Olink Holding AB (publ)

F:6XA

Earnings Call Transcript 2021-Q4

[Operator]

Good day. And thank you for standing by. Welcome to the Olink Proteomics Fourth Quarter 2021 and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jan Medina with Investor Relations. Please go ahead.

[Jan Medina]

Thanks, Shannon. And good morning, everyone. Thank you all for participating in today's conference call. On the call from Olink, we have Jon Heimer, Chief Executive Officer; and Oskar Hjelm, Chief Financial Officer. Earlier today, Olink released unaudited financial results for the fourth quarter ended December 31, 2021. A copy of the press release and an updated corporate presentation are available on the company's website.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the U.S. federal securities laws, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

For a list and description of the risks and uncertainties associated with Olink's business, please refer to the Risk Factors section of our final prospectus relating to our registration statement on Form F-1, File number 333-257842, which was declared effective by the U.S. Securities and Exchange Commission on July 14, 2021, and in our other filings with the SEC. We urge you to consider these factors, and you should be aware that these statements should be considered estimates only and are not a guarantee of future performance.

Also, in the remarks or responses to questions, management may mention some non-IFRS financial measures. Reconciliations of adjusted gross profit and EBITDA and certain other non-IFRS financial measures to the most recently comparable IFRS measures are available in the recent earnings press release available on the company's website.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 14, 2022. Olink 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, except as required by law.

And with that, I will turn the call over to Jon. Jon?

[Jon Heimer, Chief Executive Officer]

Thank you, Jan. And good morning, everyone, and thanks for joining Olink's fourth quarter and full year 2021 earnings call. I will start with a review of our operating results, highlight some key accomplishments and current strategic objectives and discuss our guidance for 2022. I will then turn the call over to Oskar to provide more details on our financial results and our outlook.

2021 was a transform - transformational year for Olink, including our successful IPO, strong execution of our strategic plan and the achievement of numerous research and commercial milestones. I would like to thank the entire Olink team for their dedication and commitment through a period of tremendous growth for the company.

Olink was well positioned exiting 2021, and we are optimistic about the company's prospects in 2022, expecting another year of strong growth in the next-gen Proteomics market still in infancy.

First, I'd like to provide a high level overview of our financial performance in the fourth quarter, and Oskar will go into the details later in the call.

I'm pleased to report that we delivered fourth quarter revenue of $43.7 million, representing growth of 61% compared with the fourth quarter of 2020. Full year 2021 total revenues was $95 million, a 76% increase compared with the full year 2020.

During the fourth quarter, which represented 46% of full year revenue in 2021, we experienced some headwinds related to the impact from the COVID uptick across multiple geographies. Despite this initially unexpected impact, I am pleased that the team was able to manage through and deliver revenue that was above the high end of our guided range.

Customers are adopting Olink's [ph] platform at a rapid pace, which is very exciting and at the same time, posted some challenges. The current seasonality of our revenue base is a function of where we are in our life cycle as a fast grower in a promising market and customer adoption curves, which are fluid. We do believe this current seasonality will remain in the near term, but over time, we expect it to become less pronounced.

A few more words on COVID. Our business in 2021 and how we are contemplating its potential impact in 2022. The increase in pandemic induced business friction that we experienced during the third quarter progressed largely as we had anticipated through the fourth quarter. It was with the dedication of Olink's entire organization that our strong execution offset these headwinds during the quarter.

As we consider the more recent rise of Omicron and its possible effect on 2022, we've not seen significant additional headwinds arising from it, as of now, but continue to monitor developments as others in our industry have discussed.

Despite the COVID headwind, we continue to execute on the multiple revenue drivers in 2021, which will continue into '22. For instance, we see a very strong traction with Explore externalization at next-generation sequencing labs and reached a total of 25 installations by the end of '21.

We recently began delivering Explore 3K. And just as important, we've expanded Explore's reach within existing NGS customer installations placed earlier in this year and in 2020. All these factors combined helped drive strong Explore utilization during the quarter, which Oskar will detail in a bit more later.

Explore, a new product for us last year, represented 69% and 62% of our total revenue in Q4 and full year 2021, respectively. And with this positive performance, total kit revenue growth rebounded strongly in the fourth quarter, up 83% over Q4 2020, while service revenue growth was 37% compared to Q4 2020. We continue to make progress with our shift towards kits with kits representing 35% and 28% of total revenue in Q4 and full year 2021, respectively.

