IsoPlexis' (ISO) CEO Sean Mackay on Q4 2021 Results - Earnings Call Transcript

IsoPlexis Corporation (NASDAQ:ISO) Q4 2021 Earnings Conference Call March 2, 2022 8:30 AM ET

Company Participants

Carrie Mendivil – Investor Relations

Sean Mackay – Chief Executive Officer

John Strahley – Chief Financial Officer

Conference Call Participants

Max Masucci – Cowen and Company

Vijay Kumar – Evercore ISI

Puneet Souda – SVB Leerink

Operator

Good day. And welcome to the IsoPlexis’ Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder this call may be recorded.

I would now like to turn the call over to Carrie Mendivil, Investor Relations. You may begin.

Carrie Mendivil

Thank you. Earlier today, IsoPlexis released financial results for the quarter and year ended December 31, 2021. If you have not received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to [e-mail].

Joining me today from IsoPlexis are Sean Mackay, Chief Executive Officer; and John Strahley, Chief Financial Officer.

Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release IsoPlexis issued today. For a more complete list of description, please see the Risk Factors section of the company’s quarterly report in Form 10-Q filed on November 12, 2021, and the Company’s other filings with the Securities and Exchange Commission.

IsoPlexis intends to file its annual report on Form 10-K for the year ended December 31, 2021, next week. Except as required by law, IsoPlexis disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, March 2, 2022.

With that, I'd like to turn the call over to Sean.

Sean Mackay

Thanks, Carrie. Good morning. And thank you everyone for joining us. I’m pleased to welcome you to our fourth quarter and full year 2021 earnings call.

On today’s call I will provide an update on our commercial execution and discuss our investments to drive future growth. The I will turn the call over to John for a review of our financial results and outlook for 2022.

2021 was an exciting year for IsoPlexis. We've made significant progress across multiple fronts as we drove commercial adoption of our single-cell proteomics instruments and consumables, and finished the year with $17.3 million in revenue, 66% year-over-year growth over 2020.

At IsoPlexis, we have developed a proprietary technology platform based on the unique intersection of proteomics, single-cell biology and functional multiomics, as we work to enable a greater understanding of in-vivo biology. There is a clear need for understanding functional proteomics that is not able to be captured in the genome and to analyze single cells for early signal to respond to disease that cannot be detected at the bulk level. We look at single-cell indicators to understand the earlier sources of therapeutic response and disease activity to drive novel and advanced curative medicines for our customers.

We are creating a unique position within the proteomics market. Today, we have launched our IsoLight and IsoSpark instruments and are seeing adoption across many different areas, including the high growth segments of cell therapies, immunology, immuno-oncology and inflammation research.

As the pioneer of single-cell proteomics, we have recently unveiled our Superhuman Cell Library in industry-first mapping of the proteomically driven cells to determine how the human body responds to complex disease.

In addition, longer term, we are developing our single-cell, multi-omic, duomic platform, which will expand the multi-omics market with a uniquely clinically relevant solution. For the first time, researchers will be able to sequence the supercharged proteomic cells we uniquely detect, which will enable them to model and predict much deeper layers of clinical immune biology.

Our strategy is focused around a set of key themes that will drive our growth and lay the foundation for long-term success. These areas include scaling customer adoption by expanding our installed base of instruments, as well as driving increased utilization within each customer account, significantly expanding our test menu through the expansion of our Superhuman Cell Library, increasing the number of high impact, clinically relevant publications, demonstrating differentiated utility of our technology in large end markets, executing on innovative product roadmap, including the breakthrough Duomic system targeting uniquely, clinically relevant multiomics. And finally, demonstrating operational excellence and supply chain management.

We have demonstrated tangible progress in each of these strategic areas throughout 2021 and will continue to drive further progress throughout the course of this year. Starting with customer adoption, we sold 98 new instruments in 2021 bringing our total instruments in the field to 209. We experienced a strong fourth quarter of shipments with instrument demand driven by the differentiation of our proteomics single-cell platform, particularly around the large areas of cancer immunology and cell and gene therapy.

To drive lasting growth, we are continuing to execute on our land and expand strategy that we laid out on our last earnings call. First, we focus on landing key accounts across top pharma companies and comprehensive cancer centers in which we have demonstrated meaningful progress throughout 2021. Starting with the top pharma as of year-end, we passed an important milestone with a 100% of the top 15 pharma companies now using IsoPlexis for functional cell analysis. We have already begun expanding into these key accounts as several top pharma companies now have multiple IsoPlexis instruments. In fact, we have now placed our seventh system into one of the top five biopharma companies demonstrating the value our instruments are bringing to these customers.

This is the core of our customer adoption strategy. We are laser focused on getting a high degree of champions within these companies, which is a critical part of the first few months of utilization. Once these customers are generating data and establishing normal usage, our sales force starts promoting the value of our technology across different application areas. We are heavily investing in this expansion strategy, which allows us to create a robust pipeline within a wide number of large accounts.

