we're really a great partner to our customers in that regard. So here, you'll see a chart of our growth record over the past, give or take, 10 years. And you'll see we've had a really strong track record of growth, a 33% CAGR. On the chart, the purple shows our organic growth; the blue, our acquisition. So a nice mix of growth, both through organic means and M&A, really capitalizing on the growth drivers and the portfolio that I've mentioned. Next, let me bring in a little forward to today and give you a quick update. We've talked in the past couple of quarters about the business realignment that we're doing, and we're moving from the 2 operating units and 2-segment structure to the 3 operating units of Sample Management Solutions, which consists of our biorepository business, our consumables and instruments business and our automated stores; Multiomics, which is really our genomics business but acknowledging that we've moved beyond the genome into epigenomics, proteomics; and B Medical as its own operating unit, really acknowledging its unique commercial drivers and customer base. We think this realignment will really enhance our commercial strategy and support growth because it aligns us with the customers we serve and is really effective in that way. If you think about it, the customer making a decision for multiomics, the timing of making those decisions is a lot faster than, say, whether you're going to transfer your entire sample collection. So we've realigned in this way that we think will be really effective commercially going forward. This new structure goes into effect in our fiscal '24, and that starts on October 1. Here, I'll touch briefly and give a reminder on our capital deployment strategy. I won't go into too much detail, but just as a highlight, we're in the midst of a very significant share repurchase program. We've committed $1 billion to return to shareholders through the end of this calendar year. As of last week when we reported earnings, we had already returned over $760 million, yes, and 16 million shares. And we're on track to return the full $1 billion by the end of the year. After we've completed that program, we'll still have about $1 billion of cash available for deployment, whether that be organic, inorganic or returned to shareholders. It's just a really strong balance sheet position for us. Before I wrap up, I'll just -- you'll see on the screen our guidance we provided last week. This is not an update or restatement, just for reference, the metrics we set out for the fourth quarter. I'll highlight, we're expecting fourth quarter organic growth, excluding C&I that I mentioned earlier, of about 3%. We think in the current market, this is a really respectable growth rate for us. And for the full year, we're, like I said, just rounding up to about $660 million of revenue at the midpoint. In conclusion, we have a really differentiated end-to-end sample management portfolio, over 600 -- at a $660 million run rate, positioned for growth, margin expansion, really strong end markets that I mentioned. We have a global platform, and the platform has been built in a way that can support additional capabilities, new customers. And so we're really excited about it. And to kind of round it all out, a great balance sheet, and most importantly, a really great team of employees. So with that, hopefully, you've learned a little bit about Azenta. And now Andrea will take you through a deep dive of our genomics portfolio.