While the Explore pull-through will vary from quarter-to-quarter given the size of Explore installed base and seasonal trends, we continue to anticipate additional progress towards increasing our revenue mix towards kits in 2022.

In the fall, we began delivering Signature, and we are pleased with the 28 placements recorded during Q4. Signature has expanded our reach within the low and mid-plex market. And it's interesting to note that some Signature customers are also existing [ph] Explore users, growing their activity with the Olink platform beyond high-plex. We believe this demonstrates the wide range of capabilities, our technology and its ability to address multiple use cases at the same customer.

It's clear to us that our technology and commercial strategy is resonating with customers across industry, research and academia. And including our presence further downstream with our partner, Octave Bioscience, in multiple sclerosis, Olink's values being realized throughout the entire spectrum of Proteomics applications.

We feel we have a very solid commercial plan to support our guidance for 2022. We remain very confident in our competitive offerings, demand from current and prospective customers and are enthusiastic about the many opportunities we see arising for Olink to have an impact in both research and clinical applications.

Our competitive position is stronger than ever in NGS and qPCR with Explore 3K and Signature, and we're confident in our ability to execute and expand in this largely untapped next-generation Proteomics market.

As market awareness and adoption continues to accelerate, we have invested to support the company's position as the market leader. Spending was higher than planned due to the opportunities that we continue to see developing with customers, most of which will take time to cultivate.

We anticipate 2022 will be another year of investment to support our growing leadership position in Proteomics. And given our successes with new investments in the Explore platform, our earlier results with Signature and other commercial opportunities we are pursuing, we believe we have a unique ability to drive improved return on investment over time for Olink with these initiatives. Oskar will get into the details on the financial guidance in a few minutes.

But I wanted to be clear that despite this accelerated level of investment, we are well capitalized to deliver on our existing strategic plan and return to profitability, leveraging the strong unit economics, leverageable business model and strong marketing position.

The combination of all drivers of our business results in 2022 forecasted revenue to increase between 42% and 53%, achieving a range of $138 million to $145 million. We expect continued seasonality this year with quarterly trends similar to 2021. And over time, we do see the potential for our seasonality to become less pronounced as our revenue and customer mix continues to expand. This guidance also assumes that the existing pandemic environment and resulting operational friction are roughly similar to what we're experiencing today.

Beyond this year and over the long term, we remain optimistic about our competitive position and our ability to drive strong revenue growth still being at the very front end of the $1 billion opportunities in Proteomics research and diagnostics.

Underlying our optimism for 2022 are many of the positive factors that helped drive a strong 2021. Explore continues to gain strong traction in NGS with new prospects and existing customers. Landing and expanding are both proceeding very well. And recently launched Explore 3K is being very well received in its early days.

In this context, I would like to add that this represents groundbreaking times in Proteomics. In my opinion, this is the first time in history of Proteomics that is both at scale and quality with unparalleled throughput.

Looking at 3,000 proteins in parallel with single-plex quality in large cohorts consisting of thousands of samples in just days. We have all the reason to believe that proteins and proteomics will represent the most important omic [ph] when it comes to tracking the transition from health to disease, measuring disease progression or drug response.

We can feel that the research community is very excited that Proteomics is finally here, and we see a strong adoption and excitement across both academia and biopharma. As the CEO of Olink, I'm very proud that we have driven the field to this current state. We continue to rapidly expand research opportunities and remain convinced all of this work by us and our customers will have a major impact on how healthcare is executed and drugs developed.

Beyond NGS and Explore 3K, Signature, our newest offering in the low and mid-plex space, has similarly found a ready customer base, we expect will grow strongly in the quarters and years ahead. We think Signature is another strong example of our promise to address the multitude of Proteomics research goals within customer's labs.

We think the findings of more than 800 studies published today, Explore NPA will further define our place as the leader in Proteomics. We believe this body of knowledge also speaks to the quality of the data, the Olink platform generates, a sentiment shared by many of our customers in their real world experiences as well.

As we've discussed in the past, The UK Biobank project is an immensely important project, and Olink is proud to be the platform which supports the project. We view this existing project as an investment in scientific discovery, deepening our relationship with the 13 biopharma consortium members and the global research community.

The project's use of Olink NPA technology aims to significantly enhance the field of Proteomics, enabling a better understanding of disease biology and supporting innovative drug development for project participants.