Ultimately, this strategy demonstrates the utility of our systems as we’re able to leverage our customer success across multiple sites, as well as across numerous groups and applications. On the academic side, we are making great strides on our key account strategy as well with 67% of U.S. Comprehensive Cancer Centers now using IsoPlexis technology. We have now placed our fourth system at one of these major centers with additional orders coming in.

This is a great proof point that although the first system can be the most challenging to place, we are able to gather a momentum with subsequent systems. This brings confidence in our sales strategy and our performance for the coming year. This is just the beginning as we are laying the foundation to continue to proliferate our systems. We are well-positioned to continue growing our installed base to meet the increasing demand for our tools. Importantly, although our focus remains on placing instruments, our consumable business is also growing, and we are pleased with the positive utilization trends we are seeing with customers so far.

Moving on to our Superhuman Cell Library, a big focus over the last year has been to move beyond T cell profiling to characterizing the various proteomic equivalent cell types that affect human health. We have significantly expanded the number of cell types customers can analyze, which has expanded in our test menu. Our system can now profile a wide variety of critical immune cells in the adaptive and innate areas, as well as structurally important cells to blood flow and tissue formation.

We have categorized these cell types into our Superhuman Cell Library, which we are unveiled in January as the industry first mapping of proteomic driven cells. We are leveraging our growing expertise of single cell proteomics to define what a superhero cell looks like and then developing a massive cell library based on our customer’s findings across excel types in the human body. This expansive platform allows their technology to be more broadly applicable across research areas and lays the groundwork for customers to continue to add on to the characterization of these uniquely predictive cells to advance human health.

Turning to publication. There are now 100 publications demonstrating the necessity of our unique single cell proteomic platform to drive the earliest signals of response in key high growth markets such as cell therapy, cancer immunology and infectious disease. There are wide range of use cases for our unique single cell proteomic analysis in Superhuman Cell Biology that are exemplified through an increasing velocity of ultra-high impact clinically relevant journals. We believe the growing collection of peer reviewed publications highlighting the value of the IsoPlexis platform is a leading indicator of traction and key end markets.

We have previously highlighted various nature medicine publications that demonstrated our expanded cell therapy offerings and showed that our superhuman proteomic cells are indicating the earliest sources of long-term response. Today, I would like to highlight two recent publications that go beyond cell and gene therapy to underscore how we are advancing the pipeline into immune health and immune monitoring for cancer immunology as well as COVID and other infectious diseases.

Immune health and immune monitoring for cancer immunology represents a larger end market than cell gene therapy for predictive response. Publications have shown our polyfunctional superhuman cell metric to be a key element in the ability for the immune system to orchestrate a long-term response in cancer patients. This indicator is valuable as we demonstrate the utility of our technology to customers. In the last six months, multiple studies have been published that indicate that changes in polyfunctional superhero cells predict cancer immunology therapeutic response intense cancer in a durable fashion.

Studies in Journal of Clinical Oncology, Journal for ImmunoTherapy of Cancer and Blood Advances conducted at Memorial Sloan Kettering, MD Anderson and more highlight the role of these predictive polyfunctional super cells. The second area I want to highlight is advancing the pipeline more deeply into immune health and immune monitoring for COVID-19 and inflammatory disease. We recently announced the publication in cell, where researchers use our single cell functional proteomic technology to identify factors that may indicate patient inflammation after COVID-19 infection also known as post-acute sequelae of COVID-19, PASC or long COVID.

In this study, our technology is used to profile the inflammatory immune response of COVID patients, which may be key to the development of preventative measures and treatments. These high-impact publications are a leading indicator of strength in larger markets like cancer immunology, and also in new markets as we demonstrate a broader ability to access the superhuman cell library, as it is applicable to infectious non-immune disease, transplant biology in any areas where patients have a hyperactive autoimmune response.

Turning to our product pipeline, we are making significant advancements in our four core product families, which include the single cell secretome, intercellular signaling, our multiomic Duomic platform, as well as our bulk proteomic platform CodePlex.

Keep in mind, all of these four platforms run on our installed base systems, meaning that the channels we built provide us the opportunity to deliver these new chip platforms to a high growth existing end market. First, we are advancing our single cell secretome test menu with the comprehensiveness of the superhuman cell library.

Second, we’ve made advancements in our single cell signaling platform, a single cell alternative to traditional bulk proteomic Western blot. We’ve added pipeline assets for immune signaling to compliment tumor signaling, both of which represent a need for deeper proteomic pathway single cell resolution.

Third, our new single cell multiomic platform Duomic has demonstrated advancements at a rapid pace. The need for novel high utility single cell multiomic solutions begin in earnest as the method was highlighted as nature’s method of the year recently in 2019. We are excited about standing the single cell multiomics market with a uniquely clinically relevant solution.