Hi. I'm Andrea O'Hara. I am one of the technical specialists within the GENEWIZ multiomics team. And I work with our customers and our customer-facing team to help bring all of these solutions to play. So one thing we think about with multiomics is what is multiomics. What are we looking at? What are we thinking about when we're thinking about multiomics? Multiomics is the integration of multiple different omics to give us one final net result. And typically, we're thinking about the following things. We're thinking about genomics at the DNA level; epigenomics or the regulation of that DNA; transcriptomics, the RNA level; and then proteomics or proteins. And all of these work together in concert to give us that final phenotype for the individual, and that can be something healthy, a healthy individual or an individual with a specific disease. Now what this actually means though is that if we think of the human genome or a human, there are over 20,000 protein-coding genes with many different factors and modifications impacting it. And so when this comes together, that 20,000 genes turns into a tenfold 200,000 transcripts. And from those 200,000 transcripts, we can get millions of proteins, which are then modified to tens of millions of proteins. And so while we might think why not just look at our next stage of proteins, we want to keep in mind here that 10 million might be too high of a number to look at, so we want to focus on all of these together to get the best results. Now why are we thinking about multiomics? When we think about that DNA level, this is really telling us what can happen in the individual. The transcriptomics is a nice standard. It tells us what appears to be happening. The protein is really what happens -- what is actually making it happen. And again, we might want to focus just on that protein level, but that 10 million is really going to be too difficult for us to parse apart. So when we think about multiomics, we really want to put that all together and think about that full central dogma. That's going to give us the greatest insight into the phenotypic state of the individual. This is where we can put things together. We can put together biomarkers, expression patterns and proteins to help us get the best net results here, which can ultimately lead to more specific drug targets and a better overall understanding of the mechanism of any particular disease. How is this all achieved? There is a number of different ways that we can look at all of these different omics. So here on the left-hand side, I'm showing you a very complicated slide. That is just showing you all of the different types of multiomics that we offer. I'm not going to go through all of these in any great deal. But the moral of the story here is, as I like to say, if it can be sequenced, we can do it. There are so many different ways for us to get at all of these different types of omics, but we have solutions across the board, which means that we're a one-stop shop with full end-to-end support and integrated analysis. We specialize in clinical sample handling, transportation, storage and analysis. And some of this is achieved with our on-site regulatory lab, including the CAP/CLIA environment. And that makes us a trusted partner for top pharma, biotech and academia. Why do these customers choose us? There's a number of different reasons here that really set us apart from our competitors. This includes the fact that we do offer -- in addition to that very comprehensive portfolio itself, we offer a very complete end-to-end workflow. This includes extraction through analysis, and this really sets us apart from our competitors. In fact, we have, in addition to just those standard, tried and true tested samples, over 100 different types of samples that we have processed for our customers. We offer both our standard workflows as well as some very custom and exploratory workflows, which means that if somebody wants to try sensing new, unique or interesting, we're able to take that on. And we have a lot of experience with these complex, difficult or potentially poor quality samples. And so at the end of the day, we've sequenced over 200 species. This includes some very standard plants, animals and humans as well as some more interesting things, including microbes, bacteria, viruses. We have had gigabases upon gigabases that we sequence and again, over 100 samples, which is at the end of the day, why we're a trusted partner for over 4,000 institutions, including all top 20 pharma. We achieved this using a number of best-in-class platforms. This includes the actual sequencing platforms as well as adjacent tech that's associated with that. We also offer the highest level of certification whenever possible. So with Illumina and PacBio, we are a certified service provider. We also offer the latest and greatest in that tech, including the NovaSeq X Plus and the PacBio Revio sequencers. We also offer complementary technologies, including Oxford Nanopore, and then again, technologies associated with the upstream components of these downstream projects. That includes things like Olink, NanoString and 10x Genomics for single cell. And within these spaces, we offer the highest-level certifications whenever possible. So for Olink, we have the platinum certification for their panels. And for 10x Genomics, we're 1 of 3 certified global clinical research organizations, which is where we really can bring all of this experience together. So as Sara mentioned previously, when we're thinking about multiomics, this is just one step of a much larger workflow, where we're thinking about all of those touch points for the sample. This starts with the upstream planning, sample sourcing, sample collection, management of those samples, transportation of the samples, storage of the samples. And then that downstream component of actual processing and multiomics. And here's where I'm going to focus the rest of our talk. So I'm showing you a very simplified overview of study design and multiomics processing, and we're going to take a look at these different nuances here, reasons why customers might choose us for any one part or all of these parts of this particular process. So in a normal workflow, we would anticipate starting out with study planning and sample sourcing as needed. Once those samples have been collected, we're then going to put the samples in long-term storage. You see, I actually have a bunch of different arrows coming in and out of long-term storage, and that's because while an ideal situation would be starting the workflow from the front end, we might sometimes encounter a scenario where a customer has samples that are archival in storage that they want to now do a study or build a study off of. And they might have designed it in advance, or they might be designing it now. So there's going to be a lot of movements around when these samples are actually collected and when we're actually going to process them. Suffice it to say that planning and storage are all going to be key