By the end of last year, we delivered data on 56,000 samples to The UK Biobank p consortium, a tremendous compliment that would not have been possible without the hard work and talent of our employees [ph] And for 2022, we plan to run samples in the expansion phase on the Explore 3072 platform.

When data from this research are published, it will be published using Olink's unit of protein expression, NPX or normalized protein expression. In some ways, Olink is not only leading the commercial market in next-gen proteomics, but also define its language.

Further to defining the language of Proteomics, our ambition to expand from 3,000 to 4,500 protein biomarkers in 2020 remains on track, as is our ambition to expand beyond that.

Aside from UK Biobank, additional consortia that we're part of include SCALLOP, CORAL and COLLIBRI. The SCALLOP consortium led by Anders Malarstig has a goal of identifying novel molecular connections and protein biomarkers course [ph] in certain diseases, such as coronary artery disease, RA, bipolar disease, heart failure, dementia and metabolic syndrome.

CORAL formed and chaired by Neuroscience thought leader, Dr. Charlotte Teunissen, it's a collaborative community of scientists working on the Olink platform investigating diverse neurological conditions by studying blood and CSF sample, with a goal to identify biomarkers and biological mechanisms for neurological diseases.

Lastly, COLLIBRI is a consortium to define protein biomarkers of inflammatory bowel disease led by [indiscernible] As with these consortiums, we're exploring more opportunities where the Olink platform can be the underpinning technology for large-scale projects, which are grounded in science, specificity, accuracy and decision making for customers.

In addition to The UK Biobank population Proteomics project, we see a lot of interesting excitement across many large and strategic cohorts around the world. Scientists need and want to add protein to the cohorts to complete the multi-omic perspective.

We're convinced that Proteomics is and will continue to be very high on the agenda for all of these worldwide cohorts. We look forward to continuing generating a lot of democratized value in these data sets and particular to do so through our external Explore lab partners via our kit offering.

In summary, we believe we are in early phases of this multibillion-dollar next-generation proteomics opportunity. We believe Olink is the most advanced scientifically and commercially, and we are working hard to continue to drive impressive growth at Olink in 2022 and the years to come.

I will now turn the call to Oskar to discuss our financial results.

[Oskar Hjelm, Chief Financial Officer]

Thanks, Jon and hello, everyone. First, just a quick reminder that we will be presenting at two investor conferences this week. Tomorrow morning, we'll be at the BTIG MedTech Digital Health, Life Sciences and Diagnostic Tools Conference. And Friday morning, we will be at SVB Leerink Global Healthcare Conference.

Unfortunately, we will once again be interacting virtually instead of in-person or on the slopes, but we look forward to catching up with many of you then and in the weeks to come.

As we pre-announced on January 10, our fourth quarter revenue totaled $43.7 million, strong growth of 61% year-over-year. This brought full year 2021 total revenue to $95 million, up 76%.

Revenue growth was driven by strong performance from our Explore platform and in particular, Explore kits, which represented 40% of total quarterly Explore revenue.

Adjusted EBITDA for the fourth quarter 2021 was negative $1.4 million as compared to positive $10.8 million for Q4 2020. As Jon indicated, given the benefit of moving quicker, Olink accelerated investment during the fourth quarter.

As of the end of 2021, we had 25 externally placed Explore installations that have generated revenues for us over the last 12 months and the installed base achieved approximately $750,000 in customer pull-through during the 12 months of 2021, benefiting from both increased customer traction and seasonal Q4 strength.

We've made very strong inroads with our Explore offering during these early quarters on the market, and we continue to expect variability in quarter-to-quarter pull-through, which will be further impacted by our seasonal trends.

During our early experience with Explore so far, we've seen an average annual pull-through from our Explore customers ranging from $500,000 to $750,000 with individual spend ranging from less than $100,000 to multimillion-dollar orders.

Kits revenue for the fourth quarter grew strongly, up 83% to $15.3 million or 35% of total revenue as compared to $8.3 million for the fourth quarter of 2020 or 31% of total revenue. Drivers of kits revenue included strong Explore pull-through. Full year 2021 kits revenue grew 82%, totaling $26.8 million versus $14.8 million during 2020.

Analysis Services revenue for the quarter was $23.7 million as compared to $17.3 million for the fourth quarter of 2020. Service growth continued to be driven by Explore across all regions.

Boosted by strong deliveries of Signature, other revenue was $4.7 million during the year end quarter as compared to $1.6 million for the fourth quarter of 2020. Q4 2021 other revenue growth was primarily driven by the placement of 28 [ph] Signature instruments late in the quarter, including a small amount of initial reagent sales. Full year 2021 other revenue totaled $8 million versus $4.9 million for 2020.