For the first time, customers can connect our unique functional proteomic data from single cell with the genetic drivers of these highly sought-after proteins for pharma and clinical research applications. In November, at the Annual Meeting of The Society for Immunotherapy of Cancer or SITC, we demonstrated that Duomic now has the ability to capture concurrent T-cell gene expression and functional proteomic information simultaneously for the in cell profiling in particular CAR-T profiling. Effectively, we demonstrated proof-of-concept in sequencing a variety of our proteomic super cells for the first time, which lays the groundwork for key discovery and development applications at the intersection of immunology and cancer.

We are focused on three large end market multiomic applications, which include immune expression in proteomics, tumor expression in proteomics and T-cell receptor expression in proteomics. As a reminder, you’ll be offering our Duomic platform via early access new service in the second half of 2022 with a full product launch in mid-2023. We are very excited for what’s ahead with our pipeline and look forward to providing updates in the near future.

Lastly, we are investing in our operational infrastructure to support our rapid growth. Over the second half of 2021, our operational team expanded our supplier relationships substantially reduced supply chain risk and ensured our ability to meet increasing instrument demand in 2022. We continued to build raw material inventory in the fourth quarter of 2021 where necessary to mitigate lead time on critical and single supplier components further ensuring our ability to execute upon our revenue plan in 2022.

We are committed to operational excellence and will continue to iterate on our processes to support future growth. This has been a moment at here at IsoPlexis, I’m very proud of our growing team for all their work throughout the year as we transition to a public company. We are looking forward to continuing to provide our customers, high utility, highly differentiated data that accelerates their work in critical areas of human health. We will focus on growing our installed base through commercial excellence. And finally, we will also continue to provide updates on exciting advancements in our differentiated product roadmap, all built upon our leadership in leveraging superhuman cell biology.

I will now turn the call over to John for more detail on our financials.

John Strahley

Thanks, Sean. Total revenue for the fourth quarter of 2021 was $5.5 million up 63% from $3.4 million in the prior year period. These results were primarily driven by an increase in instrument sold. Total revenue for the full year of 2021 was $17.3 million, a 66% increase from $10.4 million in the prior year. Product revenue for the fourth quarter was $5.3 million, a 65% increase compared to $3.2 million in the prior year quarter. Product revenue for the full year of 2021 was $16.2 million, a 74% increase compared to $9.3 million in the full year of 2020.

As a part of that product revenue, we made significant progress with consumables generating $4.8 million in 2021 compared to $1.9 million in 2020. We are encouraged by the growth in our consumable revenue to-date, and in the near-term, we continue to focus on increasing our installed instrument base to create a strong foundation for long-term growth of our consumable sales.

Our commercial team continued to drive adoption and sold 37 instruments in the fourth quarter, bringing total instruments sold to 98 in 2021. As of yearend, we have now sold 209 instruments since the initial commercial launch in late 2018. Service revenue for the fourth quarter was $246,000 compared to $201,000 for the prior year quarter and service revenue for the full year of 2021 was $1.1 million in line with the prior year period.

Gross profit for the fourth quarter of 2021 was $2.8 million compared to $1.8 million in the same period of 2020. Gross margin was 51% in the fourth quarter compared to 53% during the fourth quarter of 2020. Gross profit for 2021 was $8.8 million compared to $5.4 million in the prior year. Gross margin for 2021 was 51% compared to 52% in the prior year.

As mentioned on our last earnings call, gross margin expansion is one of our key areas of focus as we continue to scale our business. Over the next five years, we expect gross margin to gradually improve and settle into the low-to-mid 70% range. Operating expenses for the fourth quarter of 2021 were $27.5 million compared to $11.2 million in the fourth quarter of 2020. The increase was primarily driven by headcount expansion across the organization and the additional costs of being a public company. R&D expense was $7.1 million, an increase of $4 million, and SG&A expense was $20.4 million an increase of $12.3 million primarily driven by increased personnel and related expenses as well as marketing and promotional activities.

Total operating expenses in 2021 were $85.1 million compared to $32.7 million in 2020. R&D expense for 2021 was $21 million compared to $11.2 million in the prior year, and SG&A expense for 2021 was $64.1 million compared to $21.5 million in 2020. Our net loss was $25.3 million for the fourth quarter of 2021 compared to $8 million in the fourth quarter of 2020. Our net loss was $81.6 million for the full year 2021, compared to $23.3 million in 2020. We ended the year with $127 million in cash on the balance sheet. As we move into 2022, we will continue to be thoughtful about investing our capital to maximize our ability to service our customers, rapidly expand our installed-base and continue to expand our clinically relevant product roadmap.

Now turning to our revenue outlook for the full year 2022. We expect revenue for the year to be between $26 million and $27 million representing growth of 51% to 56%.

At this point I'd like to turn the call back to Sean for closing comments.

Sean Mackay

Thanks John.

As we mentioned earlier, we are excited about the progress we made as we transition to being a public company in 2021 and accelerated our commercial adoption while also adding significantly to our product roadmap. We look forward to another exciting year in 2020, as we believe our unique single cell proteomic solutions will continue to make a deep impact on our fast-growing customer base in large clinically relevant end markets.