components of that downstream multiomics analysis. And within that multiomics space, we're going to be thinking again about those 4 main points: genomics, epigenomics, transcriptomics and proteomics. So if we zoom in on that one, again, we're thinking about those areas of what can happen, what appears to be happening and then what's actually making it happen. Let's start with that top level, which is the DNA, which is genomics and epigenomics, identifying what is potentially possible in these individuals. Now within the genomic solutions, we offer a number of flexible and overlapping options to meet the needs of our customers throughout the life cycle of their study. This is really critical because, again, when we're thinking about general genomics, this is something that a number of different providers might offer, but they may not offer the flexibility that we do, the comprehensiveness and the ability to take this throughout their entire life cycle of the study. First off, we have whole genome sequencing. This is the most comprehensive, and it's the traditional gold standard. We offer this with our 2 sequencing platforms, Illumina and PacBio, and it's the most ideal for sequence variant and structural variant detection. Again, this is a very classic and old approach. However, we find that most of our customers are actually going to start with whole exome sequencing. This is really focusing on the 99% of the protein coding genes, which means that we're really excluding a lot of material, which means that it's really ideal for first pass and functional analysis. In a typical workflow, a customer would opt for whole exome sequencing and then maybe pick a subset of samples for that deeper whole genome sequencing. Again, because we offer both of these levels of testing, we can use that exact same sample for both analysis. Now as a customer progresses through other studies, they may want to then design and develop a targeted sequencing panel. This is really critical for late stage because at that point, everything has been identified of interest. And we can use these for diagnostics, for inclusion/exclusion criteria, a number of different options. And we do have the capabilities, with our CAP/CLIA lab, to actually move this into an accredited workflow. So because we offer this extensive portfolio and we have the flexibility for RUO versus regulated, we can take them throughout their entire set of needs, really important for customers that are forward thinking. Next up, we have the epigenomics. This is looking at those regulatory areas. Epigenomics is really an emerging field, meaning that it's still very exploratory. There is a lot of room for growth. And this is where our cutting-edge methods really set us apart. I'm showing you our sort of top 3 high-level views. There's actually a number of different other offerings within the epigenetics space. But these are sort of the most common ones that we might be looking at. Starting off with methyl sequencing. This is a genome-wide analysis. And it's the most traditional approach but not necessarily, again, the most cutting edge. More and more, we're seeing a huge growth here in ATAC-Seq and ChIP-Seq. ATAC-Seq is focusing on just the subset of the genome that's open or available. It's a nice standing and really complements RNA sequencing, which I'll get to in a moment. And it doesn't require a lot of background knowledge. Again, because this is exploratory, that means that there isn't a ton of information in this space. So our customers do need something that's flexible. And ChIP-Seq is very, very specialized, very cutting edge, but this is sort of the next wave of epigenomics. The important part here is that because we offer the flexibility of these tools, we will find that our customers might use complementary methods depending upon where they are within their stages. And again, offering all of them offers them the ability to flex as needed. Next up, we have our RNA component or transcriptomics, and this is also going to include immuno-profiling. And that's talking about the immune repertoire of a sample. If we're thinking about an individual with a particular disease that is then going to be treated, we want to think about how does their immune system respond upon treatment. So looking at the immuno-profiling is also critical when we're thinking about any sort of clinical trial or testing. And again, this is really thinking of an intermediate standing. It's not as complex as that protein level, but it's still more complex than the DNA level, but we're actually seeing what's at play. Now RNA sequencing is our best seller and is our most comprehensive offering. This is absolutely the thing that most customers are asking about. But when we think about RNA sequencing, we still have a lot of options within it. So I have a picture here of some LEGOs. Bulk RNA sequencing is really thinking about just taking whatever this piece is, whatever this tissue simple is, whatever this LEGO thing we've made is and looking at all of the pieces together. Single cell is going to be taking it apart and looking at each of these brick by brick, sorted in some fashion. Here, I'm showing them by color. Spatial profiling is really looking at it as a whole, so I can see that what is this thing that I'm looking at. So we want to think about these 3 different metaphors because there are times that we're going to use any or all of these tools depending upon the questions we're asking. Within bulk sequencing, this is our tried and true, the most popular classic. It is, again, that #1 bestseller within that subset. Again, we offer extraction through analysis. This is really critical within this particular phase as RNA is very difficult to isolate, and our customers might not have optimal sample type. And this is a space that our competitors do not offer services here across the board. So this really helps us to set us apart. Additionally, we offer analysis, which is ideal for customers that don't have the bioinformatics capability, especially true for some of our academics. We offer within this bulk space, a lot of different subtypes, including things like ultra-low input, custom and specialty options. Single cell is, again, looking at this at a deeper dive. Single cell is a really complex workflow, and we have a lot of experience. In fact, we're one of the most experienced service providers within this space, which is why we are 1 of the 3 global providers within this space with that certification. We have a number of proprietary approaches that help us to deliver some higher-quality results. We also offer a number of different prep workflows besides the standard single-cell workflow, and we have a downstream interactive analysis tool. And here's just sort of a look at where some of these different optimized protocols can really help us to set us apart. The thing to keep in mind here is that while a number of customers that use us for single cell might actually already even have their own single cell box, we're bringing that