By geography, revenue during the fourth quarter was $20.2 million in North America, $20.1 million in EMEA and $3.3 million in China and Rest of the World. By geography, revenue during the full year of 2021 was $42.3 million in North America, $45.4 million in EMEA and $7.2 million in China and Rest of the World.

Turning to expenses. Q4 2021 consolidated cost of goods sold was $18.4 million, resulting in a gross profit of $25.3 million. This compares to Q4 2020 cost of goods sold and gross profit of $8.4 million and $18.8 million, respectively. Consolidated adjusted gross margin during the quarter was 60.7% versus 72% for the fourth quarter of 2020.

By segment, adjusted gross profit margin for kits was 85% for the fourth quarter of 2021 as compared to 90% for the fourth quarter of 2020. The decrease in the fourth quarter kits margin is related to year end adjustments related to our Target product. Full year 2021 adjusted gross profit margin for kits was 86% versus 84% for 2020.

Q4 adjusted gross margin for Analysis Service was 50% compared to 68% in Q4 2020. The decline in AS margin was primarily driven by UK Biobank. And once we delivered the UK Biobank project, we expect service margins to revert to normalized levels that we've observed historically.

In addition, the AS margin was impacted by our investment into capacity in order to deliver out the UK Biobank project. But this investment has also built unique institutional knowledge that will further enrich our support to customers as we externalize Explore.

Full year 2021 adjusted gross profit margin for Analysis Services was 57% versus 69% for 2020. As we consider total codes [ph] we continue to believe that our strategy to increase kits revenues as a percent of total revenues will have a positive impact on gross margin over the long term and quarter-to-quarter variation out to be expected given the seasonality of our business and the early stage of our product introductions. Further, the introduction of Explore 3072 should provide support for margin expansion over time, leveraging internally built antibody library.

Adjusted gross profit margin for Other was 34% as compared to 23% for the fourth quarter of 2020. Q4 2021, Other adjusted gross profit margin was impacted by Signature sales during the fourth quarter. Full year 2021 adjusted gross profit margin for Other was 45% versus 47% for 2020.

Total operating expenses for the fourth quarter of 2021 were $33.1 million as compared to $13.8 million for the fourth quarter of 2020. The increase was largely due to continued and accelerated investment in Olink's commercial organization and research and development and driven by additional costs as a public company as well.

Full year 2021 total operating expenses were $102.9 million as compared to $42 million for 2020. In keeping with a very large Proteomics opportunity in front of us, we expect to continue to invest according to our strategic plan and grow all parts of the business in 2022.

Operating expenses are broken out as follows, selling expenses for Q4 2021 was $12 million versus $4.3 million for Q4 2020, administrative expenses for Q4 2021 were $11.8 million versus $7.9 million for Q4 2020, and R&D totaled $8.7 million and $2.2 million for Q4 '21 and Q4 2020, respectively. Other operating loss was $600,000 in the quarter as compared to other operating income of positive $600,000 in Q4 of 2020.

Net loss for the fourth quarter was $8 million as compared to a net profit of $6.5 million for the fourth quarter of 2020. Full year net loss totaled $38.3 million as compared to $6.8 million for 2020.

Net loss per share for the fourth quarter was $0.07 based on a weighted average number of outstanding shares of 119,007,062 as compared to a net profit share of $0.13 in the fourth quarter of 2020 based on a weighted average number of outstanding shares of 23,190,461. Full year 2021 net loss per share totaled $0.43 versus $1.10 per share in 2020.

We ended the year with a strong cash balance of $108.1 million in cash and cash equivalents with a large net working capital release typically observed during the first quarter due to seasonality in our revenues.

And as Jon mentioned earlier, even as we have accelerated our investment, Olink remains sufficiently capitalized to achieve our return to profitability and to fund our existing strategic plan. And we believe we have a unique ability to drive strong and improved return on investment over time for Olink with these investments.

In addition to our product focused efforts to capitalize on the many opportunities over the next couple of years, we need to invest in the right people. We entered 2021 with 214 employees, and we are entering 2022 with 416 employees, including 150 full time employees in our commercial team.

We grew our headcount by nearly 100% in 2021 to continue building a strong foundation for 2022, but more importantly, for 2023 and beyond. Our commercial team entering 2022 is the largest amongst our peers. And today, we have over 750 customers well diversified among biopharma and academia.