With that, we will now open it up to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Tejas Savant with Morgan Stanley. Your line is open.

Unidentified Analyst

Good morning, guys. Thanks for taking the questions. This is Edmond on for Tejas this morning. Few questions from me, first on the guidance. The guidance range is relatively tight. I was wondering if you guys could provide some details on the puts and takes that could get us to the low-end and the high-end of the range. And where do you see the most room for driving upside in the guidance?

Sean Mackay

Hey, Edmond, it's Sean. Thanks for that question. So, let's start here. Our range of 26 million to 27 million is based on really continued expansion of our install base at a rapid rate. And we're excited to grow at this at least 50% plus growth rate for the year and put up another strong year in the evolution of IsoPlexis as a meaningful player in the fast-moving single cell and proteomics spaces. We do expect to continue the strong pace of instrument sales in accordance with the guidance we put forth. So, this would be at least 130 instruments placed this calendar year. This means we'd beat around 340 instruments by year end, an exciting position to be in given our expanding consumable go through. We're excited also about the IsoSpark in particular, continuing to be a key catalyst of our growth academic centers and biotech. Beyond that pharma base where of course we've sold to 15 – the Top 15 pharma. While this product was launched in 2021, we expect the system to be over half of our instrument sales in 2022, as it was in Q4 of 2021.

As far as the timing goes, our revenue ramp is expected to be similar to what we have done in the past, which is typically more heavily weighted toward the second half of the year. We also see consumable pull through increasing throughout 2022, taking into account the large increase in placements, which makes consumables a more significant portion of our revenue. As we discussed our 100 publications are a strong leading indicator of purchases for high utility used cases in our large cancer immunology, in cell therapy end markets. And as we move into other key research areas, we expect pull through to be at least 40,000 per unit on the basis of our single cell proteomic leadership. With upside coming from expansion of our superhuman cell library, which we outlined on the call, as well as new applications like single cell signaling. This progress on our business sets up for an attractive, longer term financial profile as we move towards the higher margin razor blade model, we seek.

This recurring and predictable higher margin consumable revenue really demonstrates the purpose of why we are so focused on investing to expand the installed base now. As far as our salesforce goes, as you mentioned, what are some of the catalysts? A key driver of our ability to deliver this year and exceed expectations is our maturing salesforce, with total commercial head account of 190 as of the end of 2021. The vast majority of these salesforce have now been seasoned at the company well trained and able to produce results that can have each major U.S. and international region creating more predictable revenue monthly, which is very important for us exceeding our goals this year.

You also ask a little bit more about upside and perhaps you're alluding to the pipeline. So, we do have our Duomic revolutionary first of its kind clinically relevant Multiomics offering coming in the second half of this year as an early access service, which is very exciting. After our acquisition of a wide body of sequencing IP last year, and our investment in development we're now generating novel data in key end markets that is generating significant customer interest as I mentioned on our call. While this is pretty exciting, we're not actually baking this into our revenue profile for the year consistent with what we discussed in the last couple quarters. We're really using this service launch this year and they have to for customer learning and to prime the market for a much broader launch in 2023. Therefore again, as you alluded to, there is some limited upside in the services aspect of our business due to this revolutionary Duomic platform coming online as a service in half two of 2022. And we're excited to bring this to what we think so far is a very excited customer base.

I'll stop there then.

Unidentified Analyst

Great. Thank you. Thank you for all the color there. I'm not sure if I missed this on the call, but can you remind us where your current academic in pharma split is right now? And on that have you seen any signs of spending conservatism, particularly on the side with the recent chatter about cash constraints?

Sean Mackay

And just, you mentioned one of the – I'll get to the split, which end market did you say on the constraint side?

Unidentified Analyst

Biopharm, it’s mid-cap biopharma.

Sean Mackay

Mid-cap biopharma okay. Yes. So right now, we're still maintaining that sort of roughly two-thirds biopharma labs and one-third academic as we have consistently. From our perspective, the budgetary sort of outlay for what we expect this year hasn't been significantly constrained by let's say, broader changes as you mentioned in conservative potentially driven by the capital markets. I think a couple factors to think about: one cancer immunology in cell and gene therapy for biopharma in particular continues to be of high import for at least expanding their markets from an end market basis. And as you know, biopharma in particular has had an influx and cash over the past let's call it couple years to invest in expanding their pipelines.

I think the second thing is we continue to see our differentiated publication profile in these two key end markets as driving significant, let's call it allocation of mind share and then allocation of budget for our technology. So, while there may be some broader conservative in the future, we don't see that really affecting intra demand as it is today.

Unidentified Analyst

Great. And one last one from me and I'll hop back in the line. I was wondering if you can comment on some of the recent trends you've been seeing in February from a COVID perspective on the lab operations side. And I appreciate the color that you guys provided on the actions that you've taken to meet these supply risk, but have there been any signs indicating that there will be improvements or deteriorations in the supply chain pressure side?