experience, expertise in this very complex workflow. And that really helps to set us apart, and it's why customers choose us for this particular process. So this actually starts out with shown in that blue box on the left-hand side. The customers will isolate the cells and then freeze the cells using a specialized protocol. This goes above and beyond the standard protocols where we're actually going to identify different approaches based on their cell type because some cells are much more fragile than others. They'll then ship it to us where we'll [ solve ] the cells and assess viability. The next step here that's proprietary is the removal of the dead cells. This is to help clean it up. As typically for the standard approach, we need live cells for processing. Once we have all those cells ready to go, we're going to load them into the 10x Genomics box to do that workflow on the bottom. I'm not going to go into the details on that one. But even once that's complete, we're going to then do standard library preparation and sequencing. As you can see, just based off of this picture alone though, it's a very complex workflow and one that needs a lot of experience and support. Now once everything is done, we also offer a comprehensive interactive analysis tool. I'm showing you a little video graphic here of how it works. This is a deep data analysis platform with the scientists in mind, not the bioinformatician in mind, really ideal for somebody such as myself who does not have a bioinformatics background but wants to be able to make intelligent insights into their data. Again, all of our customers are experts in their respective fields. However, they might not be experts in next-generation sequencing. So this allows them to use this tool to do an analysis with nice point-and-click options, publication-ready figures, helping them to get everything ready for their next stage. Now the final level here is spatial profiling or what I like to call the final frontier of transcriptomics. This is really critical for the complex tissue types. Now we're actually looking at the sample in the context of that 3D space. With spatial profiling, we can characterize the heterogeneity of the sample while still preserving that cellular context. And for spatial profiling, we use the NanoString platform. Spatial profiling is really critical for irreplaceable archival samples. At Azenta, we're used to dealing with precious samples. All samples are a little precious, but these are the irreplaceable ones. We only have one shot to get it done. We need to get as much information out of it as we can, and we need to treat it with utmost care. So this starts out with the customer actually shipping us over the sample, and then we will have an interactive meeting with the customer to identify regions of interest and then process with the spatial profiling system to actually pull out either proteins or RNAs of interest. And once we have all of the transcriptomics complete, the last phase would be proteomics. Now proteomics, again, is that actual workhorse here. The proteins are what's getting it done. Again, we don't want to look at all 10 million. That's probably too much data to look at. So we want to use the information that we've gleaned from upstream to guide our approach for this downstream proteomics and really focus and target on the proteins of the main interest. Proteomics is a really excellent space for us to be in. We are an early adopter in this very attractive emerging market that has huge growth opportunities. I would say this is the area where we are most poised for growth, considering just how much expansion has happened within this space. The tech that we selected, we picked specifically because it is highly sensitive, highly specific and very easy to use. The sensitivity and specialty component is key because that means that all together, we can get a high throughput resolution with a very low input amount. Really critical because, again, our customers do have very precious samples. They want to get as much out of any single sample as possible. So if we're thinking about a sample where I can get that DNA, the RNA and the protein from the same sample using only a few microliters, that's going to be really key, and they may be able to bank the residual for future downstream studies. Now all of the next-generation sequencing I was discussing earlier is really focusing on that human sample or animal sample, whether it's healthy, diseased or treated. But next-generation sequencing is really critical for other components of this workflow, including the confirmation and validation of an actual biological therapy. So when we think about the development of a therapeutic, we are going to have the model development and process optimization within the preclinical stage. And this is actually where we get to look at the actual product itself and confirm what it is and make sure it's everything we want, no more, no less. We have a few different solutions within this space, one that you may have seen before, includes our AAV gene therapy. We have a very, very comprehensive solution here. It's ever expanding and at this point, nearly complete. I'm showing you in sort of that green turquoise color all of the different touch points we have within this workflow. But it starts out with our sequencing solutions and then -- sorry, synthesis solutions and then sequencing solutions throughout the workflow. Next-generation sequencing, in particular, is critical and key in the confirmation and validation of the AAV product to make sure that we have exactly what it is, that it's fully intact and that we don't see any variability within it. We also have some additional offerings within the therapeutic space outside of AAV, and this includes mRNA therapeutics and vaccines. This is really the wave of the future. We have a number of synthesis options for actually generating the mRNA therapeutic as well as sequencing. This is a proprietary approach that we have to confirm and validate the mRNA therapy or vaccine. You might remember that a lot of the COVID vaccines came out as being mRNA vaccines. So this is one space that's absolutely emerging and continuing to grow and expand. And so this is a big area of growth for us that we see in the future. And that brings me to Azenta's mission statement and commitment. At Azenta, we are here to offer you an end-to-end solution, streamlining your clinical testing and getting you through the entire time course of your clinical study. This starts out with the actual sourcing of your samples, collection and kitting as needed, transportation of your samples to our long-term storage. In long-term storage, we will protect your samples, retrieve them as needed and then deliver them to wherever they need to go. Hopefully, you're sending them back to us for the downstream processing. At the downstream processing level, we can process your samples however you need to, analyze them and then deliver you high-quality results. And with that, we are ready to take our questions.