Moving to our outlook for 2022. As Jon discussed, we expect another strong year with total revenue to be in the range of $138 million to $145 million, representing growth of 45% to 53% over the full year of 2021.

In addition, we expect seasonality of our business will progress similar to the seasonality in 2021 and COVID friction to approximate what we experienced in Q4 and 2022 thus far. So as we consider 2022 and the years to follow, we remain very optimistic and consider ourselves very well positioned for strong growth.

I'll now turn the call over to Jon for his concluding remarks.

[Jon Heimer, Chief Executive Officer]

Thank you, Oskar. So in summary, 2021 was another year of strong execution and strong growth, confirming our leadership position in the next-gen Proteomics field. We saw and continue to see increasing traction and robust adoption across our entire portfolio of products and services, selling into a broad and diversified growing customer base. And new products like Signature and Explore 3K are being well received. So it's with strong optimism that we embark on the remainder of 2022 and look forward to the months, quarters and years ahead.

And at this point, we'll open up the call for questions. Operator?

[Operator]

Thank you. [Operator Instructions] Our first question comes from Matt Sykes with Goldman Sachs. Your line is open.

[Matt Sykes, Goldman Sachs]

Hi, good morning. Thanks for taking my questions. And congrats on the quarter. Maybe if we just start with the guide. Would love to kind of hear how kind of your embedded expectations for the mix of kits versus service as we kind of go through the course of the year? And then within kits, what Explore could represent and how that's factored into your guidance?

[Oskar Hjelm, Chief Financial Officer]

Yeah. Thanks, Matt. Oskar here. It's a great question. So when we look at sort of the kit mix and service mix over the year, I mean, we continue to expect sort of good progression and driving our externalization strategy and driving up the kit mix over the year.

But as Jon mentioned in his scripts, we have the UK Biobank project deliver out through during the first half of the year. So we expect the kit margin or the kit mix to sort of improve over the quarters of the year. And clearly, that will be you know, driven by the Explore kit offering.

But I think it's also important to bear in mind that we delivered 28 Signature boxes ahead of our internal plan, very late in Q4. So we do expect sort of that to impact 2022 positively and also reflect that in our guidance.

[Matt Sykes, Goldman Sachs]

Great. And then maybe just on UK Biobank. I know Oskar, you said that '21 was kind of around 10%, and I know it's front half loaded for this year. But could you just give us an idea of what the contribution from UK Biobank was in the fourth quarter? And then what it would be for either the first half or the full year '22?

[Jon Heimer, Chief Executive Officer]

Yeah. So Oskar you could help me what portion of UK Biobank was in the fourth quarter for last year?

[Oskar Hjelm, Chief Financial Officer]

So probably roughly half of what we had for 2021 was in the fourth quarter.

[Jon Heimer, Chief Executive Officer]

Okay. So what we said was roughly 10%, right, for the business in 2021 and roughly half of that in the fourth quarter, Matt. And looking ahead on 2022, we, you know, it is significantly less portion of the business. And as you know, we cannot disclose the financial details of the deal. But it's - so it's a small part of the overall business in 2022.

[Matt Sykes, Goldman Sachs]

Great. And then just one last one for me. I know this small line in the other segment, but just given the strength that you saw in the Signature placements in the fourth quarter, even with that, assuming a certain ASP, it seems like there was some additional revenue that came in for other.

Just remind us kind of what else outside of Signature is within the other? And was there anything that showed some stronger trends than you had expected?

[Jon Heimer, Chief Executive Officer]

No. I mean clearly sort of the real growth drivers for the placement of Signature boxes, but then we also saw good performance of Agrisera, so that we know, that they were not only an internal sort of provider of antibodies, so they have external revenues of plant based antibodies that they sell. And in that line, we'll also see sort of some - sort of sample prep cell and sort of service related to our labs and then also ships and flow cells.

[Matt Sykes, Goldman Sachs]

Great. Thanks very much.

[Jon Heimer, Chief Executive Officer]

Thanks, Matt.

[Operator]

Thank you. Our next question from Puneet Souda with SVB Leerink. Your line is open.

[Puneet Souda, SVB Leerink]

Yeah. Hi, Jon, Oskar. Thanks for taking my questions. So first one, really on the guide. I mean, it's $138, $145, a fairly wide range. Maybe just can you walk us through sort of puts and takes to that. I suppose, some of the supply chain concerns that you had, the plastics that you talked about, if any of that is in there. It seems like UK Biobank is - a large portion of that is already through.