Sean Mackay

Why don't I do this? I will speak to the lab operations. I'll pass to John more broadly about COVID impacts on our guide for the year. But just specifically about lab operations we see that I think typical to what's happening around United States folk have been one more accustomed to dealing with variants. So, whether it's wearing masks or getting vaccinated and being able to continue operations as such. So, I think that's sort of one key aspect to why we didn't see a significant flip in let's call it the instrument driver, which again as we spoke to as our – in our guide, that's the significant driver this year.

Secondarily with lab operations, of course, coming into the beginning of the year, there was some caution, especially around an early part of January, but this doesn't stop the projects that are supposed to be occurring with milestones for our customers throughout the first quarter. And as people have come back after the peak in the variant, we still see those projects continuing significantly with the same; let's call it expectations of our customers throughout the year which from a lab perspective drives the similar amount of usage to what we would've expected.

John, why don't I just pass it to you on how COVID impacts our guide for the year as well?

John Strahley

Yes. And so, our revenue ramp for 2022 should look similar to what we've done in the past. So typically, more heavily weighted to the second half of the year, Edmond. So roughly 40 – it's about a 40%, 60% mix between the first and second half of the year for us. And so, from our perspective given everything, Sean just described we feel confident in the guidance we just gave that $26 million, $27 million for the full year. We are – here we are March 2nd, so we've provided the guidance two months into the year and we're using all available information regarding the impact of COVID over the last several quarters. And we do think that most labs are back to their normal cycle. At this point, just lastly and Sean said it, at this point the COVID impacts have not changed the demand for our instruments from a budgetary perspective from our customers and we continue to see strong end markets for our technology.

Unidentified Analyst

Great. Thank you, guys, very much.

Sean Mackay

Thank you.

Operator

Our next question comes from Max Masucci with Cowen and Company. Your line is open.

Max Masucci

Hey guys, thanks for taking the questions. Maybe shifting over to the software side, just big picture here; can you just speak to the automated analytics software? How much of a differentiator the software capabilities are or should be in the future? And then any feedback you received from customers around, ease of use, quality of insights and whatnot?

Sean Mackay

Yes. So, when you think about products and you think about end markets, and you sort of – we’re coming back to what we just discussed as far as our end market being pretty heavily weighted to that biopharma biotech. Part of that is driven by our ability to actually have a proteomic in single cell system that's pretty easy to use, as you know. Our software and our hardware proteomic automation plays a big part of that. And that’s why as far as you look around any single cell company, as far as a revenue mix, we are the most heavily weighted to the biopharma biotech area because of this, let's call it, mix of clinically relevant solutions. So that's kind of weighted towards more preclinical Phase 1, Phase 2, as we know in our TAM and also this sort of ease of use of accessing the data from our single-cell proteomic systems.

As far as the software goes, we think this is an important growth driver this year as well because when people get access to our publications as a leading indicator of let's say directly what they can apply for either their cell therapy programs or their cancer immunology programs today, the next thing we do as we're taking them through an initial sort of let's call it a deeper dive into our tech technology after we've confirmed interest in our tech, is that they go through a software demonstration. And that software demonstration is basically to illustrate, this is not downloading six open-source pieces of software from online and trying to cobble together your own informatic understanding, which is actually pretty typical in our industry. This is taking a really baked together, push button software suite, pushing a few buttons on the left side of the screen, and then kind of combining and comparing samples with, yes, it's, we have a big data platform, but you can actually use specific buttons and just compare five samples or ten samples or twenty samples, and come to conclusions on differentiation of these kind of what makes a better cell product or what patient has a higher probability of being a responder in accordance with your biomarker research.

So, as you probably guess that ease of use factor, automate that – very unique automation we have on our proteomic instrument in the unique end-to-end nature to our single cell software is a driver of why we're excited about our clinically-relevant end markets.

Max Masucci

Great. And then for the single customer that's brought in, I think, it was seven systems so far. I'm just curious if that's a mix of IsoSpark and IsoLight? And just how they are using all of those systems either independently, or together in terms of the research projects are pursuing?

Sean Mackay

Yes. So, it is a good question, I think, right. If you look at specific customers like that, you might surmise that a lot of them, especially on the biopharma side are pretty heavily on the IsoLight side of things, it's also a function of like, if you purchase five of something across labs and you like them, you might want to just stick with that specific kind of type and throughput of product because you have success with it, right? So that maybe a little more heavily weighted towards IsoLight mix.

But as far as the usage of it, you can look across our publication literature and say, hey, in the last – and I alluded to this on our call on the last six months, we've had a number of pretty exciting and major clinical publications, which take checkpoint inhibitor drugs that are obviously the main focus of a lot of the top pharma to combine drugs on top of that, to get a longer term durable response in their patients in various solid tumor indications, we've shown that our super cell polyfunctional predictors are key to sort of uncovering or deconvoluting the mechanism of what makes a good responder across the number of these PD-1, anti-PD-1 combination trials.