Great. Well, thanks for that great overview of the business there on the genomics side. And to start off, the company had pretty solid fiscal 3Q results. I think NGS grew double digits. You did mention some of the new platforms in there like the NovaSeq X and the Revio. Can you just talk about how those 2 platforms or even new launches are driving some demand within the genomics business?

Absolutely. Do you want to go first?

So within that space, as I mentioned, so we do always want to invest in the latest and greatest technology, especially in well-established players. So with the Illumina sequencing, we have already invested in the NovaSeq X Plus. This really offers us additional throughput and capacity and also offers less expensive sequencing, which we can pass along to the customer. With Revio in particular, we're noticing a big drive and a push towards long-read sequencing from new customers that are now interested in this tech. One thing that we do find is that for customers who might be interested in investing in that equipment on their own, if they have no experience with long read, they tend to do a proof of principle or POP study. And so we get those as a customer, but also some of them might opt to stay with us and not invest in the tech themselves but just to invest in utilization of the platform through us. So we are seeing a lot of interest and new lead generation within the Revio space in particular.

Yes. And I think the investment is just really consistent with how we think about that business. We're always trying to be at the cutting edge of technology, and we're always going to be looking at emerging technologies, investing where customers want us to provide services. And this -- the investments we've made in NovaSeq X Plus, Revio, really consistent with that philosophy of supporting customers with the latest and greatest.

And one thing you mentioned there was that interest in the long read demand. Illumina has their complete long reads, kind of the extension of the synthetic long read. Others have tried to create assays there. Just do you do anything with those assays, any demand there from customers you can comment on?

Yes, that's a great question. So I think we do very much keep our ear to the ground with other emerging tech. Also, PacBio has their short read option. So within that space, we are overly attuned to that market, and we're trying to gauge customer interest. Currently, we've really just invested in the ones that we historically have offered that we already have that business built into it, but it's something that we do monitor to see if we have an emerging demand that might indicate a reason to add them in.

And I wanted to ask a question. You showed a nice graph there on the bulk, the single cell, the spatial. We had a fireside this morning with NanoString, and they were talking about some of that transition. They believe that spatial is where they think the industry is going. Have you noticed anything? I think you're using the GeoMx for the assays. Anything on the shift from single cell to the spatial demand there? I guess any additional granularity and color you can provide on those trends?

Sure. So I think that historic -- recent history, single cell has been really strong. And I see that we're really, at this point, hitting an inflection point where we're poised to really pivot over to spatial heavily. One thing for us to keep in mind is that while we all -- our customers really do want to be on the cutting edge, a lot of them don't want to necessarily be the first. They want to have a small amount of establishment. And so we've reached this real point where we're seeing more and more emerging within spatial that's going to start to drive a much higher gain there. So I think that we're -- as a market, it's extremely poised for growth like now.

I think that really sums it up well, and I think it's consistent with we're, in a way, platform agnostic, right? It's whatever technology our customer is looking for. And there's going to be cases where they're looking for single cell, looking for spatial, looking for both, and we can really support them in that.