So, maybe just talk to us sort of how do you - what are some of the puts and takes that get you to the lower end of the guidance range versus the sort of the higher end of the guidance range? And then I have a few follow-ups.

[Jon Heimer, Chief Executive Officer]

Sure, Puneet. Thank you. I don't think the range is that broad, to be honest. We're growing very rapidly, right? So it's just a $7 million range. So how we're thinking about it is mainly around timing, really.

I mean we're not planning for the bottom end of the range. So it's sort of a conservative estimate or risk adjusted. And on the higher end of the range, maybe a few things we didn't plan for will happen.

So to me, it's - we're growing very rapidly. It's really just a few projects that have come in one part of the year or not. So it's - to me, it's actually a quite tight range, considering how rapidly we grow. And I would say that timing of things is the most thing that is difficult to be precise and predict on.

[Puneet Souda, SVB Leerink]

Okay, got it. Excellent. And then a question on pull-through, Oskar mentioned 500,000 to 750,000. I mean given the timing of the Explore launch, that is pretty impressive and especially considering the 3,000 launch that you had.

Maybe just talk to us how do you see that number trending through the year and maybe longer term because you talked about a couple of your customers are in million.

So maybe just walk us through what are some of the things that you see that need to happen in order for those customers to go into those higher ranges? And maybe just walk us through that.

[Jon Heimer, Chief Executive Officer]

Yeah. Thanks, Puneet, and we agree. I mean, we're impressed as well on the investments that people are doing on the Olink platform. And obviously, we contribute that to the value it provides to their research. And yes, so we try to be as clear as possible with you all here and so representing the ranges that we've seen across quarters, right.

And as you know as well as us that the product hasn't been on the market for that long, it's really three quarters really, right? So it's - and what we try to say all the time that we probably need more time to dial in and be more precise.

So - and how we see that customers are thinking about this that, as I said in my part of the script that we have all reasons to believe that proteins will be likely or Proteomics be the most important only care providing a lot of very insightful data to drive research and development.

So what we see then is that Proteomics and especially as I also commented on my script that being us scale and quality. Now I think personally that this is the first time in history where we can look at three proteins - 3,000 proteins with single-plex quality in blood. And hence, that we're seeing this trend shift, right, that we are - that customers are starting using Proteomics as a strategy in their R&D. And hence, that is represented by those multimillion dollar orders. But there are also people that are starting to [indiscernible] that you saw in the lower end of the range.

But - so it's really hard, Puneet, honestly, to be super precise on this, and I honestly think that we need to follow a few more quarters ahead. And they be – and to be more precise. But yes, it's obviously encouraging all of it, right? So all good stuff.

[Puneet Souda, SVB Leerink]

No, I appreciate it. It's impressive given the early days of this product. And just last one, if I could ask about. Obviously, Illumina invested into one of your peers in high-plex proteomics.

On one end, it obviously validates this space, but just wanted to get your view as to how do you see, you know, even though with the kits launching in 2024, how do you see the competition in the market right now? And just wanted to get your thoughts on that overall. Thank you.

[Jon Heimer, Chief Executive Officer]

Yeah. Thanks, Puneet. No, we continue to have a very strong relationship with Illumina, and we don't believe that the Soma [ph] will have an impact on our market opportunity we see ahead. And we continue to view the Illumina installed base. It's a very attractive market that we are definitely going after. So nothing has really changed sort of in our perspective on that.

[Puneet Souda, SVB Leerink]

Got it. Thank you. Thanks, guys.

[Jon Heimer, Chief Executive Officer]

Thanks, Puneet.

[Operator]

Our next question comes from Tejas Savant with Morgan Stanley. Your line is open.

[Tejas Savant, Morgan Stanley]

Hey. Guys, good morning. Jon, maybe to kick things off, just a point of clarification really. In terms of FX, it sounds like it was a 3% tailwind in the third quarter, but a much larger 16% or so here in the fourth quarter. Can you just walk us through that dynamic? And Oskar, maybe outline, what exactly are you embedding in your '22 top line guide for FX?

[Oskar Hjelm, Chief Financial Officer]

Yeah. So yes, as we saw sort of, I mean, great tailwinds during the fourth quarter for FX. And I think clearly, sort of we saw a greater shift looking at sort of, in particular, between the USD to the SEK and also the USD to Euro and to the Sterling to some extent. And so that is really sort of what's driving the FX tailwind.