And what that does is sort of demonstrate that for a major pharma, it's very interested in that next wave of where they are going to get a more personalized response that are checkpoint drugs. Again, the largest oncology drugs in the world we have a significant contribution to that.

So, it's not just one lab sort of running five systems and them saying, I need a six. It's more like there's so many avenues, even within one pharma trying to attack this problem. In word is spreading that you need the IsoPlexis solution to uncover these super cells. And that sort of makes it a lot kind of, I wouldn't call the word easy, but a lot more straightforward to sort of say, here is a customer reference within your own institution of thousands and thousands of people. Here is their demonstrated utility. Here is not only this published literature showing that you need this from the major clinical trial centers, but even within your own company, you're generating real time, high impact data.

So, it makes that sort of customer reference call that you need when you are in our stage, which is we're not in the early adopter stage, we're really in the early majority in some of these places. You need those customer references to just increase the volume of that sort of virtuous circle of customer expansion if you know what I mean, Max.

Max Masucci

Yes. Yes, got it. Just final quick one. Just would be curious if conversations with the procurement folks have rebounded as the Omicron impacts subsided stated, just what the latest dynamics you're seeing? Are you still seeing any disruption in procurement facilities or if that's largely rebounded at this point?

Sean Mackay

So, there was, from our perspective, it's rebounded because there was that, I think, it's pretty broad based in our industry, but in December, there was a bit of a – especially with academics, a short period where people wanted to pause on anything that was not specifically sort of COVID diagnostic related and had something to do with equipment. What we've seen is from a biopharma perspective, biotech, there has been no pauses on procurement. And if anything in the academics, are back to utilizing the funding that they have, especially the growth in NIH funding, which is well-known this year to sort of accomplish their organizational goals, which really involves success in their clinical trials and their clinical programs. That's a major of every academic medical center across sort of indications, because of course, cancer is still a super, high need area of research that they all want to expand in.

Max Masucci

Great. Thanks for taking the questions.

Operator

Our next question comes from Vijay Kumar with Evercore ISI. Your line is open.

Vijay Kumar

Hey guys, thanks for taking my question. Sean may be back on this guidance question can you talk about the visibility you have here? Obviously, we've been hearing about supply chain impact. I think 3Q you didn't have a push out a system placement. So, talk about the supply chain situation and your visibility into this guidance.

John Strahley

Hey, Vijay, it's John. Let me just take that on the supply chain. You are right we did share on the last call supply chain issues and logistic issues did present some increased pressures on, primarily on, prices for materials as well as extended lead times for certain items. So, in response to those pressures, we built up our inventory. We did that throughout the second half largely of last year, including into the fourth quarter and the goal there was to fulfill instrument demand in 2022 without [indiscernible].

Sean Mackay

Vijay [indiscernible].

Vijay Kumar

Hi John, sorry. Can you hear me? Yes, can you guys hear me?

Carrie Mendivil

Yes, we can hear you.

Vijay Kumar

Hi, Sean. Apologies. Is this better?

Operator

Ladies and gentlemen, please stand by. You may begin.

Sean Mackay

Hey everyone. Sorry about that. Dialing into a landmine, I think, for some reason the internet dropped off at our Branford headquarters. Apologies for that.

Operator

Vijay your line is still open.

Vijay Kumar

Hey guys. Sean, John, can you hear me?

John Strahley

We can hear you now. Yes.

Vijay Kumar

Fantastic. Apologies. I think lost you guys there for a bit then John was talking about the visibility and supply chain.

John Strahley

Yes. So just a couple things quickly. On the supply chain end of things, as you mentioned last year, we did have some impact on a pricing basis and a supply basis just to sort of you mentioned the Q3 impact. What we did was really build up our inventory and prepare for 2022 so that we would have no impact on customer demand. You see a little bit of that in the sort of cash increase throughout the inventory increase throughout the second half of the year. And so now we’re comfortable with really having what we need to sort of execute in 2022 without disruption.

Vijay Kumar

Got you. And then one related question, Sean on this. What is I guess, are there any gross margin impacts here – sharing about shipping costs going up in that, what are your operating expense assumptions here for fiscal 2022, a lot of inbounds I’m getting or on the liquidity position and your capital needs just given the cash balance you have right now? Is there a situation where you feel like you have enough cash on hand to drive the business or perhaps talk about the liquidity position in general and what kind of OpEx ramp are you assuming?

Sean Mackay

Yes. So, what I’ll do first is, so to the first question you had because I can answer the OpEx question. What was the first question you had? Sorry, I was just dealing with some technical difficulties over here.

Vijay Kumar

Sorry. On – are there any gross margin impacts here on increasing freight costs, et cetera?

Sean Mackay

I – from our perspective, we really do have some faith in being able to expand our gross margins as we look forward, I think we wouldn’t expect like you alluded to that sort of Q3 dip in the gross margin that is largely due to supply chain. It still at this stage, our revenue makes is mostly impacted by selling instruments. And as mentioned, we expect customer utilization to continue to grow over time and revenue makes will get to more of a 50/50 instrument and consumable split by the end of 2023.