Maybe just one follow-up on that. I think you had just the DSPs that there's also some new spatial imagers on the market. Have you looked at that? Just any color from customer interest there?

Absolutely. So again, that is something that we really keep a close eye on, and we work closely with these tech providers to actually get insights into where that is going, where it's moving. So currently, we're using GeoMx. But obviously, yes, we're taking a look to see if we move into CosMx, which is NanoString's next option that involves deeper single cell within the 3D space.

Okay. And then I'll ask one more here and then turn it to Liza. But on gene synthesis, I think this was an area where you saw some headwinds in fiscal 2022. Second quarter -- this is the second quarter now with Q-over-Q growth. Can you talk about some of the visibility in this business outlook? And what's your thoughts for the remainder of the year?

Yes. So the 2 quarters, the sequential growth are significant for us. As you mentioned, I think it shows the progress that we've been working over the past year, really focused heads down in terms of getting through some of the headwinds we experienced late last year. I guess it was third quarter last year when we had some of the logistical issues, the China shutdown, really coming through that and starting to see some positive traction. And I think the business -- in the environment we're in, we think we're operating really well. And when we talk about the changes we've made over the past year from a commercial perspective, we've made a lot of investment in our sales team, especially around the technical expertise in genomics. We said on the -- in the third quarter call, we added about 20 specialists, which is meaningful for us. And those specialists are able to provide sort of additional expertise, especially in synthesis, especially NGS, where it's just getting those projects across the finish line. Being able to interact with the customer with respect to the project they're working on has been really effective. And again, we're just plotting the way forward and feel good about that progress.

I guess taking advantage of Andrea since she's here. That was a really interesting slide on methylation and the different methylation techniques. It would be great to kind of understand. You said kind of customers shifting between -- to talk a little bit about the different use cases and kind of methylation techniques that you're kind of seeing and also kind of how you're thinking about -- or if there's anything interesting that you're seeing or evaluating. I think that feels obviously kind of a lot of companies trying maybe different techniques and different resolutions.

So absolutely. So one thing to really consider within all of those different options is some of it will really be customer-specific in terms of what they're studying and what the baseline is there. I would say that epigenomics is definitely -- it's more of an emerging space. It's not as mature necessarily. And so depending upon what historically is already known about that might drive what they choose to do. Some of these workflows require a lot of sets of samples, controls and baseline studies. Some of them are a lot more plug and play, which is why I would say ATAC-Seq is one that is a really nice middle ground wherein there's not a lot of background needed, and they really can just go and run. And it has a more direct readout towards RNA sequencing. So I would say that's sort of our most popular option, but there is so many other options besides those 3 that I showed that you can really start to kind of play within this space and tweak depending again on what the questions are that the researcher is asking. One other thing to consider, too, when we're just talking about single cell versus bulk is that there's also flexibility in these spaces. So for example, single cell, we can actually do the RNA and [ attack ] in the same cell. So we're getting a very, very direct readout, really key for some of these researchers that are trying to do that deep dive, very comprehensive at the single cell level.

I'll just do one more. But the SRS facility in Boston, maybe kind of asking about that and kind of if you could even just speak about kind of the backlog and kind of how to think about the space and ramping there.

Yes. So this is a facility we're really excited about. We'll be opening the facility later this calendar year. So we're a few months out from the official opening. In terms of how we view this facility, one, it's a great opportunity to be in the local Boston area with so much pharma, biotech, even academic research going on, clinical trials going on. So we really view that as an asset. It's also going to be our kind of next-generation facility. Starting from day 1, it's going to really feature automation. And in fact, we'll be installing our own automation at that facility. We've been -- we've talked previously, we're adding automation at our facility in Indianapolis. But this is going to be a really effective way to manage the fact that the Boston area tends to be much more expensive, as you can imagine, on a square foot basis than Indianapolis. So that's really key. And we think being close to the customers, especially in cases where they may be comfortable outsourcing the samples but maybe some of them they want right in their backyard as opposed to in the Midwest, this is a great option for that. And we'll continue to talk about filling that facility as we get closer. But it's going to be a really nice addition for the portfolio for us reaching some of these customers.

Great. Well, I think with that, we're right up here on time. Andrea and Sara, thank you very much for joining us today, and thank you for everyone listening in.

Thanks.