So then we're looking at sort of 2022, I think we've sort of factoring some sort of more stable levels. But I think sort of similar rates that we observed during the fourth quarter.

[Tejas Savant, Morgan Stanley]

Got it. So just to clarify that, Oskar. I mean, so of that 45% to 53% of reported revenue growth, what does the constant currency revenue growth look like for you embedded in the guide? Is it sort of a 10% FX tailwind that you're baking in here for '22?

[Oskar Hjelm, Chief Financial Officer]

No. It's much smaller than that, Tejas. So single digits.

[Tejas Savant, Morgan Stanley]

Got it. Fair enough. And then on the OpEx, I know you mentioned sort of accelerating investments to support your growth here. But how are you thinking about sort of that $33 million in terms of using that as a baseline going forward? And was there an FX component in that line as well, given what we just spoke about?

And then if you think about the cadence through the year in terms of your OpEx increases, anything you can share on that, please?

[Oskar Hjelm, Chief Financial Officer]

Yes. So I think, I mean, as we mentioned, we expect to invest sort of, I mean, a similar pace in - during 2022. And I think continuing to incurring sort of similar levels that we did in 2021. And I think sort of a relatively sort of gradual build-up during the year, if that's helpful.

[Tejas Savant, Morgan Stanley]

Got it. Fair enough. And then on the seasonality piece, I believe you mentioned in your prepared remarks that you expect similar seasonality as in '21. But you did see - I think it was about a $9 million UK Biobank benefit in the back half of '21. And I think -- Jon, you mentioned a more modest benefit here in the first half of the year because of the expansion phase of the project.

So I'm just trying to sort of like juxtapose those comments with the seasonality, right. Because you should expect perhaps a less back-end loaded this year just given the shift of that $9 million that won't happen in the back half of '22?

[Jon Heimer, Chief Executive Officer]

Yes. No, we don't think so, Tejas. I mean if we rather look at the duration of the lifespan of the company, as we talked about in our past, right, that we've seen in seasonality and now the business has scaled quite practically, right. So even despite UK Biobank was a big project, it was still representing a very small percentage of our sales.

So honestly, we expect 2022 to look pretty similar as '21 in terms of seasonality despite also your comments, which you are correct on that, we will deliver UK Biobank in the first half of this year likely. And hence - but still, it is a smaller part or a smaller portion of the business for sure.

So yeah, hopefully, we answered your question. And the bottom line is that we expect it to be that we've seen from the start of the company and similar to 2021.

[Tejas Savant, Morgan Stanley]

Got it. And one final one for me, Jon. So following up on Puneet's question there on the Illumina news here with one of your competitors, as you had sort of time to digest it and perhaps so have some of your customers, can you share any sort of early feedback from them.

And what if anything can you do proactively to make sure that your growth trajectory here continues as they launch their co-branded product at some point in the future?

[Jon Heimer, Chief Executive Officer]

Yeah, sure. No, I mean we continue to see, first of all, a very strong positive relationship with Illumina. We are in a very important part of growing their business, their reps on the street. I mean, their customers are looking to add protein to the mix today. And hence, they are being quite active together with us. So we continue to see a very positive fruitful relationship with Illumina.

And on my customer base, I honestly don't think it's changed at all. We've been compared to the SomaLogic technology over and over since we started the company. Now we have superior performance, in particular, on specificity, which is truly crucial to get data that you truly can trust. It's going to help projects a lot downstream instead of having to validate your data with secondary technologies, et cetera. So it's a very, very strong, clear USP we have, and that's tremendously important to research.

And on the last part of your question, I think seeing is believing, right? Maybe something will come in a few years, but I think the research interest remains here now. We are obviously a front runner and the NGS strategy we have is very much appreciated. The customers can get to all or mix [ph] basically on the same underlying instruments they already have. So we don't change our outlook whatsoever on this, so we remain very positive.

[Tejas Savant, Morgan Stanley]

Got it. Thank you so much, guys.

[Jon Heimer, Chief Executive Officer]

Thank you.

[Operator]

[Operator Instructions] Our next question comes from Sung Ji Nam with BTIG. Your line is open.

[Sung Ji Nam, BTIG]

Hi. Thanks for taking the question. Maybe one on 2022 outlook, as we think - look at the gross margins for the year, could you maybe kind of go through the puts and takes and just trying to figure out net-net, if you expect gross margins to continue to improve versus last year?