There is going to be leveraged as we scale operations to focus on consumables and as our rev mix because we more heavily weighted toward consumables. A key driver of our margin improvement plan is indeed this consumable margin improvement process. So, we’ll – later this year, we’re going to be coming out with more information on how we plan to make strides in this area.

Our specific strategy has always been to improve our ability to source reagents and use high quality reagents. So, we will have more to describe there soon. Importantly, and Vijay, this is how we think of the really the mid-term and the long-term as our financial profile improves towards the higher consumer revenue, higher margin razor blade model that we seek. And this is an easy sort of math function based on the 340 instruments we expect at the end of this year.

This recurring and predictable higher margin consumable revenue will demonstrate the purpose of and why we’re so focused on investing to expand the installed base now. How about with the second question you asked Vijay, I can pass to John…

Vijay Kumar

On the OpEx assumptions, Sean, yes.

Sean Mackay

On the OpEx assumptions. So, John, why don’t you go forward?

John Strahley

Thanks, Sean. Vijay, just wanted to share, do you hear me, I’m back on?

Vijay Kumar

Yes.

John Strahley

Thank you so much. Okay. So OpEx, so for full year 2021 our OpEx is approximately $85 million and that’s reflecting – reflected our continued investment in the commercial team, the future technology platforms, in addition to the infrastructure and expenses associated with being a publicly traded company. So, a couple of points about going forward one, we are maintaining rather than increasing that spend, that drove the commercial and operational success last two year.

So, we had success in growing the business by expanding our commercial force generated 66% revenue growth last year. And of course, now with today’s guidance projecting 50%-plus revenue growth this year. Two, we will be doing regular evaluations of the productivity around our three cost drivers. So that’s the commercial, the operational and development to make sure that capital is most efficiently allocated. And last thing I would say, Vijay, we do seek to continue on our path to profitability within the next five years, which of course requires expanding our installed base and driving that razor blade model that Sean just described.

Vijay Kumar

And sorry, just to clarify that John, when you said maintaining OpEx spend, is that as a percentage of revenues or from a growth perspective or is that on a dollar basis? $85 million in terms of OpEx spend – yes.

John Strahley

Yes. I think in terms of absolute dollars Vijay.

Vijay Kumar

That’s helpful, John. And maybe Sean one – last one for you. Maybe bigger picture question for you. Now I think one of the questions I get is, it’s an interesting technology IsoPlexis, but could this become a standard in the industry when you look at cell and gene therapies. I found your Superhuman Cell Library initiative interesting. Maybe talk about what kind of traction are you getting from that initiative. Are biopharma customers now looking at your platform or perhaps becoming a standard, what needs to happen before we see broader adoption amongst your customer base?

Sean Mackay

So, yes, just a topical question for us Vijay as we sort of think through how we plan for the sort of three to five years. I think the question is standard even interesting. One, what makes standard, this is as we’ve gone through at times, we looked at the places that have had 1,000 and 5,000 of systems. And part of that is a two pond and gas set is the sort of validation – you need the validation in the clinically development literature to go to do what you’re doing, and you need high differentiation or also of course you become a commodity and so just to sell on other methodologies.

I think last year was really important for the validation part, right? You – we – you and I have personally talked about this proliferation of nature medicine, after nature medicine and clinical publication cell, Journal of Clinical Oncology just showed that if you care about measuring the immune system in response to or my drugs that activate the immune system working, IsoPlexis is going to have a place to play relative to the flow cytometer solution you use today, right?

Because IsoPlexis form the function of proteomic aspects that’s highly differentiated versus the surface immune cell profiling aspects of flow cytometry make. And what that means, right? If the promise sort of our 100 publications is just a very leading indicator of us becoming a standard relative to flow. What this means is we have a much broader ramp ahead of us than behind us, right? Because there’s 40,000 flow systems. Every time even the pharma where we have seven systems. When I – when we go tour the – we do a walk on the pharma, you see hundreds of flow cytometers around that pharma, right?

And what that means is people care about immune profiling. We’re offering a whole new aspect of analytical immune profiling. They can’t get anywhere else. That’s highly meaningful in the literature for predicting are your drugs going to work in the personalized fashion. And so, we do believe that with the right awareness building with this continued clinical validation in the literature, and with using this 190-person sales team, commercial team to our advantage to evangelize our technology.

We’re on the cusp of being a standard. I think the second aspect is, so the first aspect is being a standard. The second aspect is technology differentiation with the proteomic barcode, what we've done is created a large step function in what you're able to access from each cell proteomically, where you're only able to look at a few of these highly relevant analytes from proteins that are the business end of the immune cell, what matters to sort of a patient mounting a response against cancer, for example. We've gone from doing three to sort of orders of magnitude above that, right, per cell. And what that means is we're uncovering this highly relevant clinical biology, but in a highly differentiated fashion that no other technology can touch.