[Oskar Hjelm, Chief Financial Officer]

Yes. Great question, Sung Ji. So if we sort of break down 2022 and look sort of first half versus second half. So first half clearly sort of delivering out the UK Biobank project, and we will continue to see sort of somewhat depressed levels of gross margin similar to what we saw during the fourth quarter and due to the UK Biobank project.

And once that is delivered out, we expect margins to improve and also benefiting from the continued shift towards the kit side of the business. If that's helpful.

[Sung Ji Nam, BTIG]

Okay, got you. And then for the Signature platform, obviously greater - better-than-expected demand out of the gate there. And you mentioned that some of them are actually going to existing Explore customers, which I think is very interesting.

But just curious, in general, for the customers that are adopting the Signature system, whether they were using something else before for these multi-plex Proteomics applications or if they're kind of getting into it for the first time? Just kind of curious what the customer mix looks like?

[Jon Heimer, Chief Executive Officer]

Yes. Thanks, Sung Ji. Great question, very good one. Yeah. So it's actually a mix. I think many Proteomics labs that we target, they obviously have done proteomics in the past and where we're likely replacing older technologies with the next-gen one delivering across all key performance criteria.

But interestingly enough, as I commented in my script as well, is that we see many Explore customers adding Signature. And that could be more of a genomic-focused lab in the past, right, which now are excited to be able to add proteins to the mix and also realizing that you don't always want to count up on that [ph] But also sometimes when you're more targeted, certain pathways of interest, for example, look at more targeted panels, which Signature represents.

So that speaks greatly in my mind to how we designed our portfolio of products to meet the use cases and application areas from customers, as we talked about capping that or netting down into pathways and so forth.

So I think it's really a strong data point and testament that we thought about that in the right way and customers are already responding to it. So a bit of a mix on your question, but yeah.

[Sung Ji Nam, BTIG]

Great. Thank you. And then lastly from me, the Boehringer Ingelheim partnership, the EMPEROR study, obviously, the largest of its kind. I think you have a couple where at least a few studies like that are underway. Just trying to get a sense of, obviously, they would like to - they would probably need to look at the results from such study.

But curious how the partnership could evolve over time in terms of what are - what do you think - what's the pivotal, I guess, kind of the point for Olink in terms of taking this to the next level, right, just from getting involved in kind of the biomarker study to maybe potential partnership for as continued diagnostic or what not? I'm just trying to get a sense of how this could evolve over time?

[Jon Heimer, Chief Executive Officer]

Yeah. Great question, again. I think it's fantastic to see that one up because I'm really excited myself, right, we're seeing now major biopharma are adding Proteomics to these studies. And as I said a couple of times already today, right, I think it's truly driven by scale and quality and throughput that it has never been there in the past and now it's for sure is.

And to me, as a known biotech, biopharma guy, I love to see how they're using it. So how they can use Proteomics for repositioning, for example, then looking at potential new indications for an already existing drug, which is a tremendous return on investment, obviously, from the biopharma companies perspective. They have a drug and now they can use Proteomics to identify new areas of application. So that's definitely part of what you just talked about, so super exciting.

But we also see many of those quite sizable projects in biopharma in later stages. So looking at understanding mode of action, understanding safety in more detail and efficacy.

So I see this as a very strong trend, yes, early, right, but that they're realizing that Proteomics is here at scale, and they can now use it to really support their strategy and business. So I'm super happy to see this happening and happening quite fast as well, so super exciting.

And obviously, to your question as well, that this is not a one-off in my mind, that is rather the start. And how they can take the initial data, going into more targeted questions and then maybe using them as strategies in development or on the market as well.

So still early innings, right, but tremendously that it's going in this direction and quite fast as well. So very encouraging for all involved, I think. Thank you.

[Sung Ji Nam, BTIG]

Great. Thank you so much.

[Jon Heimer, Chief Executive Officer]

Thank you.

[Oskar Hjelm, Chief Financial Officer]

Thank you.

[Operator]

Thank you. And we are showing no further questions at this time. I'd now like to turn the call back over to Jon Heimer for closing remarks.

[Jon Heimer, Chief Executive Officer]

Okay. So thank you, everyone, for joining us today and for your interest in Olink. We look very much forward to keeping you updated on and hope to connect with many of you this week. So have a great everyone - great day, everyone, and thanks very much for attending. Good-bye.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.