And so, it creates a confidence in our sales team being able to sell what we do, because it's high utility, high differentiation. And that's the basis of us becoming basically a standard. And the last part of being standard is, well, you have to have the validation, you have to have the differentiation, you have to have the execution to back it up. And so, our job over the next three to five years, as we've said is, we get this installed base into the thousand plus and then the thousands.

And then we're really talking about a recurring revenue consumable base business, where our customers, they are our community, right? We don't have significant barriers to entry with high capital equipment costs that we solve for that, if people have a differentiation need between the IsoLight and the IsoSpark. Now it's about showing the utility of our platform as we have and just really expanding. While as John alluded to recognizing that we are starting to see sales leverage, so sort of managing the cost basis of what we do to sell in every region in a sort of thoughtful fashion. Hope, that answer, Vijay. So, we're very excited about everything ahead of us and we see significant upside in the next few years.

Vijay Kumar

That's helpful, Sean. Thank you, guys.

Sean Mackay

Operator, we still line.

Operator

Yes. Our next question comes from Puneet Souda with SVB Leerink. Your line is open.

Puneet Souda

Yes. Hi guys. Thanks for taking the question, but it looks like most of the questions have been covered. So, with the tough technical difficulties ongoing, I'm going to wrap up my questions into one. First, is really around ASP, what do you expect the trend to be for IsoLight, IsoSpark and IsoSpark duo, if you could elaborate on that. And then, Sean, for – I know you had a number of efforts ongoing to improve the technical product marketing and follow ups and field application training improvement. So maybe if you could elaborate where those efforts stand.

And then last one for John, on gross margin, you highlighted low to mid-70%. So, could you maybe elaborate – is there any change in timeline for that? When should we expect that? And what's the sort of consumables versus instrument mix that you have expected those gross margin levels. Thanks guys.

Sean Mackay

So let me start with product mix related ASP instruments and then training. So Puneet, as you – as we've discussed, the ASP is really reflected by our changing product mix as IsoSpark make up over half of our revenue. So while we're not going to give a very direct ASP number, we're in line with the guidance we're providing and the mix that we see from IsoSpark shifting to leadership position, as far as units goes and then over half of our revenues with the overall instrument sales, it's in line with previous expectations on the evolution of ASP, as we expand this installed base. And as we discuss really the purpose of evolving the spark and offering the customers, spark, light and spark duo was to really give us more potential to have our razor blade recurring revenue.

And as we look at the razor blade side of the consumables, we do see sort of – there's no significant differences between whether buy someone's right now, buying an IsoSpark or IsoLight, driving consumable pull through today and consumable upside. As we know the capacity of our instrument, if needed is high above, even our target sort of mid-$70,000 expectation for consumable pull through in the mid-term.

So that's at least we're talking about ASP. Training, of course, training is a significant aspect of how we – one kind of, let's say, built a really strong Q4 showing, but also how we've created expectations for this year. When you – let's call it, when you digest so many new hires, as we did, when we did our crossover round with perceptive BlackRock, and now average early in 2021. You know that you need to have six to nine months to sort of ramp up and with a technology like ours, that has these key applications, but in complex end market, you may even need more than that.

And so, what we did was really invest in an internal training program. We term it our proper training program, which is basically you train, you practice, you test you train, you practice, you test, and then you practice in the field. You essentially pilot each person that comes on board. What we see is significant success in being able to communicate the product and technology in the value proposition, in a clear fashion.

And then also we see the ability to do the sales aspect of what we do, which is the commercial need, quoting understanding the sales cycle, being able to balance sort of getting the instrument in within the sales cycle so that you can get the consumable pull through. That type of training, we've really gone the team up to speed on the IsoPlexis philosophy. So, there's always a lot more training to do, especially as single cell signaling in Duomic come online, right?

Because that's just new and unique sort of single cell proteomic analytical tools that people need to be educated in the core single cell secretome business. We made big strides on training folks and there's really no stopping that as even the most astute person in the literature. There's so many new publications on our tech that come out every sort of month and quarter, that training just needs to be a fountain that sort of never stops. So, appreciate those two questions. And John, maybe I'll let you answer the third.

John Strahley

Yes. Thanks, Puneet. So, I think your question, the gross margin, the long-term plan, expansion plan, any change in the – in our timeline, the answer is, no. We're still tracking the mid-70% range for gross margins over the – in the next five years. And one of the key drivers of that, as you know, is the mix. I think that was your second part of the question between instruments and consumables. What we think is by the end of 2023, our revenue mix will be 50%, 50% instrument, 50% consumables, obviously, you have some service revenue, but roughly 50-50 split instrument consumables.

And just for some context, you look at the – our year-end 2021 and 2020 numbers, the trend is heading that way toward a more favorable or positive mix from consumables. Our consumables were about 18% of our total sales in 2020 and increased about 28% of our total sales in 2020. So, we do expect to see that trend continue and again not impacting that timeline be put forth.

Operator

Thank you. There are no further questions at this time. This does conclude the program and you may now disconnect. Everyone, have a great day.